FBHDTJ Still-life selection of board games (Monopoly, Chess, Cluedo, Scrabble) with playing cards and gambling chips

Blaming the CEOs for all real and imaginable transgressions is a common thing these days. I’m not an exception myself: on more than one occasion, I argued that all major problems of the corporate innovation process stem from the lackluster performance of the folks who are ultimately in charge of it: the CEOs.

A recent study, however, suggests that the blame should at least be partly shared by the people very close to the culprits: the board members. The study shows that innovation does not rank very high on the list of top priorities for most corporate boards. It ranks number five, to be precise—well after concerns over attracting and retaining top talent, the regulatory environment, and competitive threats.

To give the boards members some credit, though, they’re quite honest about their own performance: only 42% of the respondents rated their boards’ processes for supporting innovation as above average or excellent (70% gave such a high ranking to their ability “to staying current on company”).

The authors of the study believe that one of the reasons for the boards’ poor performance on innovation is the board recruitment policies practiced by most companies. When asked which three areas of expertise the directors prioritized when filling open board seats, just 13% highlighted relevant technical expertise (which is supposed to be absolutely required for the innovation process). Instead, the boards typically looked for experience in their firms’ industry (51%), strategy (34%), or finance (30%).

There is one aspect of the study, however, that makes me somewhat uncomfortable: the use of the broad term “innovation” when applied to complex set of corporate activities the boards are supervising. What does “innovation” mean in this specific context? Is it the specific percentage of the company’s revenue set aside for R&D? Is it the precise ratio of the R&D funds allocated between incremental, “adjacent,” and radical innovation projects (a.k.a. the 3-Horizon Model of Innovation)? Is it a decision to create a position of Chief Innovation Officer (as opposed to running a less hierarchical model of corporate innovation)?

Those are real issues related to the corporate innovation process. Those are real questions that the directors must tackle on a regular basis. Lumping them indiscriminately under a convenient and easily recognizable umbrella term makes interpreting the survey results easy. Will this increase the boards’ attention to the innovation process? I doubt that.

The image credit: https://www.yours.co.uk/features/nostalgia/articles/classic-board-games-are-back-in-fashion

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