Australia’s innovation paradox: Innovation not a core value for 75% of Australian organisations, yet most business leaders believe they have the skills for innovation

by Ricoh Australia 31 January 2019

We need to better align the role or purpose of innovation with the perceived capability to deliver outcomes

Sydney, 31 January 2019 – Ricoh, a leading provider of smart workplace technology, today announced the findings of its Workplace Innovation Index, a new look into the challenges Australian organisations face with driving innovation and adapting to change.

In a survey of business leaders conducted on behalf of Ricoh by StollzNow Research, only one-quarter (25%) believe innovation is core to their business, however, a solid 40 per cent believe they must innovate for survival. Additionally, nearly two-thirds of business leaders believe they have the capability to drive innovation programs.

Australian organisations have the talent to innovate, but lack a strategic focus or sense of urgency to bring new ideas to life.

“In today’s rapidly changing economy, innovation is a must and should not be seen as a ‘nice to have’

While slightly more than one in four business leaders (26%) say innovation is important, they concede the organisation is tied down with a need to focus on current operations.

“In today’s rapidly changing economy, innovation is a must and should not be seen as a ‘nice to have’ or a ‘department’,” Ricoh Australia, CEO, Andy Berry says. “The research reveals significant disparities between what Australian organisations are pursuing and what is seen as important.”

“We know innovation can deliver operational improvements and new business opportunities, but we’re not elevating its strategy value, from the boardroom to front-line staff,” Berry says.

Leadership from the CEO and unit managers is vital for creating an innovative workplace and the study found an overwhelming 82 per cent of business leaders believe innovation starts with senior management.

The research highlighted how Australian organisations are managing innovation:

  • There is a skills perception with the disconnect between opportunity and capability – innovation is not core for 75 per cent of Australian businesses, yet nearly two-thirds of business leaders believe they have the capability to drive innovation programs.
  • In the fast-paced digital economy, innovation is required to fend off competition. Nearly half (40%) of Australian business leaders believe they must innovate for survival.
  • The two biggest threats to innovation are budgets and available resources (24%) and risk aversion by staff and management (22%).
  • To develop and innovation culture, there needs to be more focus on people and processes, and how technology can support this change.
  • Fewer than one third of organisations always involve staff in reviewing innovation outcomes. Hiding the benefits (or challenges) with innovation does not help foster the culture required for ongoing change.

Keeping up with global change

How innovative is Australia as a nation? According to the 2018 Global Innovation Index , Australia ranks down at number 20 in the list, behind much smaller economies such as Ireland and Luxembourg. We are also the first in the list to be rated with an income group ‘weakness’, with an overall score of 52.00 (68.40 is highest, 15.00 is lowest).

Despite our stable, medium-sized economy (Australia is ranked 13 for GDP) and good ideas, we still have a lot of work to do to lift our innovation prowess to stay ahead of the fast-paced global economy.

Global research by IDC found 86 per cent of organisations are still “laggards” or “followers” when it comes to innovation. And only 14 per cent are above average or “leaders”.

In Australia, Ricoh’s Workplace Innovation Index scores Australian companies 68 out of 100, which is less than ideal and shows we have a long way to go to develop the digital workplace – an essential building block for innovation.

The index is an average of key workplace efficiency and innovation attitudes. Factors include attitudes towards innovation; processes for evaluating needs of staff; internal processes; the value of collaboration; and senior management’s vision for introducing innovation programs.

While the Australian business climate is faring well, we are not exploiting innovation to its full potential.

Innovation means productivity

Innovation is often associated with “big ideas” but Australian organisations have a lot to gain by exploiting innovation for productivity.

Innovation is a goal but is often stifled by the immediate requirement for day-to-day productivity.

To uncover where innovation-productivity gaps lie, the Workplace Innovation Index looked at how Australian organisations are managing their internal systems and processes.

The findings show that most (60%) Australian organisations do not have a required level of clarity around systems and processes and this is holding back increases in efficiency.

Nearly twice the rate of senior executives are more likely to feel internal policies and processes are ‘clear and consistent’ compared with their line of business manager colleagues, indicating a clear disconnect between the C-suite and those who are closer to the coalface.

Worryingly, nearly two-thirds (61%) of business leaders report productivity loss when new systems and processes are introduced. This is a clear indicator that better implementation and change management is needed when new systems are deployed.

Most (65%) Australian organisations are in the middle of, or planning to, reorganise internal systems and processes, indicating the appetite for transformation is alive and well, which can easily lead to more innovative practices.

A collaboration culture is calling

Australian organisations looking to bridge the gap between innovation skills and outcomes must look towards a new future of collaboration and cultural change.

The research showed how better collaboration can result in real change:

  • A little more than half (51%) of the respondents reported their organisation involves staff in the introduction of new technology “sometimes”, with 12 per cent saying staff are “rarely” involved.
  • When staff are always involved in new technology introduction, the productivity loss rate reduces to 57 per cent.
  • A high 43 per cent reported having “slightly fragmented” systems and processes, with 14 per cent having “a patchwork of tools”.
  • Organisations need better ways of collaborating and communicating. And there remains a considerable lack of consultation with staff when it comes to having the right tools to work together.
The clearer we can explain why we are changing, where we are heading, or how we will get there, the more our people will trust us to lead them there.

Australian organisations have collaboration technology available, however, more than one-third (36%) of business leaders say the organisation does not use collaboration tools in an integrated or systematic way.

A culture of innovation and change will be developed with the right people and collaboration technology. Even with the best ideas, innovation can easily get caught up with legacy business models or a sheer reluctance to change.

According to Ricoh’s Andy Berry, the culture of any large organisation cannot be shifted unless your people are willing to change, no matter how solid your business case or how stark the threat of disruption.

“The best thing we can do as leaders is to answer the big inevitable question: Why? The clearer we can explain why we are changing, where we are heading, or how we will get there, the more our people will trust us to lead them there,” Berry says.

Methodology

StollzNow Research conducted a survey of business leaders on a range of topics, from attitudes to innovation, to hurdles and barriers to change. The sample consisted of an even spread of C-suite executives, business unit managers and middle managers in companies with 100 or more staff. All differences in responses were assessed for statistical significance at the 95% confidence level. The findings provided insight into what business leaders need to change to drive innovation and transform their organisations.