Innovatia

FIRMS MUST EMBRACE INNOVATION FIRST Science and research provide new opportunities for Australia to change its business culture, and governments can facilitate greater activity, but innovation performance depends on actions in business, according to Mark Dodgson . M ost innovation in every nation happens

tive technological change. Science and research provide new opportunities and governments can facilitate greater activity, but innovation perfor- mance depends on actions in business. Firms are adjusting to progressive movements such as #MeToo and Black Lives Matter, and to a majority-millennial workforce with evolved expectations of the working life. Pre-COVID-19, moves were afoot to rethink the purpose of busi- ness amid growing evidence that addressing so- cietal issues and stakeholders’ priorities helps produce long-term value. A new approach to in- novation has to be part of this reformation. The US Business Roundtable of leading CEOs questioned the singular pursuit of sharehold- er value, as opposed to the creation of value for stakeholders including employees, custom- ers, suppliers and the broader community. The World Economic Forum’s “Great Reset” is mar-

shalling support for a fundamental reset of the foundations of the economic and social system, providing a framework for the rethinking and reshaping of business purpose and behaviour, and the creation of a more equitable, sustaina- ble and resilient future. What is to be done? Australian firms have to rethink and reset their in- novation strategies, processes and practices. This will require the search for new opportunities and the astute application of novel governance ar- rangements, different organisational structures and more appropriate performance metrics. Universities have a role to play in creating new options for the future, though business schools need to collaborate with firms and shift training imperatives towards fostering skills in innovation and entrepreneurship.

approaches, with the bulk of activity devoted to in- cremental changes, a proportion directed towards more substantial initiatives, and a small element designed to explore future options. Even the most innovative firms need collabo- ration – with suppliers, customers, other firms and research institutions. Successful firms have innovation strategies and effective processes in place to manage innovation, including in R&D and new product and service development, linking them with business objectives. They also have supportive governance structures, typically involving board-level responsibility for innovation, regular reporting on performance and clear and consistent articulation by leaders on the importance of investment in innovation. Such firms percolate the understanding that innovation is everyone’s responsibility and cir- cumvent obstacles to change. What is new? Firms are navigating the turbulence created by the pandemic, threats to global trade and institu- tions, political and social polarisation, and disrup-

in firms. Australian businesses have a mixed record in innovation. We have some outstanding successes, for example, in parts of the mining, food and health industries, some service sectors and technology start-ups. However, we simply do not have enough of them to rebalance the economy in the face of the challenges that lie ahead. Amid the re-assessments taking place since COVID-19, there is a priceless opportunity for businesses to rethink how innovation is managed and, more fundamentally, reassess its nature and purpose. Factoring in ongoing political turmoil and the climate crisis, conditions are prime for a fundamental reset of innovation in business. What do we know? Research over the past 70 years has found that in- novative businesses live longer, grow more and generate larger profits. Innovation is found in new products and services, operations and production, organisational structures, paths to market and business models. Innovative firms adopt portfolio

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INNOVATIA

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