Corporate Fountain of Youth
Corporate support for innovation needs to begin at the board level.
A deeply ingrained culture of innovation is vital for all companies, but particularly for those that are technology based; it is innovation that allows a technology company to continually generate new business. For this kind of culture to take hold, all the microcultures in a company–including those devoted to business planning, marketing, operations, and developing new ideas–must be understood, supported, and (though they may at times seem incompatible) brought together under leadership that truly cares about creativity.
When such a culture is in place and creating a steady stream of innovations, a company enjoys an institutional value beyond Wall Street appraisals based on financial metrics. In my experience serving on the boards of a variety of companies, this outcome is easiest to achieve in private companies, where management can focus on creating long-term value without fretting about a few pennies per share with every quarterly report.
Startup companies have no difficulty at all in treasuring innovation, since that is the foundation of their enterprise. But in order to keep a culture of innovation alive in established private companies, that culture must be deeply embedded in the board of directors. Its importance must be stressed when top management is selected and evaluated; it must be central when the board sets the company’s goals and direction. Established companies, however, seldom use this seemingly obvious criterion in selecting their board members. Instead, board members are generally sought for their financial, legal, and other worthy skills. Innovation then typically declines, which in turn shortens corporate life spans–to less than 40 years on average.
To test my feeling about this, I asked members of two executive-search practices whether experience in and passion for innovation were often among the qualifications sought in prospective board members. Both said they recalled no request for such qualifications, although they did get requests for backgrounds in academia and technology. This response clearly suggests that those who are responsible for making board selections in established companies inadequately understand innovation and lack commitment to it.
I am convinced that all technology companies stand to gain in both vitality and longevity if they focus on bringing people who support innovation to the enterprise in many roles, but particularly at the board level.
Sheldon Buckler is chairman of Lord Corporation, a private technology-based company in Cary, NC. (A minority share is owned by a foundation that exclusively benefits MIT.)