What about the risk of becoming not relevant in the future?
But, … is there sufficient attention for another great risk, namely the risk of becoming less or not relevant at all in the future? According to my experience, that attention is insufficient. Innovation is barely on the agenda. Executives (too) often avoid open dialogue with their supervisory board about innovation. Why? Because they fear that ideas will be stifled at their inception. And they are right. In my experience, this is due to the composition and the agenda of the supervisory board. Exceptions aside, supervisory board members usually lack genuine market-oriented innovation expertise.
Only 5 to 20% of its time is spent on the innovation agenda
My thesis research in 2023 for Nyenrode Business University indicates that an average supervisory board spends no less than 80 to 95% on finance, governance and control issues. Only 5 to 20% of its time is spent on the innovation agenda. Addressing the risks related to being in control and the risks related to future relevancy should be more balanced and should also be reflected in the composition of a more diverse supervisory board. Diversity is not only about gender, age, ethnicity, and cultural background, but also about professional expertise, mindset, and the perspective from which issues are approached. Are individuals with excellent experience as CFOs, CIOs, lawyers, or accountants the best equipped to challenge a leadership team on their business innovation strategy, efforts and results? Are there also genuine innovation professionals on the supervisory board of your company who can elevate the quality of an innovation agenda and positively challenge management? Are real investments being made to fundamentally raise the knowledge level of the entire board on the theme of innovation? And I don’t mean an inspiring presentation by an external trend watcher or innovation guru just before drinks or dinner.
Large scale study on composition of supervisory boards
Together with Professor Alexander Braun, Mirza Osmanovic (both University of St.Gallen), and my former colleague Roger Peverelli, we are currently conducting a large-scale study on the composition of supervisory boards of companies. To begin with, we have examined the 50 largest insurers in Western Europe, with other sectors to follow. I expect that we will be able to share the preliminary results of this research in May 2025.
What is your experience? What best and worst practices do you see? What is the ratio of ‘control-driven’ supervisors to ‘innovation-driven’ supervisors in your company?
