'Talent, not technology' is the key to innovation
Innovation is a key driver of productivity, jobs creation and economic performance.
Businesses in Australia experience a wide range of barriers to innovation, suggesting that policy to support innovation needs to be flexible and broad-based, the Institute of Public Accountants said in its recently released Small Business White Paper.
Talent, not technology, is the key, the IPA emphasised, warning that if wider skill requirements are not addressed there are likely to be bottlenecks created downstream in the process.
“Technical skills across the workforce, and particularly interdisciplinary skills that bridge areas of expertise, are particularly important for innovation and are often subject to market failures,” the IPA added.
How to be innovative
Despite the complexity of innovation, it is possible to abstract an underlying set of stages typically followed by inventive firms. These include:
- Searching for new opportunities. This typically involves firms searching externally for new markets, technologies or delivery mechanisms they can exploit by building on their existing technological capabilities and connections to customers and suppliers.
- Selecting which opportunities to support. Once a range of opportunities has been found, firms need to make strategic decisions, under conditions of uncertainty, about which options they will pursue and which options they will reject.
- Implementation. Once the strategic decision has been made, firms need to implement their strategy and allocate time, people and resources to ensure the process is effectively undertaken. Innovation is inherently uncertain, and this will typically involve formal and informal experimentation to develop new products and services that provide value for customers.
- Capturing value. Creating value for customers does not guarantee commercial success, as firms need to find ways to monetise the value they have created. Innovations, particularly disruptive innovations, often create non-monetary forms of value, such as improved brand recognition, which firms can also capture. Firms can capture value by learning from their experiences to improve their future innovation processes.
The IPA advised, however, that the steps will only be successful if business owners and their staff focus on building the business overall, rather than making what they do in their business solely a matter of habit.