CASE FOR BOARD INNOVATION COMMITTEE
Innovation is at the forefront of Proctor & Gamble's business strategy, so much so that the company has established a board committee dedicated entirely to innovation. This committee, called "The Innovation & Technology Committee," is composed of both internal and independent directors who are tasked with overseeing and advising on all matters related to innovation and technology within the company.
The committee's responsibilities are vast and varied. They review and make recommendations to the board on major strategies and other subjects relating to the company's approach to technology and commercial innovation, the acquisition and development of technology to ensure ongoing business growth, and the measurement and tracking systems important to innovation.
Similarly, Medtronic has a "Technology and Value Creation Committee" whose mission is to periodically oversee and assess the company's product, service, and technology portfolio and its effects on the company's growth, performance, and competitive position. The committee also monitors emerging science and technology trends, identifies new markets, and assesses the company's intellectual property portfolio and related strategy.
To accomplish their goals, both committees keep the board informed of competition's successful product launches, track the pipeline for new product introductions and improvements, and make recommendations regarding the company's internal and external investment in research and development.
Other companies are following suit and adding or considering adding a board-level committee or representation to address the topic of technology and innovation. Depending on the importance of technology and innovation to the company, the board could create a standing committee, an ad-hoc committee, task force, or advisory council. The options are many, but what's important is that technology and innovation have a voice in the boardroom
Given the frequency of these reviews, a cybersecurity review should be conducted with the board annually. Approved cybersecurity initiatives that are important to the board should be reviewed at each board meeting, and guidance and support provided where necessary.
Second, technology is rapidly changing industries and creating new competitors every day, which means that boards need to understand management's technology and innovation strategy. They must understand the approach to technology strategy and innovation to perform their due diligence, challenge assumptions, and, when satisfied, support the initiatives.
While road maps displaying technology initiatives and their status are important, they are not enough. Boards must also understand how individual technology or innovative initiatives impact customer experience, product innovation, or operational efficiency. This insight is needed so that board directors, who are typically steeped in business strategy and competitive models, can ensure a prudent and well-considered course for the organization. Once understood, a portfolio approach to investment is required to balance short-term and long-term tradeoffs in alignment with the company's operations and strategy.
By providing this information, boards can make a more significant contribution to promote growth and innovation within the organization.
In summary, effective technology reporting to the board involves providing regular updates on cybersecurity strategies, budgets, and talent, as well as understanding management's technology and innovation strategy, the impact on the customer experience, product innovation, and operational efficiency. With this information, the board can make informed decisions that manage risk and promote growth and innovation within the organization.
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