Innovative businesses generate an average estimated return of $405,000 through cost savings, productivity gains and increased revenue, the Commonwealth Business Insights Report – Unlocking Everyday Innovation found.
The report surveyed 2,195 business owners, decision makers and managers between August and September this year.
What these businesses have done has delivered $69bn to the Australian economy, with the potential to contribute around $215bn if that same return were to be achieved by all Australian businesses*.
Under the survey guidelines, innovation was defined as introducing something new or making a significant improvement in one or more of four areas:
- Business processes
- Products and services
- Organisational structure
- Marketing practices
“Most businesses are innovating in just one of the four areas; products and services,” said Adam Bennett, Group Executive, Business & Private Banking, Commonwealth Bank.
For those businesses, the innovation index score ranks just below 30.
“But for those innovating in three or more areas, their innovation index scores jump to around 50 and the extra revenue generated is much higher too, at an estimated average of $763,000 per firm.”
There’s “strong correlation” between how innovation-active a business is and the level of revenue or savings generated, Bennett said.
Top 3 traits of innovative businesses
The report measures the innovation performance of Australian businesses across a range of demographics and quantifies the value of a business’s innovation through productivity gains and additional revenue.
There are 15 elements of innovation making up an ‘innovation index’, and innovative businesses share common characteristics.
The top 3 traits include:
- Process - encouraging employees to ask questions that challenge (13%)
- Adapting – adapting your products and services to make the most of opportunities (13%)
- Philosophy – expecting employees to offer creative ideas for improvement (11%)
“These are not radical disruptive changes, but rather simple ways businesses can seek to move up the innovation curve, and realise value,” Bennett said.
When looking at innovation activity by industry, the report reveals that the most innovation active industries are manufacturing (61%) and wholesale trade (59%).
You can read the full Business Insights Report here.
* These figures are based on a total Australian market of 530,937 businesses with more than two employees and annual turnover of more than $500,000