Whereas businesses were likely to consider human capital, reputation and customer capital as the assets with most strategic value, in 2016 innovation has started to take the lead. To this end, Deloitte has participated in a seminar on innovation in corporate governance conducted by the Kuwait Economic Society. This and other insights on Innovation in Corporate Governance were highlighted by Rami Wadie, Deloitte Enterprise Risk Services (ERS) Partner and Middle East Leader of the Deloitte Center of Corporate Governance.
Key findings from the Deloitte Innovation Survey include the following:
- 96% of respondents consider innovation to be among the top five strategic priorities, with more than a fifth of companies classifying innovation as a top priority.
- Two thirds of respondents innovate in order to grow or differentiate themselves from the competition.
- More than half agree to have a well-defined innovation strategy.
- More than 40% of respondents say that they have a well-defined action plan to execute and implement their innovation strategy.
Wadie discussed organizations’ discipline around innovation and how disruptive thinking is becoming sharper. He also discussed the methods by which innovative ideas should be measured, the ways in which enhanced governance would contribute towards innovation and growth of an organization, and the responsibility of internal audit in relation to the same.
“The results of the Innovation survey show that businesses are aware of the strategic importance of innovation, although there is still some way to go to seeing sufficient implementation of any such innovation so that its value has impact,” explains Wadie. “Today’s companies exist in a climate where strategic risks – those that either affect or are created by business strategy decisions – can strike more quickly than ever before. This means that companies that fall behind on the innovation curve may quickly fall prey to what is seen as innovation’s evil twin – disruption.”
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“Boards need to ask critical questions such as, What will our customers value most in 3-5 years’ time?, Are we investing today to deliver on our customers’ future expectations?, How are we as board and management governing the innovation process?, among many other questions,” explains Wadie. “Best practices in this area would entail companies appointing dedicated innovation managers or chief innovation officers, regularly reviewing and discussing the company’s innovation strategy and risks, and requesting management to conduct innovation audits and to report on innovation performance”.