Organisations that innovate tend to cope with continuous change as well as challenging competition better. They are more resilient, flexible and react faster to their environment. Nevertheless, is it not always clear what we mean by ‘innovation’ and what the role of good governance plays in it. 

Innovation is the process of discovering and developing new knowledge and translating this to successful products and services. 

Innovation is not solely “the introduction of new ideas”. Even though this may be a good first step, we do not talk about “innovation” until the idea has been applied in such a way that it improves a product or service or the underlying business processes. Successful innovations are strongly tied to organisational goals and contribute to the vision of the organisation. Good governance, therefore, plays a crucial role in innovation. 

Every organisation today needs innovation in some way, shape or form. Innovative activities have similar characteristics that influence governance in your organisation. Digitalisation has both internal and external effects. Internally, the organisation must switch to a digital organisation. Externally, innovation and digitalisation have to do with organisational strategy and taking risks. Digital, connected organisations, for example, think about how they can service their customers better, how they can create value based on data or how they can realise their greater purpose. 

The role of the board 

GUBERNA believes in the role of good governance to stimulate innovation (and digitalisation) and to help the organisation succeed. With a clear long-term vision and concrete goals, the board of directors provides guidelines that are necessary to channel the growth of innovative projects. To make innovations a success, board members need to approach them from an investment & research-perspective. It requires long-term investments and financing in new technology and competences. In addition, research and continuous evaluation of the results play a crucial role in steering the innovation process. By taking weighed risks backed by research; an idea can grow into a positive innovation for the organisation. 

The intensity of research and development investments is influenced by good governance in the organisation. The division of functions of the CEO and the chairman and the presence of the founders of the board of directors also contribute positively to innovation. In addition, focusing on diverse skills and perspectives of the dependent and independent board members may also have a positive influence. New ideas and perspectives should be discussed. By letting go of traditional thought patterns and by stepping away from “group think”, innovative ideas can come to life. 

At GUBERNA, we believe in the power of good governance to stimulate innovation. May your organisation be inspired to translate good governance practices to more innovation and resilience in the long-term.

Publications for Innovation

Cyber-Risk Oversight

The ISA’s cyber-risk handbooks are an attempt to provide Board members with a simple and coherent framework to understand cyber risk, as well as a series of straight-forward questions for Boards to ask management to assure that their organisation is properly addressing its unique cyber-risk posture.

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The IRIS Book

The IRIS Book (1982-2015) captures that unique experience and is designed as a Road Book that illustrates and reflects on the key concepts of Entrepreneurship.

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Re-designing Corporate Governance to Promote Innovation

This paper argues that mainstream corporate governance recommendations and best practices do not necessarily serve the interest of innovative enterprises. This is hardly surprising given that the main consideration underpinning corporate governance (at least at listed companies) is how to “protect” the interests of minority shareholders rather than determining how to build an innovative company. 

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