Eric Tang is the managing director for Canada at strategic communications company Porter Novelli.
From the Industrial Revolution to the artificial intelligence era, innovation powered by technological advancements has driven progress, but often at great societal and environmental costs. Today, as innovation accelerates beyond regulatory oversight, companies can no longer assume they have an unrestricted right to disrupt industries, communities or ecosystems. Instead, they must secure a “licence to innovate” – not just regulatory approval but explicit commitments from stakeholders that define how innovation affects society.
The licence to innovate stems from a body of academic work in stakeholder management and was extended to the business context by the World Business Council for Sustainable Development in 2016. It also aligns with the materiality principle in today’s ESG (Environmental, social, and governance) framework reporting. This approach becomes hugely relevant when the early 2000s move-fast-and-break-things motto is no longer tolerated by regulators or citizens.
Take the rapid development of GenAI as an example. Since the technology caught the attention of the public in late 2022, in part thanks to the launch of ChatGPT, the rapid development and deployment of the technology has raised a sleuth of concerns: from environmental impact caused by the energy required, to copyright issues, data protection, to bad actors’ use of the technology to cause harm. As such, governments around the world – including Canada – have been quick to respond with various regulatory frameworks to mitigate potential and unintended harm. For many corporations, the use of GenAI-powered technologies to gain a competitive edge may seem like an established new reality, but not before they demonstrate their governance on how to safeguard their customers and other stakeholders’ interests.
A licence to innovate goes further than compliance. It requires companies to consider three critical steps: setting clear innovation commitments, defining impact covenants and establishing measurable accountability frameworks.
Setting clear innovation commitments
Innovation should not be an opaque, profit-driven endeavour. Companies must articulate to internal and external stakeholders why they are innovating and what benefits their advancements will create beyond commercial success. This means articulating a clear vision, acknowledging the potential costs and disruptions in the journey and committing to seeking and deploying solutions to mitigate or offset these costs.
A prime example is Apple, which has made privacy and data protection a central part of its innovation commitments. Recognizing growing concerns over user data security, Apple has embedded privacy into its business model, introducing initiatives such as App Tracking Transparency (ATT), which requires apps to seek user permission before collecting data. This move, while disruptive to the digital advertising industry, reinforced Apple’s commitment to consumer data rights. Additionally, Apple has consistently integrated privacy-enhancing features in its products, such as on-device processing for personal data and end-to-end encryption. By foregrounding privacy as a core innovation principle, Apple has not only strengthened its brand differentiation but also shaped industry standards on data protection and ethical technology practices.
Defining impact covenants
Every innovation creates disruptions, whether in labour markets, industries or social structures. Rather than reacting to backlash, forward-thinking companies pro-actively define covenants – formal mechanisms that anticipate and mitigate these disruptions.
Consider IBM Watson’s collaboration with the Mayo Clinic in using AI for oncology treatments, which started as early as 2014. AI-driven health care innovations could have raised concerns about accuracy, ethics and job displacement. IBM and the Mayo Clinic co-developed a framework that ensured AI worked side-by-side with human expertise. By engaging medical professionals in defining AI’s role, they turned potential resistance into structured collaboration, resulting in an augmented ability to deliver patient care to oncology patients at scale.
Establishing measurable accountability frameworks
Innovation commitments and impact covenants must be backed by action. Without clear accountability mechanisms, even well-intended initiatives risk becoming hollow promises.
Microsoft’s AI ethics and sustainability initiatives provide a good example. Its pledge to become carbon-negative by 2030 is not just a statement – it is tied to investment commitments, annual progress reports and third-party verifications. Similarly, Microsoft has actively advocated for AI regulations and created internal review boards to ensure its AI deployments align with ethical guidelines. By making innovation commitments measurable and subject to public scrutiny, Microsoft has reinforced its credibility while influencing industry-wide best practices.
Moving from trust to structured commitments
Trust is important but not an end goal. In our era of rapid technological change and growing public skepticism, businesses must take action to safeguard the goodwill of their stakeholders. They need formal, structured commitments that ensure their innovations create shared value.
A licence to innovate is not a passive social contract. It is a framework for aligning corporate innovation with stakeholder interests, balancing progress with responsibility. Business leaders must also recognize that long-term relationships with stakeholders transcend political shifts; these relationships are fundamental to commercial success and provide stability in uncertain times.
Companies that pro-actively define their commitments, structure their impact covenants and measure their accountability will not only drive meaningful advancements but also secure long-term resilience in an unpredictable world.
This column is part of Globe Careers’ Leadership Lab series, where executives and experts share their views and advice about the world of work. Find all Leadership Lab stories at tgam.ca/leadershiplab and guidelines for how to contribute to the column here.