Business innovation one step at a time

As a key driver of business, financial and economic growth, improving our nation’s level of innovation is something of an endless debate. How are we performing? What are the benefits of innovation for business owners and managers seeking growth? And how can Australian businesses boost innovation in our country?

The Australian Bureau of Statistics’ (ABS) report on ‘Innovation in Australian Business’ found the proportion of innovation-active small to medium businesses (SMEs) increased by 13 per cent in the year ending 30 June 2012. This was across four areas of innovation: good or services, operational processes, organisational/managerial processes, and marketing methods.

With small businesses representing 96 per cent of businesses in Australia, what happens within this sector has the potential to drive a vast improvement in our domestic economy if they are encouraged to further adopt innovation in their business.

Business innovation is something each of us can contribute to by making incremental improvements.

For example, there is considerable scope for small business to improve marketing through the use of online technologies. Depending on what research you read, anywhere between two thirds to four fifths of consumers will search online first when looking for a product or service, yet two thirds of SMEs don’t have a website. This means a significant number of local businesses are missing out on sales and marketing opportunities simply by not having an online presence.

Many business owners don’t have a solid business plan and only use their accountant for tax compliance, not realising the potential breadth of their service offering. A recent MYOB Business Monitor research found SMEs using an accountant for business advice and strategic planning, rather than just tax compliance, were 31 per cent more likely to see an earnings uplift last year. That’s a strong case to dig a little deeper and explore the possibilities of the relationship.

We know improving innovation leads to increased productivity and in turn has the potential to free up time for business owners to spend more time doing what they want. Whether it’s growing or maintaining their business health, spending time with family, playing golf, volunteering for a charity or something else entirely. No matter what aspirations they have, most business owners would understand the benefits of having more time in their day.

The ABS research I mentioned earlier indicates that the larger the business, the higher the rate of innovation. So, if we are to improve innovation we should also encourage micro and small business to scale up.

It is great that these businesses are innovating, but let’s find ways to support smaller businesses to be successful as they scale up. This could involve implementing technology to automate processes and free up more time to spend on sales and marketing. Or, it could be assisting them to target new markets closer to home or further afield with the support of organisations such as their local business chamber. It could even be simply partnering or merging with a similar or complementary business.

If we don’t nurture smaller and growing businesses, they won’t be employing people in the months and years ahead. We need to apply much greater focus to making it easier to run a business, and to recognising and celebrating the innovation of our smaller businesses. The enthusiasm, drive and passion of smaller business owners have a much larger financial and emotional, direct and ripple, effect on our economy than many realise.

Innovation doesn’t happen in a void. Now’s the time to talk about what your business or the company you work for could be doing better. Let’s collaborate to take the next steps.

Tim Reed is the executive director, CEO, of accounting software provider MYOB.