Innovation and creativity — are they just buzzwords for business, or a case of ‘do or die’?
When you think of innovation, what immediately comes to mind? The first mobile phone, artificial intelligence or robot-assisted open-heart surgery?
Faced with such game-changing examples, it’s easy to understand how entrepreneurs feel overwhelmed by the practical costs and risks associated with innovation, competitive pressure and daily management tasks.
However, true innovation is about implementing new ideas to create value, not just creating breakthrough products or services.
Novel combinations of ideas applied to different business contexts and activities is where creativity comes into play and innovation really happens.
World Creativity and Innovation Day (April 21) was a timely reminder about the integral role innovation plays in business and spotlighted just how quickly we can fall behind as a country when we aren’t treating innovation as a ‘must do’.
An influx of digital disruptors and tech innovation has created an incredibly competitive global market, with Australia now ranked 20th on the Global Innovation Index.
Put simply, Australia’s business sophistication and knowledge, and its technology output levels, fall short compared to other countries.
Australian businesses are process innovators and earn a relatively modest proportion of income from the sale of innovative goods and services compared to other OECD countries.
Business organisations need to be smarter in managing innovation efforts to get more bang for their innovation-investment buck.
The professional services, media and entertainment, manufacturing and utility industries all face disruption, and here, Australia has fallen behind.
Innovation is happening at lightning speed with these established industries reshaped by the likes of artificial intelligence and augmented reality, chatbots, blockchain, robotics, big data, 3D printing and smart appliances.
According to the latest Australian Bureau of Statistics data, only 38.3% of Australian businesses invested in at least one innovation type for the year ending in 2017.
The highest proportion of these businesses were in the healthcare and social assistance, administrative and support, and rental, hiring and real estate industries.
While it is not the responsibility of governments to foster innovation at the firm level, the recent federal budget did little to encourage innovation and creativity among Australian organisations as a whole.
Responding to the budget, StartupAus chief Alex McCauley said Australia had lost its way on innovation policy, labelling it overly politicised and badly defined.
As consumers, Australians have a reputation for embracing and adopting new technology. Australia is one of the largest adopters of handheld computing devices and boasts a high disposable income per capita.
As a nation, Australia is a small, geographically isolated economy dominated by small businesses and lifestyle entrepreneurs seeking local competitive advantage through cost reduction rather than pushing the innovation frontier to capture world markets through new value creation.
These factors combine to make Australia a very lucrative target for digital disruptors in the growing global internet economy.
So, how can Australian business, both small and large, not only survive but thrive in this new and fast-moving global digital innovation landscape?
First, they need to understand how innovative technologies could potentially disrupt their current markets. Second, realise the opportunities these technologies present to not only respond to but create disruption. And third, rethink the dominant logic of how they do business by continually testing new combinations to innovate their business models.
It is concerning less than a third of Australian businesses in industries threatened by digital disruption invested in business model-related innovations. These industries include retail trade, information media and telecommunications, financial and insurance services, manufacturing, professional, scientific and technical services, wholesale trade, accommodation and food services.
This is because established larger businesses find it very difficult to implement new business models which require self-disruption in fundamentally shifting the way they do business. To do this requires ambidexterity — the ability to simultaneously exploit current opportunities while exploring and testing new growth opportunities which require new business models — a balance very few businesses are able to achieve.
The key is to think like a startup. Find a niche market begging for a radically new or better solution and find an effective business model that leverages digital disruption to efficiently deliver the value proposition.
It is not exceptional individual innovations that underpin rapid growth but rather the exceptional execution of an ordinary idea.