Transformative innovation and shifting balance: How boards can track stakeholder momentum

Boards must not only understand the innovation itself, but also how it is reshaping the environment around it. Stakeholder momentum refers to how the innovation is influencing stakeholders, their definitions of value, and the balance of power. This is crucial for companies developing transformative innovations as well as those being reshaped by them.

Some of the most consequential questions involve values that cannot be easily quantified. For example, in the case of data centers, the benefits like investment, jobs and tax revenue can be measured financially, but the impact on water resources or community character cannot be directly compared. There is no established exchange rate for these values.

Boards accustomed to evaluating trade-offs in financial terms face a challenge when dealing with innovative situations where values are intertwined and difficult to compare. Prediction markets illustrate this dilemma, as stakeholders may have differing priorities around information quality versus gambling concerns. Boards need to monitor how the world around transformative innovations is evolving, even as they focus on the innovation itself.