Queensland businesses are among the most innovative in Australia, according to the second annual Business Insights report from Commonwealth Bank.
Drawing on a survey of almost 2,500 businesses with an annual turnover of at least $500,000, the report sees Commonwealth Bank define its own Innovation Index, testing 15 core elements of innovation across management capability and entrepreneurship. Management capabilities are split across three areas – process, people, and philosophy – while entrepreneurship behaviours include seizing opportunities, taking risks, focus, and adapting.
In assessing these factors, the report has put the national innovation index at 32, placing Australia in the ‘Innovating’ bracket; last year’s score of 24 classed Australia as ‘Improving’.
While every state and territory improved its score from last year, Queensland came out on top with a score of 37.7, with Western Australia at the opposite end of the scale with a score of 26.7.
With this range of scores, businesses across Australia can be classed as ‘Adopters’ of innovation: they may have a cautious approach to changes and innovation, and are reluctant, needing evidence and reassurance, however they will follow others once they understand the benefits. Adopters sit above Resistors, but below Harnessers and Disruptors.
Looking at innovation by business size, small businesses achieved a score of 31.1, while medium businesses have scored 35.2, and large businesses, those with turnover of $20 million or more, have scored 32.1.
The report has also examined the drivers of innovation among ‘innovation active’ businesses, assessing whether it is proactive or reactive forces that are driving change, and found that the major drivers are in fact proactive.
Fifty-three percent of innovation active businesses are proactively looking to improve their efficiencies and productivity, while 43 percent are looking to improve the quality of their offering, and 39 percent are taking advantage of new or emerging technologies and solutions.
Looking at reactive reasons, 29 percent of businesses stated they are innovating in order to keep up with what their competitors are doing, while 27 percent stated they are reacting to increasing competition or a changing competitive landscape.
The top area for investment is technology, for 49 percent of businesses, with sales and marketing, and staff training and expertise rounding out the top three with 48 percent and 47 percent of respondents investing in these areas, respectively.
The report also underscored the importance of empowering employees to drive innovation, finding that innovative businesses share four key traits when it comes to theirs taff: they share a focused vision, invest in their people, source new blood, and rethink work allocation.
The estimated additional earnings from having ‘implemented innovation’ rose from an average of $405,000 in 2016 to $592,000 in 2017, with this pushing $110 billion into the economy, up from $69 billion last year. Just over a quarter of the businesses survey put their estimated additional earnings between $100,000 to $500,000.
According to the report, the more businesses invest, the more time they expect to wait before they realise a return on their investment. The survey found businesses with an average investment of $239,000 expected to see a return within six months, while those expecting to wait at least three years had invested an average of $1.4 million.
Adam Bennett, group executive, business and private banking at Commonwealth Bank said, “As innovation in Australia continues to take hold, the recent spike in the number of home-grown Disruptors will likely increase as businesses continue to face new challenges in a competitive environment.
“As we head towards one in 10 businesses displaying behaviours that support peak innovation performance, we expect this to lead to a positive impact for businesses’ bottom lines, and greater productivity at a macroeconomic level.”