The importance of innovation for Australian small businesses


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The importance of innovation for Australian small businesses

In 2012, Australian businesses that were innovative were 78 per cent more likely to report increases in productivity over the previous year.

Why should Australian small businesses be innovative? Firstly, because innovative businesses are more profitable than those that stand stilli. According to the 2012 Australian Innovation System report, Australian businesses that innovate were as much as 78 per cent more likely to report increases in productivity over the previous yearii .

However, being innovative doesn't necessarily mean that you have to re-invent the wheel. By definition, "innovation is the implementation of a new or significantly improved product (good or service), process, new marketing method or a new organisational method in business practices, workplace organisation or external relations"iii.

While "radical" or "new-to-the-world" innovation refers to creating an entirely new good or service, "incremental" innovation means "making modest improvements to existing processes, products or services"iv. In general, Australian SMEs are much less likely to generate new-to-the-world innovations than large companiesv. Even if your small business is not a corporation like Google, which can afford to let employees spend 20 per cent of their work time on developing new projects and ideasvi, there's still a lot you can do to become more innovative.

Incremental innovation can be achieved with an open-to-the-new company culture, and always looking for new ways to improve the offerings and resources you already have.

Tips to become more innovative

No matter if you're a tradesman, run a cleaning service, manage a small office or a retail store - innovation is not a matter of industry or company size. For small businesses, it's about incremental innovation: an open-to-the-new company culture, and always looking for novel ways to improve the offerings and resources you already haveiv,vii.

1. Stay on top of industry trends and competition: Use industry reports and study results to gain the latest insights into your sector, your customers and competitors. Sometimes it can be enough to adapt an existing idea to match your own business goals, or develop it further. For example, find out about the social media use of your target group, and integrate additional channels into your communication activities.

2. Get connected: A well-established business network can not only open doors to new business opportunities, but also to collaborations and the exchange of ideas that may help you develop new concepts to foster and grow your small businessviii .

3. Focus on improving existing processes and practices: As stated above, incremental innovation is all about improving the current status quo of your business. Analysing, re-evaluating and optimising your processes and operations can help you become more efficient, find new customers, reduce waste and increase profitsvii.

4. Make use of technology: New technology - both hardware and software - can speed processes up, and allow for more flexibility and productivity, impacting on your bottom lineix. Electronic invoicing, cloud-based groupware, CRM programs or implementing the use of mobile apps such as MindJet (mind mapping) or DocuSign Ink (electronic signatures) are only very few of many technical solutions that can help your business thrive.

5. Listen to your employees: Often, your employees are the ones who spend most time with your customers, so they are very likely to have great insights due to the direct feedback they get. Also, relating to the second tip above, your employees may have a business network themselves to exchange ideas. Don't hesitate to encourage your staff to share their insights, and give them the support they need to implement their idea, if it's feasible and in line with the company goals.


iAustralian Bureau of Statistics 2014, 8167.0 - Selected Characteristics of Australian Business, 2012-13, 18 September, viewed 20 January 2015,
http://www.abs.gov.au/AUSSTATS/abs@.nsf/mediareleasesbyReleaseDate/9E5E78C631736862CA257BEA0011C969?OpenDocument

iiAustralian Government, Department of Industry 2013, Australian Innovotion System Report, viewed on 20 January,
http://www.industry.gov.au/science/policy/AustralianInnovationSystemReport/AISR2013/wp-content/uploads/2013/11/AIS-Innovation-Systems-Report-2013-v3.pdf, p. 10

iiiOECD (2005) Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd edition, OECD and European Commission (quoted in Australian Government, Department of Industry 2013, Australian Innovotion System Report, viewed on 20 January,
http://www.industry.gov.au/science/policy/AustralianInnovationSystemReport/AISR2013/wp-content/uploads/2013/11/AIS-Innovation-Systems-Report-2013-v3.pdf, p. 13)

ivQueensland Government, Business and Industry portal 2015, Types of innovation, viewed 20 January,
https://www.business.qld.gov.au/business/business-improvement/becoming-innovative-business/innovation-types

vAustralian Government, Department of Industry 2013, Australian Innovotion System Report, viewed on 20 January,
http://www.industry.gov.au/science/policy/AustralianInnovationSystemReport/AISR2013/wp-content/uploads/2013/11/AIS-Innovation-Systems-Report-2013-v3.pdf, p. 9

viMediratta, B 2007, 'The Google Way: Give Engineers Room', The New York Times, 21 October, 4 February 2015,
http://www.nytimes.com/2007/10/21/jobs/21pre.html?_r=0

viiQueensland Government, Business and Industry portal 2015, Why business innovation is important, viewed 20 January,
https://www.business.qld.gov.au/business/business-improvement/becoming-innovative-business/why-business-innovation-important

viiiFitzsimmons, C. 2014, 'How to boost innovation: why small and mid-market businesses could trump start-ups', 15 April, Business Review Weekly, viewed 20 January,
http://www.brw.com.au/p/tech-gadgets/trump_could_boost_innovation_start_OI5FSjexmaJStnEq5sjh5I

ixQueensland Government, Business and Industry portal 2015, Innovation benefits of adopting new technology, viewed 20 January,
https://www.business.qld.gov.au/business/business-improvement/becoming-innovative-business/innovation-benefits-adopting-technology