Businesses nowadays have to deal with everchanging business environment in various dimensions. Rapid changes in technological, economic, regulatory, social, and cultural aspects led to fast-changing consumer behaviors. The aforementioned factor has become “new challenges” for companies to adjust their ways of doing business in order to tackle these changes.

To cope with the new challenges, companies need “innovation” or a process to seize “business opportunities” which can be built on to generate new initiatives that can add corporate value and eventually benefit the economy, the society, and the environment.

This guideline has been developed to reflect the significance of such matter and the necessity for companies to have clear and concrete direction in promoting innovation. We hope that contents of this guideline will help Boards gain a better understanding of their roles in innovation governance. The guideline divides into two sections including 1. Key Principles and 2. Guidelines.

Key Principles of this guideline are as follows:

1.     The Board should have knowledge, understand, and recognize the significance of “innovation”, a key mechanism to enhance business competitiveness which will affect the success and sustainable growth of the company.

2.     The Board should review its composition to ensure appropriateness and promote diversity to accommodate the oversight role in innovation.

3.     The Board should emphasize on promoting and ensuring that innovation has been developed in ways that fit with the company’s context, taking into account both internal and external factors.

4.     The Board has a role in guiding and encouraging the company to develop or utilize innovation by assigning the management to drive and be responsible for effective implementation.

5.     The Board should discuss with the management in terms of both “concept” and “process” in promoting / developing innovation to ensure common understanding and perspectives.

6.     The Board should ensure the company has appropriate “organization structure” that accommodate innovation development.  This might be done through restructurings of operation, task design, chain of command, roles and responsibilities to make them more flexible while emphasizing on communication and proper degree of decentralization.

7.     The Board should ensure that CEO and senior management have knowledge, expertise, and innovative leadership potential.  Innovative leadership should be among criteria for recruitment, remuneration setting, and performance evaluation of CEO and senior management.

8.     The Board should have a role in setting corporate-level strategy, ensuring that innovation-related aspects are recognized and integrated in the strategy so that the management can use as a direction for concrete execution. 

9.     The Board should conduct risk governance in parallel with innovation governance by reviewing risk appetite together with the management on a regular basis to ensure it stays at reasonable level and does not obstruct innovation development

10.  The Board should promote culture of innovation by establishing a workplace environment that accommodates employees to think creatively, think out of the box, and keen to learn continuously. 

11.  The Board should regularly monitor progresses of innovation strategy / plan through management reports and offer useful guidance to the management for further development / improvement. 

12.  The Board should ensure that innovation developed by the company does not only add business value which can be exploited commercially but also benefits stakeholders and makes positive social or environmental impacts. 

For full "Guideline on Board’s Role in Innovation Governance" please download below