Finding new and effective ways of solving your clients’ biggest problems, growing your business and edging out the competition can be a challenge for many organizations. Traditional organizational structures and cultures, and the fear of failing or taking risks are just a few hurdles that can stand in the way of innovation.
As part of Protiviti’s mission of helping institutions navigate today’s challenging economic and regulatory environment, several of the firm’s advisors recently shared their wide-ranging views on how boards of directors can help companies break the mold to unlock their creativity and address the effects of digital disruption. Following are ten ideas that can help to stimulate innovation:
- Encourage diversity and inclusion – A company that has a diverse board and senior management can spot trends and opportunities more quickly than one that does not. Diversity allows companies to develop closer relationships with clients and to understand their concerns better. Executive management should recognize the importance of creating an environment where different people of different means and with different backgrounds across a whole range of dimensions (age, gender, ethnicity and disciplinary differences) can come together to produce the best ideas.
- Hire problem solvers and risk takers – The most innovative companies are constantly looking to hire people who can solve problems and are not afraid to tackle the toughest challenges. Educators are at the forefront of the effort to produce better qualified candidates for the workforce, though more needs to be done to develop graduates who are comfortable with math, reading and writing, and can communicate effectively. Numeracy and literacy at a much higher level is fundamental to the workforce of the future.
- Bridge the technical skills gap – With many industries facing a global shortage of skilled technical workers, companies should be willing to look outside the traditional college and master’s degree fields for workers with specific technical skills. For instance, some large employers are currently working with veterans and community colleges to fill technical positions through certification programs. Companies can also leverage technology to improve their talent pool.
- Prepare for the millennial effect – Companies need to recognize and prepare for the significant impact millennials and Generation Z are going to have on business operations and the workforce in the next few years. Unlike older generations, such as the Baby Boomers, millennials have different expectations around issues of race, gender, religion and sexual orientation. They have less tolerance for companies that fail to make accommodations in these areas. While the influx of millennials in the workforce will help companies become better innovators, it will also put pressure on management to push for more diversity.
- Consider whether the organizational structure promotes innovation – Restructuring may be necessary to allow the company to focus on new ideas and projects without detracting from its core successes. Management and boards should be willing to make important structural changes at the right time. Take the 2015 corporate restructuring at Google as an example. Alphabet Inc. was formed to house and separate the Google search engine and its related businesses from other promising “moon shots,” a smart move that allowed the firm’s big bets to stand or fail on their own.
- Keep the company’s founders involved (if possible) – Many of today’s great innovations started in basements and dorm rooms by young and intrepid founders. In most cases, keeping the founders involved with the company is crucial to maintaining a culture of innovation. Can you imagine Amazon becoming what it is today without Jeff Bezos? A founder can provide much-needed vim when companies run out of ideas and stop taking risks. On the other hand, it is equally important for companies to recognize when a founder or founders are disrupting the business in a way that hurts innovation and growth.
- Build cyber resilience – Today’s cyberattacks are more impactful and sophisticated than ever before. The average cost of a breach event is at about $4 million, and boards are increasingly worried about not just the cost to respond to or recover from the immediate impact but also the longer-lasting reputational risk. If companies are to continue to innovate, it is imperative that they build cyber resilience. This means developing and testing threat defenses, communication plans, backup systems and more. The critical question is not how to keep attackers out, but how quickly an organization can get the company network and systems back up and running without irreparable damage to the business, customers and the economy.
- Ask the right questions – An effective board member should listen and ask the right questions, rather than dictate to senior management what needs to be done. Asking thoughtful questions, such as “How are you thinking about this?” or “Here’s what I’m worried about and how can you help me address it?” is the most effective way to open a conversation with management around innovation. A future-ready board should allocate time to discuss the company’s innovation strategy and culture and encourage open discussion on direction and progress.
- Build goodwill with regulators – Innovative companies should not wait for regulators to come knocking on their doors; they should invite them in and show them how they are solving their clients’ problems and staying compliant. The traditional approach of companies hiding and wishing their primary regulators forget they exist is no longer a viable strategy.
- Help employees displaced by technology – Artificial intelligence, blockchain and other technologies are making business processes more efficient, but they are also having the unintended effect of displacing workers in many sectors at the forefront of innovation. Unfortunately, many employees are not going to make it through this rapid technology revolution without a strong commitment by employers to retrain and help them acquire new skill sets. This is a commitment that boards and management should uphold. Boards should take their role of serving the larger community, and not just shareholders, seriously. Equally, employees should embrace the opportunity to become lifelong learners, meaning they must show a willingness to be retrained and to develop new skills that are more marketable.
These suggestions on innovation are aspirational in nature and require each company to assess carefully its unique circumstance and capabilities. Visit protiviti.com for more insights and perspectives from our experts on innovation, market trends, business developments and risks.