The numbers you need to convince your boss that innovation is worth it
I’m a big fan of innovation. This seems fitting given my job title has the word ‘innovation’ in it. If you are reading this, then chances are that you are a fan of innovation too! However, chances are also quite high that you know at least one person within your organisation who is not a fan of innovation. They may even be an active sceptic of innovation and perhaps they are your boss.
This can provide a sticking point if you: a) have the title of Innovation Manager and are responsible for instituting innovation within your organisation or, b) are a passionate individual who is trying to drive innovation within your team. Dealing with sceptics comes part and parcel with the innovation role. And we all know that sometimes, some good hard stats are the best way to get your foot in the door with that innovation sceptic that you need to win over.
Luckily, at Inventium we have a soft spot for reading huge amounts of information, often presented in research reports and meta-analyses, and pulling out the key learnings in order to benefit you, the passionate innovators! The data below comes from an epic (in terms of length and impact) report – the Australian Innovation System Report 2017. I’ve done you a favour and picked out my favourite bits and pieces. Consider the following your Cliffs Notes and get these numbers on your CEO’s desk next time they say “Innovation is a buzz word. Let’s just focus on doing what we already do better!”
- For the majority of industries in Australia, if you are not innovating then you are the exception when compared to your competitors.
- Overall, 48.7 per cent of Australian firms in the sample identified as innovation-active (meaning, they have attempted to develop or introduce an innovation in the last 12 months) – a high proportion by international standards. Innovation activity is most common in Manufacturing (58.3 per cent) and is increasing most rapidly in the Arts and Recreation, Health Care and Construction industries.
- This is a growing trend – highlighting that innovation is becoming increasingly important in Australia.
- The data is in – innovation drives improved financial results such as profitability and sales.
- Innovation-active firms are more likely to report consistent increases in sales, profitability, productivity and firm size compared to firms that don’t innovate.
- The type of innovation invested in also matters. The report references research conducted for the Office of the Chief Economist that found innovation in goods and services increased firm growth by an average of 3.3 percentage points, while innovation in marketing increased turnover growth by around 4 percentage points.
- The impact that innovation has on growth increases if you are a persistent innovator, as opposed to a one-hit-wonder – so basically, the more you do, the better the results!
- Collaboration represents a huge development area for Australian organisations.
- The benefits of (external) collaboration are manifold such as pooled resources, shared technical and commercial risk and the ability to capitalise on diversity.
- A study of 7000 Australian SME’s found that collaboration on innovation increased annual productivity growth by 4.1 percentage points.
- My recent experiences in Silicon Valley support this, with executives from some of the valley’s most successful tech giants encouraging and facilitating collaboration with competitors in order to solve industry-wide customer problems and frustrations.
- Unfortunately, when it comes to business to business collaboration on product and process innovation, Australia ranks 25th out of 32 OECD countries. The report references research conducted by the OECD across 2015-16, that found roughly 86.3 per cent of Australia’s innovation-active businesses undertook no collaboration at all. This means that Australian organisations are significantly disadvantaged when it comes to reaping the benefits of collaboration.
In my view, these findings provide a strong case for innovation and will give you some guidance on where Australian companies need to be focusing their innovation efforts moving forward.
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