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Directors' responsibilities  |  Leadership  |  Strategy

The role of boards and NEDs in driving innovation



In this blog, we explore the role of the board and non-executive directors in driving innovation. Innovation is important in the boardroom because it drives growth, competitiveness, and long-term success for the organisation. Innovation can be a key factor in determining the organisation’s ability to adapt to changing markets and customer needs, and to identify new opportunities for growth.


Innovation matters to the long-terms success of an organisation

As most organisations face growing challenges from inflation, increased risks through the supply chain, geopolitical tensions and instability, accelerated digital transformation, cyber threats, climate change, etc., innovation can help organisations in many ways, such as:

  1. Stay ahead of the competition
  2. Adapt to changing market conditions
  3. Increase efficiency
  4. Meet stakeholder needs
  5. Attract talents
  6. Be prepared for future disruptions and embrace change


The board and the non-executives have a role in driving innovation

In terms of driving innovation, non-executive directors play a number of important roles. For example, they can help identify areas where the company could benefit from innovation and provide guidance on how to implement new ideas. They bring a fresh perspective to the company and challenge the assumptions of management and other board members, which can help drive innovation. Additionally, non-executive directors can help connect the company with external sources of innovation, such as other companies, research institutions, or industry organisations. NEDs can (and must) help the company stay ahead of the curve and remain competitive.


An example of how non-executive directors can help foster innovation within a company

Let’s assume that you serve on the board of an organisation that has been making and selling a product for many years. Over time, the market for this product has become competitive and the company has struggled to maintain its market share.

As a NED, what can you do?

  • You may suggest and take part in a product workshop to review the company’s current product line and identify areas where the company can improve or expand.
  • You may suggest new ways of marketing or distributing the product to reach more customers.
  • Your may explore entering your geographies and markets.
  • You could help the company explore new technologies or business models that could help it compete more effectively in the market.


We identified 9 factors contributing to innovation at board level

Not all boards have set up to foster innovation. Those with the following features are far better equipped to innovate:

  1. Diverse and inclusive board: A diverse board can bring different perspectives and ideas to the table, which can lead to more creative and effective solutions to problems. Additionally, a diverse board can provide insight into different markets and customers, which can help an organisation identify new opportunities for innovation.


  1. Strategic vision: A clear and ambitious vision for the future can inspire innovation and encourage the development of new products, services, and business models.


  1. Risk-taking: A board that is willing to take calculated risks can create an environment where innovation is encouraged and new ideas are embraced.


  1. Long-term focus: A board that is focused on long-term growth and sustainability, rather than short-term financial gains, can create the conditions for innovation to flourish.


  1. Open communication: A board that encourages open communication and fosters a culture of transparency can help to surface new ideas and promote collaboration.


  1. Performance metrics and measurement: A board that uses appropriate metrics to measure and track the performance of the organisation can identify areas for improvement and opportunities for innovation.


  1. Allocation of resources: A board that ensures that the organisation has sufficient resources for research and development can support innovation by providing the funding and resources needed to pursue new ideas.


  1. Board and management capabilities: A board that focuses on developing the skills and capabilities of both the board and management team can create a strong foundation for innovation by providing the leadership and expertise needed to drive change.


  1. External connections: A board that encourages the formation of external relationships such as partnerships and collaborations with other organisations or academic institutions can bring fresh perspectives, new ideas, and access to new technologies that can foster innovation.


✅ Which of the above features does your board possess?

✅ How do you assess the ability of your organisation to innovate?

✅ What is your potential as a NED to drive innovation?


➡️ To maximise your contribution in the boardroom, identify gaps in your knowledge and take appropriate action:

Visit our training page to explore our range of courses.

Join NEDonBoard, the Institute of Board Members as a member.

Already a member? Engage in your membership and expand your potential to drive innovation.


Written by Elise Perraud, NEDonBoard COO