First I think I have to start with the board member distinction as it’s a meaningful one. I usually describe the board role to be more like “grandparenting” versus the “parenting” role of an operator. When you are the CEO, you are the parent of the org. You are hands-on and accountable for the totality of results. It’s your team, your baby, your strategy, albeit with a lot of extra helpful hands on the wheel. You are appointed and held accountable by the board of directors.
As a board member, you are a grandparent of the org. Your value-add, beyond that of governance, is not to pull operational levers or to try to do the parents’ job, but to share your stories (hopefully not the same ones all the time), which can highlight perspective and experience so that the actual parents (CEO, ELT, etc.) can make better and more informed decisions. You hope they potentially avoid some of the less obvious pitfalls that you may be able to inform them of, but you acknowledge that the decisions are theirs. You hopefully also acknowledge (realize) your business is or was different from theirs.
Relating to the topic of innovation itself, I think this is still very straightforward. It’s still an exercise in creating new value for the company and I still approach the framework in the same way as I would as a CEO. I would ensure the following questions are addressed in a constructive way although, from experience, the process is usually not this structured:
- Customer Insights and Value Map – Do we know enough about the customer to invest our innovation dollars in places for more certain return or the most efficient payback period? If no, can we invest more to learn more? If yes, have we ranked the macro roadmap by a matrix of 1) resource and time needs, 2) value realized or risk mitigated, and 3) time period before we realize the impact of our work? This is a shorter lens conversation with hopefully the lightest lifts with the biggest impacts and shortest payback periods bubbling up. I’d also probably call it an investment framework vs an innovation framework, but these insights are useful to 2 and 3 below, as well.
- Saturation – Where are we on the saturation time curve with our current products or services? Do we need to invest in innovation in places which will augment or displace our current revenue streams in the medium to long term? Are current revenue streams becoming more efficient or deleveraging? Many times it’s hard to place a couple new bets each year with 2-to-3-year payback periods, but the best and most robust companies get over the pain of the investment window and make the new investments happen to ensure their businesses are not focused solely on incremental wins. Many do not, especially if they are held hostage by quarterly guidance or current underperformance. As a side note, at RevZilla we continually expanded our offering structurally with new products and segments in the market, but on my watch, we never had to dramatically change our model outside of spinning up our own vertical brand(s).
- Disruption – The last question I ask is the silver bullet question or the silver bullet question in reverse. “What’s the silver bullet or innovation that would kill us?” If there is a clear picture of what actually could be disruptive to the current model, a great conversation is a debate about the pros and cons of disrupting ourselves before someone else does. The other way you could view this would be to ensure your industry is not at a strategic inflection point a la Andy Grove’s book, Only the Paranoid Survive. If you had a silver bullet you should know which company to fire at. If you don’t obviously know the competitor to shoot, your industry may be changing around you faster than you are keeping up. You have to watch for that as well.
Essentially, the three questions are: “What do we know about our customer and our potential short wins and how have we prioritized them?” “What should we do about saturation and the medium term?” And “What can kill us and should we kill ourselves?”
The best board conversations on innovation and beyond focus on questions driven by strategic “whats” with a dash of “why” sprinkled in.
As a board member, I’m hoping to help illustrate a more complete equation for the management team in a way, again, that can augment or further inform their thinking. I’m hoping we ask hard “what should we do” questions, share experiences and review all intellectual capital in the room.
I’m not, however, advocating for generating consensus or making strategic choices for the CEO.
Someone once told me, “Smart people typically make the same choices, so long as they are looking at the same facts.”
Great board work should offer a better chance to expose the most useful facts for everyone to debate. Hopefully, the best decisions can then be made by the operator(s) who are accountable.