Publication Tomorrow’s Innovation, Risk and Governance

Executive Summary

Companies lie at the heart of humanity’s ability to address many of the world’s problems. As well as generating wealth and jobs, the innovations they make can have a major impact on environmental and social problems.

A helpful model of the context in which companies now operate is the’ triple context’ where future success is inextricably linked with the health of three interdependent global systems – the global economy, the natural environment and the social and political system. This ‘connectivity’ of the world leads to a business environment in which innovation and good risk management are at a premium as businesses seek routes to survival and businesses become a major  route through which society can survive the many challenges it faces.

The early 21st century is the ‘time for innovation’ – the pace is changing and companies are experiencing greater turbulence and larger shock waves than ever before. The complex world of diverse challenges, opportunities, need and expectations requires new and diverse thinking and a step change in a company’s ability to identify and manage risk – especially at board level.

If companies are to survive they need to accelerate their exploitation of new ideas. However innovation is a risky business and companies must decide when and where to innovate – but not to innovate carries certain risk. Businesses that differentiate themselves by good risk and innovation management are likely to be an increasing proportion of successful companies and an ever greater force in the economy.

This study explores the relationship between diversity in board composition, effective governance and attitude to risk and innovation. Accepting the breadth of diversity parameters that exist, for the purposes of this study we have focussed on a number of the criteria that have been identified by two of our interviewees as significant in terms of perspective and contribution: gender, age, cultural background, experience of industry, educational background, time on the board and experience of adversity.