Board members could actually stand in the way of their company’s growth, according to a recent report by the University of Sydney Business School and The Australian Institute of Company Directors (AICD).
The report, called Driving innovation: the boardroom gap, says that board members are too often focused on short-termism and traditional risks to their organisations.
Business School researcher, senior lecturer Massimo Garbuio, says it was clear that several companies are too short-term driven, being driven primarily by shareholder needs, and there is not enough investment in R&D and innovation when compared to their counterparts.
“I was surprised to find that only three per cent of the directors said they brought science and technology experience or international experience to their board,” he says.
“Many may need to upskill in order to understand the impact of new technology for their companies and how to use them to compete in a global marketplace.”
Seventy-five per cent of company directors say innovation is part of their organisation’s strategy, however, over half admitted that momentum was lost overtime. Nearly 60 per cent of directors were unaware of the percentage of their organisation’s total expenditure was allocated to R&D and innovative activities.
“With 57 per cent of directors not knowing how much they spent on R&D and innovation, Australian boards are clearly not doing enough in comparison to other national and international businesses.
“If Australian businesses want to compete, they can’t just follow what is done elsewhere, they need to lead. Customers have choices. We live in a world in which it’s often easier and faster for a customer to buy something from a US website and get it shipped than to buy it from a local retailer that hasn’t been able to effectively integrate digital and non-digital channels,” Garbuio adds.
He says there needs to be a conversation about the need to truly understand customers’ needs today as well as their needs in five or 10 years’ time. Second, there needs to be a conversation about resource allocation. Are we investing enough today in order to be relevant and thrive in 10 years’ time?
