The much-talked about benefits of innovation in Australia has already delivered almost $70 billion to the Australian economy, according to the latest analysis.
And it has the potential to generate a lot more, according to the research from the Commonwealth Bank.
The report found that businesses with an innovation program generated an estimated average return of $405,000, for a total realised value of $69 billion to the Australian economy.
If all Australian businesses got that same return, innovation would contribute $215 billion to the economy, which is more than 10% of the value of Australian Gross Domestic Product in 2015.
Fostering innovation has been a major policy agenda for Malcolm Turnbull’s government. The prime minister launched his agenda, including incentives for start-ups, in December last year, with a $1.1 billion spending package, largely directed at government services and in tax incentives for venture capital.
The analysis for the latest research, launched today by federal science and innovation minister Greg Hunt, was done according to the Oslo Manual, an OECD recognised framework for defining and categorising innovation.
Under these guidelines, innovation is defined as introducing something new or making a significant improvement in one or more of four areas: business processes, products and services, organisational structure, and marketing practices.
“We found that nationally Australian businesses are achieving an innovation index score of 24, which means that on the whole we are on the verge of moving into the arena of true innovation,” said Adam Bennett, group executive, business and private banking at the Commonwealth.
Most businesses innovating are doing so in just one of the four areas where innovation can take place, with most companies focusing on their products and services.
But the benefits of innovation increase as companies innovate in more than one area, as this chart shows:
The top three traits of innovating companies are:
- Process — encouraging employees to ask questions that challenge (13%)
- Adapting — adapting your products and services to make the most of opportunities (13%)
- Philosophy — expecting employees to offer creative ideas for improvement (11%).
“Innovative businesses share common characteristics,” Bennett said.
These include experimentation, listening to staff and adapting to take advantage of opportunities as they emerge.
“What’s interesting is that these are not radical disruptive changes, but rather simple ways businesses can seek to move up the innovation curve, and realise value,” said Bennett.
The report says the most innovation-active industries are manufacturing (61%) and wholesale trade (59%).