Australia climbed two spots on the Global Innovation Index this year, rising from 19th position in 2013 to 17th in 2014. It’s a good result, but it’s worth remembering that there are still 16 nations ahead of us.
In an era when start-up companies, unencumbered by legacy business structures or systems, can quickly overrun a market, the need for enterprise innovation has never been more acute.
Finance sector disruption has been particularly rife and has already led to Commonwealth Bank of Australia, National Australia Bank and Westpac setting up innovation centres to encourage employees to experiment with new ideas and processes.
CBA’s Innovation Lab, in the heart of Sydney, was set up as an ideas incubator and accelerator for internal bank teams, partners and customers. As chief executive Ian Narev noted at its launch, for a modern bank, “being able to be leading edge … is a life and death matter”.
Enable innovation – then support it
Former National ICT Australia (NICTA) chief executive Hugh Durrant-Whyte says that the finance sector is among the most innovative in Australia because of the constant assault by disruptive innovators, especially in the area of payments.
He believes that setting up a central location as a focus for innovation is important but it needs to be backed by an innovation-supportive culture. “Sometimes that’s challenging because companies hire people and their key performance indicators are based on ‘don’t make mistakes’,” he says.
More innovation-supportive cultures take a different tack. Durrant-Whyte says NICTA has worked with a company’s senior manager “who made it his job to go to different business units and find a way to destroy them” – he would show how technology could radically change the status quo. “People feared him at first, but because of that the whole company was always innovating.”
In contrast, another organisation would attempt to innovate by first writing a business plan that defeated its object. “If you want a step change in the way you compete … rather than incremental innovation, there needs to be at least some portion of risk,” Durrant-Whyte says.
A note of caution
Telstra’s director of technology, strategy and innovation, Ben Spincer, cautions companies against attempting to mimic start-ups in the search for innovation. “We are not a start-up, we are a $25 billion company and that’s the biggest opportunity and hindrance,” Spincer says.
He adds that the innovation challenge for large enterprises such as Telstra is “to foster creativity and innovation in an organisation that has a propensity to be cautious and siloed”.
Innovation is for everyone
Spincer says a radical rethink of corporate culture is required to ensure bottom-up momentum for creativity and innovation and top-down support. Success, he says, demands that enterprises identify strategic priorities then democratise innovation by shedding command and control structures.
To nurture innovation, Telstra last year created an online platform: called the Innovation Hub, it encourages employees to submit an idea and receive support for further investigation.
“If you want a step change in the way you compete, rather than incremental innovation, there needs to be at least some portion of risk.”– Hugh Durrant-Whyte, Chief Executive, National ICT Australia
“This has been as much of a tool for cultural change as for innovation,” Spincer says. He describes his role as “curator of innovation” in the enterprise, adding that innovation itself is a task for the entire workforce rather than the chosen few.
“The moment you focus on a small team they will inevitably lose touch with the rest of the business, which will revert to business as usual because they assume that team will be responsible for innovation,” he says. “This needs to be in everyone’s KPIs.”
Hugh Durrant-Whyte's recipe for innovation
- A number of smart people from diverse backgrounds
- Enough funding to let them focus on innovation rather than grant proposals
- Combine smart people in a porous enterprise that allows them to breathe and share ideas freely
- Sprinkle with funding throughout the innovation process, rather than adding it all at once
- Leave the mixture to bubble alone, skimming off the good ideas as they rise to the top