Some professional services firms are realising big financial returns on their investment in innovation but many more are yet to fully benefit by embracing genuine innovation, according to the new Commonwealth Bank Professional Services Insights Report.
When firms’ reported innovation activity was assessed against the leading international standard developed by the OECD, just 44 per cent met the criteria for true innovation. One third that claimed innovation were found to be merely improving, while 23 per cent were not innovating or had abandoned their innovation plans.
The report shows Australian professional services firms estimate a significant financial return on their investment in innovation, with implemented innovations delivering an average of $404,000 per firm in revenue gains and cost savings. This represents a $5 billion total contribution from the industry to the overall economy.
Marc Totaro, Head of Professional Services, Commonwealth Bank, said, “Prolific references to the word innovation risk it becoming a meaningless buzzword, yet in speaking with decision makers in professional services, it’s clear they’re generating a tangible financial return from innovation as our study demonstrates.
“However in an industry where disruption is a daily proposition, understanding the difference between continuous improvement and true innovation can both future-proof your business and create significant value in a competitive marketplace.”
Of those firms successfully innovating, the majority (62 per cent) indicated the top benefit was an enhanced client experience, followed by increased revenue, at 53 per cent.
“Firms are increasingly faced with the challenge of keeping pace with changing client demands, and many are innovating to ensure they are optimising the client experience which can in turn support a stronger financial performance,” said Mr Totaro.
Innovation active firms shared common traits when compared to those merely improving, with innovative firms more likely to have employees unafraid to take risks and fail (26 per cent versus 15 per cent), adapt their products and services to make the most of opportunities (32 per cent versus 24 per cent), and run experiments and test new ideas (15 per cent versus 7 per cent).
Within the primary segments of professional services, the results suggest legal firms were more likely to be innovation active (41 per cent) than accounting firms (25 per cent).
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About the Professional Services Insights Report
The CommBank Professional Services Insights Report is based on a sub-set of a wide-ranging quantitative survey of 2,195 business owners, decision makers and managers. This sub-set comprises responses from 217 businesses within the professional services sector (including legal, accounting, scientific and technical services).
The survey benchmarks the innovation performance of each business, identifying key motivations and drivers influencing their performance and highlighting best practice. Participants were Australian businesses with an annual turnover of over $500,000 and at least two employees.
The full report including an innovation case study on legal firm Maddocks is available here https://www.commbank.com.au/corporate/industries/professional-services/accounting/marketpulse.html