Innovation is carried out by many Australian businesses both big and small. The ABS in its summary of IT Use and Innovation in Australian Businesses for 2005-2006, reported that 38.9% of Australian businesses are implementing innovation.
According to the report, approximately 21% of businesses are introducing new operational processes. About the same proportion (19%) is introducing new goods and services, while new marketing methods are being introduced by 14% of businesses. However, most of these are large businesses: 74% of those that implemented innovation employed over 200 people, while only 49% of those with 5 – 19 employees did so.
In terms of broad industry categories, those implementing an innovation during the period were manufacturing (45%), services (38%) and mining (36%)
Facts and Statistics
Results of the ABS 2005-2006 Business Characteristics Survey (BCS) revealed some significant statistics. In this survey, the Health and Community Services and Personal and Other Services were included as additional sectors. It also expanded the survey population by including those with 0-4 employees.
This change in the survey population and the level of stratification made the current results different from those of previous years so data contained in the two years should not be compared.
Innovation can be classified into four. These are product innovation (goods and services), process innovation, marketing innovation and organizational innovation.
Summary of the 2005-06 Survey (Source: ABS, 8166.0)
|
Employment Size |
Implemented Innovation (%) |
Innovation still in development (%) |
Abandoned innovation (%) |
Any innovative activity (%) |
| 0-4 |
31.5 |
9.5 |
5.9 |
35.4 |
| 5-19 |
48.8 |
15.4 |
8.4 |
51.6 |
| 20-199 |
65.5 |
18.6 |
8 |
67.7 |
| >200 |
74 |
28.6 |
9 |
76.5 |
| Total Businesses |
38.9 |
11.8 |
6.8 |
42.4 |
| Industry |
Innovation type |
||||
|
Goods/ services (%) |
Operational process (%) |
Organizational/ managerial (%) |
Marketing methods (%) |
Proportion of innovating businesses (%) |
|
| Mining |
11.3 |
17.4 |
23.1 |
10.6 |
36.3 |
| Manufacturing |
19.3 |
31.5 |
21.5 |
16.3 |
44.6 |
| Services* |
19.4 |
19.9 |
20.6 |
14.2 |
38.4 |
| Total Businesses |
19.3 |
20.8 |
20.7 |
14.3 |
38.9 |
* Calculated as a weighted average of industries in ANZSIC93 Divisions D to L, O, P and Q.
The basis of these innovation surveys, and the ABS definition of ‘innovation’, was the Oslo Manual (3rd edition, 2005, OECD/Eurostat).
“An innovation is the implementation of a new or significantly improved product (goods or services), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.” To be considered an innovation, the process or method must be new or a significant improvement of that already in place.
The Four Types of Innovation
- Product innovation refers to new or significantly improved goods and services as to their characteristics or intended uses. Examples are significant improvements in components, materials, technical specifications, ease of use, the software involved or any other functional characteristic.
- Process innovation refers to changes in production or delivery methods, including equipment and/or software and innovative techniques.
- Organizational innovation refers to new organizational methods that are implemented in workplace organization, business practices and external relations.
- Marketing innovation involves new marketing techniques that involve changes in product packaging or design, product placement, product pricing or promotion.
In summary, then, a significant number of large Australian businesses are innovative in nature, while smaller companies tend to be less so. Innovation is a must for any business that wishes to retain their market share, or even improve it, in difficult financial times such as these.
Innovation can save money and increase productivity, and there are few doubts that new product designs are attractive to the consumer.
‘Helping Leaders build great organisations”
(C) Daniel Lock.
