We find ourselves at a pivotal moment for Australian businesses as the nation transitions from a mining and resources-led economy to a knowledge and service-led economy.
Businesses are seeking to harness the power of innovation to drive the economic transition, but how do ‘everyday’ businesses embrace innovation and achieve their commercial objectives?
The CommBank Business Insights Report – Unlocking Everyday Innovation, which has just launched, explains innovation in practical ways and demonstrates the value and drivers of innovation for all businesses.
The report measures the innovation performance of businesses across a range of sectors and demographic categories, and uses the Oslo Manual, an OECD recognised framework, for defining and categorising innovation.
Under these guidelines, innovation is defined as introducing something new or making a significant improvement in one or more of four areas across:
1. Products and services;
2. Business processes;
3. Organisational methods, and
4. Marketing practices.
Innovation performance – moving beyond improvement
Against these critera, we found just 44 per cent of Australian businesses are actually ‘innovation active’, although most (82 per cent) thought they were innovating. The rest were either only making incremental improvements or not even trying to innovate at all.
To better understand the drivers of innovation, the research tested 15 core drivers of innovation across management capability and entrepreneurial behaviour.
Together, these 15 drivers comprise the CommBank Innovation Index, which benchmarks innovation performance on a sale from minus 100 (innovation restrictive) to 100 (disruptive innovation).
The CommBank Innovation Index for Australian businesses stands at 24 nationally, which is on the boundary between improvement and true innovation, which starts at 25 on the scale.
Unlocking financial returns
When asked to estimate the value of innovation, those businesses that had already implemented an innovation cited an average return of $405,000. This equates to a total realised value of $69 billion for the Australian economy through additional revenue or cost savings.
If that same return were to be achieved by all Australian businesses*, it would contribute $215bn to the economy.
To fully assess the potential financial benefit of innovation, the report examines the differences in value created when a business implements innovation across the four areas outlined in the Oslo Manual.
The results show that the average value of innovation increased materially when businesses moved from innovating in one area ($386,000 per company), to innovating in three to four ($763,000 per company).
Moving up the innovation curve
The report also reveals that of the 15 drivers of innovation, some are more impactful than others. The top three include:
- Process – encouraging employees to ask questions that challenge the status quo;
- Philosophy – expecting employees to offer creative ideas for improvement; and
- Adapting – adapting your products and services to make the most of opportunities.
The research also identified commonalities amongst innovation active businesses, including a wiliness to experiment, listening to staff, and adapting the way a business approaches the market.
What’s interesting is that these are not radical disruptive changes, but rather simple ways businesses can seek to move up the innovation curve, and realise the value our research shows it creates for businesses.
To download the full report visit commbank.com.au/canbusiness