Insights from board members - innovations should be part of corporate bonus schemes

Spinverse recently conducted an insightful survey for Technology Industries of Finland. The survey was aimed to bring understanding on the state of innovation governance in corporate boards. The companies who responded to the survey regularly have innovations on their agenda.

When the search is on for a company CEO, all candidates should be able to show relevant evidence on innovation governance. This is what four out of five companies responded in the Board Practices on Innovation Governance Survey, conducted to gain understanding on the corporate boards in innovation governance.

The survey was carried out by the innovation consulting company Spinverse for Technology Industries of Finland. Pekka Koponen, Chairman, Spinverse Ltd., estimates that the lack of innovations poses a risk for companies. On the other hand, the survey reveals that the share of innovations in top management bonus schemes is marginal.

“As little as 12 percent of the companies that responded to the survey have in fact created criteria related to the innovations in the top management’s bonus scheme. Some of the indicators the companies use are the share of innovations in the revenue flow or the R&D expenditure of high-risk products,” Koponen explains.

Importance of idea exchange

During the panel discussion at the survey results launch, the role of the corporate boards was seen as the primus motor of the company culture embracing innovations. Marjo Miettinen, Chair of Technology Industries of Finland and Chair at Ensto Oy describes herself as “a humanist with love for technologies.”

“Technology companies thrive on innovations. The founder of Ensto Oy created a company culture that fosters innovations, but to keep it up requires constant work. To give an example, we have an internal hackathon at Ensto, where the approved idea is given startup funding. This has created a lot of enthusiasm among the staff and brought new ideas to the R&D flow,” Miettinen says.

Tero Ojanperä, the founder and Chair of artificial intelligence company Silo.AI reminds of the role of technologies as business enablers. “You cannot develop the business of a modern company without having an understanding on technologies, but if you ignore the customer viewpoint, technology is just technology. The much-discussed artificial intelligence is an example of this. Electric scooters became successful only after the platform for easy rental was created. This gave the needed push for the business,” Ojanperä pointed out during the panel discussion.

Jaakko Hirvola, CEO of Technology Industries of Finland, also reminded the audience of the potential of board practices to bring in diverse points of view. “When looking at the company management, the crucial question is how to foster idea exchange. It is important to include not only humanists but it is also good to take us engineers outside our comfort zones,” Hirvola said.

The survey was carried out during summer 2019 and responses were received from 70 companies of different sizes in the technology sector.