Below trend growth to continue
Australia’s next phase of growth must be defined by ideas, creativity and execution. Our future lies in our ability to foster a culture of innovation. But how do we measure innovation across all sizes and types of business?
Australian businesses are innovating less, despite their positive views that our culture of innovation remains largely unchanged, according to the latest NAB Labs Business Innovation Index.
The Index fell to 59.8 points in Q2 2017, from 67.6 points a year ago, with all three components of the Index lower (doing things differently, more quickly and more cost efficiently).
NAB Chief Economist Alan Oster says Australia’s next growth cycle must be defined by ideas, creativity and execution.
“Our future lies in our ability to foster a culture of innovation across the economy,” Mr Oster said.
While the Index saw a decline, business perceptions of the culture of innovation in Australia, their industry and own organisation were largely unchanged, despite this not translating into actual innovation behaviours.
“While business does not believe that the culture of innovation has changed, when measured against actual behaviours, innovation appears to have declined over the past 12 months, irrespective of business size,” Mr Oster said.
“There is a bit of a ‘perception v reality’ disconnect, in terms of what we think we’re doing to innovate and what we’re actually doing when we measure behaviours and outputs.
“It’s hard to pin-point why that disconnect may be occurring, but perhaps it’s reflective of a less conducive economic environment over the past year and more cautious business behaviours,” Mr Oster said.
Encouragingly, however, the report shows a strong a correlation between the level of innovation within a business and the extent to which their leaders encourage innovation.
“The Index clearly shows that when innovation is encouraged by the leaders within an organisation, innovative behaviours follow,” Mr Oster said.
“It is telling us that business leaders encourage innovation because of the value it can create in higher productivity, new processes, competitive advantage, adaptation to changing circumstances and differentiation.”
The report showed the biggest benefits to business from their innovative activities were improved customer satisfaction (6.0) and productivity (5.9). Innovative activities resulted in fewer benefits associated with new products and services (5.1).
Leading business innovation author and Professor of Management at the University of Melbourne, Professor Danny Samson, said companies need to have a ‘front of mind’ attitude to innovation, stimulating problem solving and creativity as a systematic capability to foster change and growth.
“Innovation can be much more than just the province of executives or technical specialists, but rather a ‘full court press’, being included in organisational goal-setting, measurement and reporting, strategic priority statements, and ultimately in behaviour and culture,” Professor Samson said.
An interactive e-brochure summarising the report, including Australian business case studies from the likes of Telstra, legal services firm LegalVision, aquaculture company Yumbah and bike accessories manufacturer Knog, talking about their business innovation practices.
For full report, please see the attached document.
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