Governing innovation: enabling disruption without losing control

By Nqobani Mzizi

In this modern era of unrelenting disruption, boards are increasingly required to go beyond merely overseeing performance. They must also enable innovation. Technologies like generative AI, ESG-linked investment models, and platform-based business strategies are reshaping industries. These changes demand not only operational adjustments but also bold strategic reinvention. Yet many boards are grappling with how to respond to innovation strategically, without compromising their core governance responsibilities. This uncharted terrain is testing the resolve of modern boards.

Traditional governance models were built for stability, predictability and control. Innovation, in contrast, is uncertain, iterative, and non-linear. It often involves experimentation, ambiguity, and sometimes failure. For boards used to structured reports, clear metrics, and linear plans, this unpredictability can seem risky. Yet paradoxically, resisting innovation presents a greater threat than any of those listed on the strategic or operational risk registers. As digital disruption and societal shifts accelerate, the board’s ability to cultivate innovation has become essential to long-term value creation.

A common governance blind spot is to relegate innovation to a management function, with limited strategic involvement from the board. The assumption that management is inherently more equipped to drive innovation can be detrimental. This gap may stem from a lack of technological fluency, unclear mandates or discomfort with the intangible nature of innovation.

The result is often a lag: boards are briefed on innovations after the fact, rather than helping to shape direction, assess risk appetite or define success. This reactive posture creates a widening governance gap, one that threatens not only agility but long-term relevance. The 2023 McKinsey Global Board Survey reveals a troubling paradox: while 87% of directors cite innovation as a top three priority, fewer than 20% believe their board governs it effectively. This is more than a governance failure; it signals a countdown to organisational irrelevance. Boards must now reconsider what it truly means to govern innovation.

Governing innovation does not mean micromanaging trial and discovery. Instead, it means creating the conditions under which innovation can thrive ethically, strategically and responsibly. It involves asking the right questions: does the board have visibility into the innovation pipeline? Is there alignment between novel initiatives and long-term strategy? Are ethical risks, data governance and unintended consequences being considered?

Today’s stakeholders, whether customers, investors, regulators or communities, expect organisations to innovate responsibly. Boards must ensure that these efforts are not only profitable but also purposeful.

King IV offers helpful guidance. Principle 4 speaks to the board’s responsibility to appreciate that strategy, risk, performance and sustainability are inseparable. This includes nurturing forward-looking capability not as a standalone concept, but as a core element of strategy. Principle 6 further calls on the governing body to ensure that risk governance enables rather than stifles opportunity, including calculated risk-taking in pursuit of innovation.

Boardrooms that successfully navigate innovation often exhibit a shift in culture: from risk aversion to constructive inquiry. They influence disruptive growth strategy, empower management to explore, remain informed, and maintain clarity on governance boundaries. They create healthy space for emergent thinking, scenario planning, and strategic ‘what ifs’. They also recognise that not every new idea will succeed, and that setbacks, when properly governed, can become valuable sources of learning rather than liability.

Sanlam’s board didn’t just approve partnerships; they embedded innovation into governance. As one of Africa’s largest insurers, the company has, since 2021, actively expanded into fintech and inclusive insurance models across emerging markets. Notable recent initiatives include strategic partnerships launched in 2023 with digital platforms in India and Africa to deliver tailored insurance products to underinsured populations. The board’s commitment to strategic modernisation is evident in its approach to ecosystem partnerships and sustainable growth.

Similarly, Rain’s digital-first disruption required its board to rethink traditional governance. Since its 2018 launch as South Africa’s data-only mobile network, the company's bold strategy demanded governance structures that could support rapid scaling. The board implemented oversight enhancements in 2022 that strengthened both customer trust and technological agility, proving that disruptive growth and strong governance aren’t mutually exclusive.

Effective governance of innovation may require boards to rethink their own composition. Do directors bring diverse perspectives, digital fluency, or entrepreneurial experience? Are there mechanisms for onboarding emerging expertise without disrupting governance coherence?Increasingly, progressive boards are including innovation experts on committees, engaging external advisors, or hosting learning sessions with disruptors to sharpen their own lens.

Boards should elevate innovation to a standing agenda item to ensure consistent strategic attention. They can also establish dedicated innovation or technology committees tasked with monitoring emerging trends and risks. These committees track tangible innovation metrics such as percentage of revenue from new products, rate of project progression through innovation pipelines, and measures of customer adoption or satisfaction linked to novel offerings. Dashboards integrating these metrics into board reports enable timely interventions and strategic alignment.

Finally, for high-impact innovation bets, boards may consider engaging independent panels or conducting peer reviews to provide fresh perspectives, challenge assumptions and strengthen decision quality.

Boards must also examine whether their own rhythms support adaptability and reinvention. An annual strategy retreat is not sufficient. Agile governance requires periodic check-ins on emerging initiatives and a willingness to evolve oversight models in step with emerging realities.

The tension between innovation and control is often overstated. Governance is not about constraining creativity but stewarding it wisely. A board that governs innovation well does not seek to eliminate uncertainty, but to navigate it with foresight and discipline.

To govern innovation is to ensure that risk and renewal are not seen as trade-offs, but as twin responsibilities of a future-fit board. This requires courage, curiosity and humility; attributes not always associated with traditional governance but essential in the age of transformation.

To remain future-fit, boards must ask:

• Are we fostering innovation or merely observing it?
• Do our governance processes support creative exploration, or stifle it?
• Is our board equipped to interrogate the future, not just report on the past?
• Are we balancing risk management with opportunity stewardship?

Ultimately, thriving organisations will be those governed by boards that treat innovation not as a threat to control, but as a catalyst for renewal, turning uncertainty into lasting value through foresight, adaptability and curiosity.

* Nqobani Mzizi is a Professional Accountant (SA), Cert.Dir (IoDSA) and an Academic.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.

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