Corporate boards should expect senior managers to cook up viable strategies for growth and profits. But inevitably, some of those strategies will fail.
Knowing how much failure a company can tolerate, whether it’s a start-up or a mature multinational, is part of directors’ risk management duties. They can also find ways to encourage innovation that will leave the company better off even if the new strategy doesn’t quite pan out. “The best boards understand how to create a climate where people can distinguish between failures that are stupid and failures that are fruitful,” says Rita Gunther McGrath, an associate professor at Columbia Business School who teaches corporate strategy and innovation. To read the entire article, sign up for a free trial subscription here.
- Posted: Tuesday, September 20, 2011
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