The Australian Institute of Management and the University of Melbourne have released a report on firm-based innovation, which highlights the challenges to firms. While innovation can occur by change, firms do better by ensuring the systems are in place for innovation to flourish. This requires a whole-of-organisation approach with good leadership and good systems. There are lessons here that go beyond Australia.
The report by Danny Samson, Professor of Management (Operations Management) at University of Melbourne, entitled Innovation: The New Imperative, presents the findings of a large-scale survey of professional managers across Australia. It found that organisations perform better when management embrace a structured, planned, and organisation-wide approach to innovation.
A recent write-up on the study describes how organisations that successfully undertake systematic innovation generate a series of innovations that deliver business value.
Innovation can occur as the occasional “lucky break”, but no business should rely on such an approach.
Systematic innovation capability is the ultimate competitive weapon for organisations, as it has no ceiling on it, and can be applied in a broad range of ways, from achieving cost reduction through innovation in process management, to creating new streams of revenue.
Australia faces challenges in achieving and maintaining global competitiveness in terms of cost, service and quality.
As Australia looks to build its future beyond the resources boom, the research findings make it clear innovation is a means of achieving competitive advantage, and a key profit driver for successful organisations.
The highlights of the survey were:
- Innovation is increasingly seen as a means of achieving competitive advantage.
- Innovation performance is strongly linked to business performance.
- Sustainable and systematic innovation requires a holistic approach across a range of innovation activities in order to maximise innovation performance, from leadership through innovation, strategy and process management.
- There are significant differences between the top quartile (top 25%) and bottom quartile (bottom 25%) of innovation performers in Australia. These differences include the priorities given to innovation in business strategy, leadership factors, resourcing of innovation, measurement and cultural factors.
- The survey reveals specific innovation practices that are significant predictors of innovation performance including aspects of strategy and leadership; a strong customer focus; the embracing of risk and change; human resource management and a culture that supports innovation; strong innovation process management and a focus on sustainability.
- The survey also reveals innovation practices that are significant predictors of business performance. These innovation practices contribute to various aspects of business performance including revenue growth; profitability; long-term competitive advantage; productivity; and customer satisfaction.