No Time for Complacency

And there are indeed some obstacles that must be overcome if innovation is to be applied successfully, including risk and the length of time required to achieve ROI in innovation. Standing out as one of the most prevalent obstacles among the participating companies was complacency on the internal front, often brought about paradoxically by the success of existing systems, which can mask the need to change.

"The issue of lack of confidence in the company systems, and the lack of skilled people to execute innovation productively and sustain it, were identified as significant hurdles to be overcome," the study found. "The obstacles of short-term focus and the constant pressure to deal with the immediate and urgent as opposed to the future were identified as frequent alibis that can easily stop progress."

Likewise, adoption of a scattergun approach to innovation can produce too many ideas and a lack of focus on how to deal with them. "The perception that 99 percent of ideas fail was enough for many businesses to place innovation in the too hard basket," the report states.

But innovation will not be stopped. It is pervasive, it is the active ingredient in transforming business, but it must be managed like any other business process. Study participants believe the challenge is to ensure that there is in place a repeatable and rapid means of converting ideas into business value.

"The difference in business experience in 2006 to that in previous years is its outcomes-based approach," the report states. "Business today recognised the need for a disciplined process where what is learned can be replicated and embedded systematically in the organisation." "Coupling ideas and outcomes, and harnessing creative thinking in a disciplined way to solve a real problem, is new. The challenge is to ensure that the disciplined process does not destroy creativity and innovation, which depends on unfettered and divergent thinking." All of which requires forward-thinking management. "The study confirms that courage, vision, and leadership are required for companies to be innovative," Bickerstaff says. And it could all be even simpler if governments became motivated to remove red tape that can stifle innovation just as surely as internal problems. Participants in the study believe there is a crucial role for government in helping to overcome the problems presented by compliance requirements, regulations, and some bureaucratic procedures.

"Innovation only results in sustained productivity and prosperity for both companies and nations when it involves transforming the way business is done. This is a challenge that the leaders of both business and government share," says the foundation's Kennedy. "To take Australia's innovation journey forward, middle market firms believe business and government need to collaborate to create an environment that helps smart enterprises innovate — that is pursue new opportunities and manage the risks and uncertainties that are inherent in any innovation."

The report Reality of Innovation Unzipped can be accessed online here.