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Australian businesses say the most significant barrier to innovation and business change is simply not having enough time to turn their ideas into reality, according to a new study revealing that traditional innovation measures, such as R&D and patents, had been growing solidly since 1990 but have flatlined since the end of the mining boom.

The joint study, by the National Australia Bank (NAB) and University of Melbourne, also found that Australian businesses innovate more than they realise, and most are driven by a desire to better serve customers.

NAB Group economics and innovation department NAB Labs, along with The Melbourne Institute of Applied Economic and Social Research, combined in the study to better understand what drives innovation across all sizes and types of businesses in Australia.

The University also found that traditional innovation measures do not apply equally across industries, while NAB chief economist Alan Oster and his team broke down the drivers of innovation by asking more than 500 businesses, regardless of their industry or size, about their behaviours, to create the NAB Labs Innovation Index.

According to Oster, many businesses innovate continuously to survive and prosper “but don’t necessarily think of that as innovation, but more likely talk about ‘improvements’, ‘changes’ and ‘adjustments’ to their everyday processes, products or services which is exactly what innovating is”.

“What we found was that these innovation behaviours are driven simply by a desire to deliver a better experience, service and product to their customer.

“While large businesses were most innovative, micro-businesses with less than 20 people were the next most innovative group and they were particularly focused on doing things more cost efficiently, but their challenge was a lack of time to implement ideas.”

Key findings of the NAB Labs Innovation Index:

•    Australian business scored 67.6 for innovation (out of 100).

•    By industry, transport/storage scored highest (72.1), followed by retail (69.7) and manufacturing (68.5).

•    WA (70.1), SA/NT (69.4) and QLD (68.3) are the most innovative states.

•    76% of businesses said they were driven by “opportunities to deliver a better experience/service/product to their customers”.

•    The most significant barrier to innovation and business change (identified by 1 in 2 firms), is simply not having enough time to turn their ideas into reality.

•    Small businesses have the most intimate knowledge of their customers – 7 in 10 (70%) report a “high” level of customer knowledge.

University of Melbourne management professor Danny Samson, who has published a book of innovation case studies and consults to companies including NAB, said innovation is arguably the “most important challenge and biggest opportunity” for the national economy.

But, “we need to better track what drives Australian innovation,” Samson says.

“We have an important saying in business: if you want to manage something well, you must be able to measure it.

“We must keep our finger on the pulse of how much of it is going on, how well it is being done, and where and why there are barriers and hotspots.

“The indices show that behavioural, as well as economic and organisational factors, impact on innovation efforts and outcomes, which is totally consistent with existing theory and our underlying knowledge.”

NAB says it intends to continue its work with the University of Melbourne to track how Australia is innovating as a nation and how that is contributing to informing the way in which Australian businesses approach the transition to the “ideas boom”.


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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).


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