Governance not Regulation 

Day 83 Week 12 Q1  Friday, March 24, 2023

From an innovation perspective, there is a huge difference between executives and boards of directors. Boards have existed since the early seventeenth century, and we live in the early twenty-first century.

Our celebrity-centric culture is driven more by ego than by sense, making it fashionable for a company’s CEO to become its Chairman of the Board. This effectively eliminates not only oversight but also perspective. When industries prove they can not manage themselves, bureaucrats step in and start regulating. Right now, the tech sector is experiencing the desire for people who are completely unqualified to pass legislation and regulate industries they know nothing about. Imagine the impact on innovation!

I am not even sure that most board members think they have any innovation responsibility, as they are often expected to rubber-stamp the CEO’s wishes. This is dangerous!

Suppose the tech sector does not ensure that there is sufficient oversight and accountability in the decision-making process and that the interests of the company and its shareholders are being properly represented. In that case, there will be and now are serious problems. Having a separate Chairman of the Board can provide for more independent oversight and accountability, which can be beneficial when the CEO is not performing well, or the company is facing significant challenges.

Having the CEO also serve as the Chairman of the Board can create a potential conflict of interest, as the CEO may be more likely to prioritize their own interests over those of the company or its shareholders.

If you are a creative outlier, independent contributor, manager, executive or board member in an innovation culture, and if you do not manage yourself well, someone less qualified than you will step in and do it.

The board has a critical role in fostering innovation that impacts long-term success by providing oversight and guidance to management in developing and implementing innovation strategies, reviewing and approving innovation plans, assessing the feasibility of new ideas and initiatives, and providing feedback and support to management as needed.

Promoting a culture of innovation within the company can include encouraging and rewarding creativity and risk-taking, promoting collaboration and knowledge-sharing, and ensuring that employees have the necessary resources and support to innovate.

It is imperative that the governance layers take some responsibility for protecting and fostering innovation by setting a clear vision and strategy, providing oversight and guidance, and promoting a culture of innovation. 

Yes, looking at the big picture may result in lower short-term returns to shareholders. Still, it also may keep the company afloat for a lot longer because businesses must innovate or die and catering to egos with conflicts of interest is not a good long-term survival strategy in business, politics, and professional and personal relationships.

Innovation is too serious a business to compromise with appeasement. It requires courage, perspective and taking responsibility.  We should not blame young inexperienced CEOs for not knowing how to run their companies. Blame the system that prevents executives from benefiting from the experiences of others who have been around a lot longer than they have.