A recent study conducted by the AIM and the University of
Melbourne found that poor business leadership was the main reason organisations
failed to innovate and thrive. The survey involved over 2000 professional
managers across Australian for the purpose of determining ‘systematic
innovation capability’ within their organisations.
According to the report, Innovation:
The New Imperative, businesses “…perform better when management embraces a
structured, planned and ‘whole of organisation’ approach to innovation.”
Such systematic innovation allows businesses to innovate
frequently rather than occasionally, and gain competitive advantages and long
term benefits.
The survey found substantial differences between the best
and worst performers in the innovation arena. Many factors related to business
leadership and organisational culture. The report lists 5 factors that are
linked to systematic innovation. In short, these are:
- Proactively looking for innovative solutions to customer problems creates business opportunities.
- Stimulating creativity in workers and supporting innovation with resources and processes that allow for experimentation.
- Innovation is measured and part of the key performance indicators.
- Contribution towards innovation is recognised with personal incentives so that being innovative is rewarded by personal gain or recognised achievement.
- “Emphatic leadership of innovation behaviours and culture works wonders.”
If you’re interested in the topic of business leadership,
and in creating an innovative culture in your business, the full report on the AIM website will make interesting reading.
Innovative businesses more likely to prosper
Commenting on the survey findings, CEO of AIM (Victoria
& Tasmania) Tony Gleeson said:
“We find that firms with proven innovation performance
are three times more likely to have higher revenue growth, profitability and
productivity. Such firms are also three times more likely to report higher
levels of cash flow, cost advantages and long-term competitive advantage.”
He goes on to suggest that with the days of the mining boom
almost over, it’s time for business leaders and managers to take a fresh look
at their business models and how well they encourage and support innovation.
Obstacles to innovation in business
Survey participants were asked what they considered to be
the main obstacles to innovation in their organisations. Lengthy development
times, a risk averse culture, and the lack of a link between remuneration and
innovation were the top three factors nominated.
Analysis of results generated a list of ‘building blocks’
for innovation. These were:
- Strategy & leadership
- Customer focus & open innovation
- Orientation to risk & change
- HR Management, training & learning
- Sustainability
- Management of innovation processes
- Culture & Communication
- Operations & partnerships
- Knowledge & technology
Business performance predictors were developed for each of
the above categories. Under strategy and leadership, predictors included
management involvement in innovation projects, decentralised decision making
processes, and a business strategy that prioritises innovation.
Could your business be more innovative?
Small and large businesses can benefit from innovation, and
from strong leadership that encourages innovation at every level. In fact,
systematic innovation may even assist smaller enterprises to gain an advantage
over larger competitors.
With this month’s theme for Chamber business
networking events being ‘business leadership’ and the March theme ‘growth
and innovation’, it’s an opportune time to consider how you can hone your
leadership skills and business strategy to make your business more innovative.
As the above report’s title indicates, innovation is the new ‘must have’ factor
for long term business growth and profitability.
If you’re an Australian business owner and not yet a member
of your local Chamber
of Commerce, do consider joining – most chambers offer excellent
opportunities for developing leadership skills, and for exchanging information
and ideas with other business owners. Active
membership is a great way to expand your knowledge and open up new
possibilities that could lead to innovation and growth in your business.
