Strategy that positions companies to innovate and differentiate for a sustainable future

Theme 1

Strategy and innovation: 10 questions boards should consider in 2022

Companies continue to refresh their strategy to strengthen agility, resiliency and sustainability and leverage innovative opportunities that can accelerate their performance over the long term. Trajectories of companies that are thriving and leaning into this strategic reset are diverging rapidly from those that are merely surviving. 

Below, the EY Center for Board Matters highlights 10 questions that boards should consider when overseeing strategy and innovation in 2022.

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▉ Question 1

How is the company rethinking its definition of long term, to maximize value while also focusing on near-term risks and opportunities?

Is the strategy appropriately focused not only on where the company is going but where it can go?

 

▉ Question 2

Are material environmental, social and governance (ESG) issues considered in the company’s long-term strategic planning?

How do the company’s business model, practices, products and services address urgent environmental and social challenges as we move toward a more inclusive and sustainable future?

 

  • + Read more#- Read less

    “CEOs are increasingly embracing the business case for sustainability, where they protect and create value by accelerating their business toward a more sustainable future.” Keep reading.

    CEO Imperative study

    80%

    of CEOs believe it’s likely companies will take more responsibility for socio-environmental impact in the next five years.

▉ Question 3

What data and metrics are being used to assess the health and vibrancy of the organization’s culture and its alignment with strategy?

Is the culture appropriate to inspire and enable innovation?

 

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    “An open exchange of ideas is essential to challenging how we think and work — which in turn sparks innovation. Encouraging diversity of thought is key,” Jeff Wong, EY Global Chief Innovation Officer Keep reading.

    “… without getting a strong balance between the right operating model and a leadership culture that is fit for the digital world, strategies will fail to deliver.” Keep reading.

▉ Question 4

Is the company’s capital allocation aligned with the necessities of its long-term strategy? How is the company addressing barriers toward optimal allocation?

 Question 5

Does the board have the appropriate governance process to oversee strategic investments that seed innovation to change the game? 

How is it supporting the acceleration of idea generation, trialing and assessment while also encouraging appropriate risk-taking?

 

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    It is important to ensure the engine of innovation — human talent. Thirty-eight percent of chief executives expect to implement change in their innovation processes over the next three years. These respondents are focused on faster idea generation and trialing and reorienting their organizations toward greater risk-taking. Keep reading.

 Question 6

Has management appropriately considered partnerships, joint ventures and alliances, along with M&A, to accelerate the strategy particularly with longer-term adjacent and transformational opportunities?

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    “Leaders clearly see M&A and partnerships with tech natives as a critical lever for a successful digital investment strategy, with nearly three-quarters of executives noting that they are shifting to M&A and partnerships to accelerate digital initiatives.” Keep reading.

▉ Question 7

Are newer and innovative technologies, including digital platforms and cryptocurrency solutions, appropriately leveraged to accelerate goals and objectives?

How can these technologies accelerate the speed to market and enhance virtual collaboration and customer engagement?

 

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    Forty-three percent of CISOs in the Americas say significant investment in data and technology will be a top priority in the next 12 months. Keep reading.

    We asked CEOs to identify the top three trends impacting their industry. Technology and digital innovation was the only trend consistently at the top. Keep reading.

▉ Question 8

What is the company’s transition plan for thriving in a net-zero future?

Is that plan integrated with the company strategy? Does it include specific short-, medium- and long-term greenhouse gas reduction targets and related decarbonization initiatives? How is the company preparing for additional climate-related disclosure requirements?  

 

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    Ninety-seven percent of CEOs agree that societal and environmental changes have a critical impact on their companies. Many are making plans to become carbon neutral by 2050. Keep reading.

▉ Question 9

How is the company investing in protecting and restoring the natural ecosystems and biodiversity on which its business relies?

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    “Every dollar, job and product we produce globally depends on nature, just as we depend on nature’s bounty both in our urgent efforts to manage climate change and in ensuring food security for us all. Nature’s health, therefore, underpins healthy financial returns of every investment made, just as financing decisions shape our impact on nature’s capacity to support us. That nature-related risks are material is therefore self-evident —  the challenge is to manage them in delivering nature positive and net-zero emissions outcomes,” Simon Zadek, Chair, Finance for Biodiversity, and Senior Advisor to the Task Force on Nature-related Financial Disclosure

    Keep reading.

    Financial services

▉ Question 10

Does the board understand the company’s supply chain constraints?

Is the board confident that the supply network is flexible and agile amid continued global supply chain challenges? How is it addressing increased calls from stakeholders for sustainability and less waste?  

 

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    Approximately one-third of CEOs indicated the supply, chain as an area where they expect to make the most, changes in the next three years, and 70% of those CEOs say they are considering sustainability and circular economy in their supply chain decision-making. Keep reading.

Go back to introduction

Board priorities for 2022

Go to Theme 2

Risk and resiliency

Go to Theme 3

Talent oversight

Go to Theme 4

Dynamic governance

Contact us

Get in touch with the EY Center for Board Matters for support in developing an innovative board strategy.