Regional Australian businesses are more innovative than their city peers, often because they are better at empowering and enabling their employees, according to new research from Commonwealth Bank.
The Bank’s Regional Business Insights Report: Unlocking Everyday Innovation, finds regional businesses enjoy a higher level of innovation than metropolitan businesses.
According to the bank’s Innovation Index, regional businesses score 25.5, compared with the city business index score of 23.6.
The index is based on assessment across 15 core drivers of innovation, with results ranging from innovation restrictive at minus 100 to innovation disruptive at 100, with the midway point indicating firms are making incremental improvements and a score of 25 representing the beginning of true innovation.
In launching the report today at the opening of the bank’s Wagga Wagga Pop Up Innovation Lab, Commonwealth Bank Executive General Manager Regional and Agribusiness Banking, Grant Cairns, said regional businesses outperform their metro counterparts on a number of the measures assessed.
“Our results show that while metro businesses are, on average, in the improving-but-not-innovating range, regional businesses are actually already in the innovation zone, making things happen,” Mr Cairns said.
“One of the reasons they’re leading the way is their increased likelihood to give staff scope to innovate. They’re encouraging people to challenge the status quo and expecting them to come up with creative ideas, and by doing this, many regional operators are unleashing the innovation potential of their teams.”
The survey found 41 per cent of regional businesses encourage people to ask challenging questions, compared to 25 per cent in metro areas. Furthermore, 32 per cent of regional businesses expect their staff to contribute creative ideas, again compared with 25 per cent in metro areas.
According to the report, Australia’s regional businesses are injecting $19 billion into the economy from their innovation practices, but a total of $44 billion could be added if all regional businesses were to innovate.
The research also found that 84 per cent of regional businesses claimed to have implemented an innovation but when assessed against the Oslo Manual, an international standard for determining innovation, just 49 per cent were truly innovating and the rest were simply making incremental improvements.
But this compares favourably to metropolitan businesses where 82 per cent of businesses thought they were innovating, but only 43 per cent in fact were. In New South Wales, 58 per cent of regional businesses are innovation active.
Mr Cairns said: “Regional businesses are demonstrating high levels of innovation compared to metropolitan firms, and the value of innovation in extra revenue and cost savings is enormous, as the research finds. To realise the extra return, businesses need to make innovation part of their DNA.
“Overall, the research found that the best ways to do this is to encourage employees to ask questions that challenge the conventional way of doing things, by adapting products and services to make the most of opportunities, and piloting new ideas to test results,” Mr Cairns said.
The Wagga Wagga Pop Up Innovation Lab runs until 7 April 2017. The Lab offers businesses the opportunity to experience a purpose-built, living environment that showcases the latest in technology and innovative practices from the Bank’s permanent labs.
“The Lab brings together leading edge technologies and practical techniques for businesses to experiment with ideas, problem solve and prototype,” Mr Cairns said.
“We’re excited to bring this experience to Wagga Wagga and give clients and partners the opportunity to really stretch their creativity, learn about ‘customer-centred design thinking’ and work on their individual business challenges and opportunities.”
Commonwealth Bank has permanent Innovation Labs in Sydney, Hong Kong and London. Wagga Wagga is one of five stops on the Pop Up Innovation Lab’s tour across the country this year.
About the CommBank Regional Business Insights Report
The CommBank Regional Business Insights Reports is based on a wide-ranging quantitative survey of 2,195 business owners, decision makers and managers, including 379 in regional Australia, conducted on behalf of the Commonwealth Bank by DBM Consultants, with further analysis by the Commonwealth Bank and ACA Research. Participants were drawn from businesses across Australia with an annual turnover of over $500,000 and at least two employees. The survey was designed to benchmark the innovation performance of each business, identifying the key motivations and drivers influencing their performance, and highlighting best practice. We also interviewed a number of regional businesses to provide a qualitative perspective on innovation.
About the Oslo Manual
The Oslo Manual is 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: business processes, products and services, organisational structure, and marketing practices. And then the innovation is assessed as being either new to firm, new to market or new to world.
See the full report here.