Australian business failing to innovate

| July 4, 2016

Despite 80 per cent of mid-sized Australian business CFOs claiming innovation is a priority for their business, an alarming 32 per cent have not allocated any funding to innovation over the next 12 months.

A survey conducted by American Express among CFOs of 252 mid-sized Australian companies found innovation is crucial for businesses, but many organisations have failed to meet their innovation goals, often due to lack of a plan for the future, or a “game plan.”

The American Express CFO Future-Proofing Survey report found 23% of mid-sized companies do not have a game plan. Half of those companies predict zero growth within the next 12 months, despite 69% of CFOs indicating growth is a business priority.

Surprisingly, businesses without a game plan believe innovation is done in an ad hoc manner rather than being strategically planned.
 

More than 50% of organisations see themselves as not evolving as quickly as they need to, and 40% of organisations have failed to develop a new product or service innovation in the past 3 years.

Amex found a well-developed plan for the future leads to growth — 83% of companies with a long-term and 79% of companies with a short-term game plan targeted growth in the next 12 months. Only 49% of companies without a plan expect growth in the next 12 months.

“Those [businesses] with a longer-term game plan are more confident than those with a short-term one. They are less risk averse, set more ambitious growth targets and are ultimately more successful, responding to new market opportunities, and undertaking radical as well as incremental innovation. In short, taking a long-term view is a key indicator of higher growth and success,” concluded the survey.

Funding was another key concern when it came to innovating, with 60% of CFOs saying access to capital for growth was a challenge. Thirty per cent of mid-sized businesses are investing more than $100,000 in innovation this year, while 38% are investing less than $100,000.

According to OECD innovation rankings, Australia is ranked a dismal 21st out of the 32 surveyed countries. However, CFOs are optimistic, with 80% believing that the Government’s Innovation and Science Agenda will improve the position of Australian businesses on a global scale.

There’s research to support the role of the Government in fostering innovation. Eighty two per cent of CFOs believe that “the Government plays an important role in helping businesses innovate.”

The OECD also claims “firms that receive public support for innovation invest 40-70% more in innovation than those that do not.” Public financial support includes tax credits, grants and loans.

Some companies are taking measures to become more innovative. One NSW property company with a turnover of $10M-$50M stated: “We’re going to employ an innovation person. So we’ll definitely be investigating the potential for R&D concessions [from the government].”

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Megan Boehm

Megan Boehm is an intern at First 5000. Megan studies public relations at the Purdue University in Indiana, United States.