In case you don’t pick up the Australian Financial Review, you may have missed some recent CEO-focused stories about innovation – David Thodey’s “Thodey presses for a culture of Innovation”, Ian Narev’s “Challenge to CBA execs”, or Jennifer Hewett’s, “Adapt and Innovate. Or die”.

PwC’s recent reports indicate 86% of Australian business leaders agree innovation is the main lever to create and more competitive economy, 84% of Australian business leaders think that innovation is the best way to create jobs, and 91% of Australian CEOs have the strongest belief that technology will be the biggest transforming trend for their business.

Innovation and how to measure it

Innovation can refer to a process, a culture or a result. Importantly the difference between invention and innovation is the focus of innovation applying to getting something to market.

It may be a business model, product or service innovation.  Ideally there can be one of each example, with a model, (iChat), breakthrough (iTunes for self publishing and music distribution) and radical innovation (drones, 3D printing) in a portfolio of successes.

Australia is estimated to be $28 billion behind other markets in commercialising innovation.

It’s our belief innovation is a commercial imperative, and tangible, repeatable, measurable and transferrable.  It can be measured in a range of lead and lag indictors, including brand and market perception, new ideas tried, commercialised or failed and learnt from, the number of innovative new products or services to market, new collaborations or partnerships, diversification of growth areas, and the tools and techniques used.

A map for considering various innovation initiatives

In the past 12-18 months Australia has progressed in the range of start up investment funds, activities and accelerators from corporates (think Westpac, Commonwealth Bank, Telstra, Coca Cola and Gov Hack, to name a few).

These are excellent initiatives to drive start ups in Australia, rather than at the heart of corporate growth or productivity step change.  The same could be said for the rise of Agile work practice, an approach we agree is the preferred means compared with business as usual, waterfall delivery, though again in itself will not exemplify innovation growth since it doesn’t question or pivot significantly from the brief given.

Given most organisations understand the innovation imperative, a common diversion for organisations is to explain what is in place. We’d recommend considering the effectiveness in real terms of what is in place, and in context, what other initiatives might yield as or greater results.

The following are complimentary lenses for accelerating innovation, each yielding differing results and emphasis:

1)    The Role of the Individual

Whether it’s Henry VIII creating a new church or Orville Wright who didn’t have a pilot’s license, the empowerment of us as individuals is at the heart of how we strive innovate.  What can you do with the funding and mandate you have? Professor Paddy Miller, whose recent HBR article on stealth innovation, is a good read.  (Professor Miller will be with us toward the end of April).

2)    Re-imagining your Organisation – the way you’re enabling innovation

Notwithstanding the above, corporate and government innovation will most certainly require the recreating of business processes and culture.  A recent PwC global research piece indicates those with a deliberate strategy to innovate expected 62.5% growth over the next five years, double the growth of that expected by those without a deliberate strategy.

Organisation wide change benefits from an innovation strategy that reflects business values and goals, and establishes the DNA of the company.  Factors include metrics and motivators, leadership, culture and talent, process, portfolio (organic vs M&A), physical space, tools and techniques (such as design thinking, agile, lean startup) and finance, tax and R&D rebates for innovation.

3)    Community engagement

Building on the hygiene factors above, Jack Welch comes to mind. “When the speed of change outside and organisation, is faster than the speed of change inside an organisation,, the end is near”.  We cannot innovate faster than 5 billion people with computers and peer to peer services – so we need to be connected to the pulse of it to ensure collaboration and relevance.

Fortunately for us, every second, consumers are openly sharing their feedback and ideas, advocacy and disdain.  In this category, ask how you are connected to consumer feedback? How are you responding to feedback, leveraging competitor inadequacies, co-creating with developers or partners, or engaging in human centred design.

4)    Foresight and collaboration for future growth

In the above points we’ve addressed individuals, organisation environment and community engagement, the fourth lens we suggest is for governments and corporates to explore new, forward looking and emerging growth.  The question is how to take an undefined opportunity, and come out with a problem worth solving, with some level of leadership and sustainable advantage, that’s prototyped and pivoted, with the commercial constructs and go to market documented.

We call this fast track innovation, strengthening the design thinking process in three places to increase the likelihood of success for corporates, deploy ability, commercialisation.

As organisations have more assets at their disposal, and take longer to get to market, this is an opportunity to investigate major technology and society trends and seek breakthrough innovations. Examples may include connected cars, clean tech, aged care monitoring, education and the internet of things.

5)    Social/Digital Intelligence

Social and digital intelligence adds new value to almost every aspect of innovation.

At an organisation level, for example Yammer and crowd support. At a community engagement level, digital intelligence exposes feedback, sentiment and insight, and at an exploratory level, it can be leveraged to test new ideas and feedback cycles on campaigns or trials.  In our teams, digital intelligence is part of all innovation frames of reference.

6)    Startups – increasing collaboration and engagement

Start ups can be far more effectively leveraged for growing the Australian economy, frugal innovation, growth and investment or speed to market.

Inside an organisation, startups may be considered as part of M&A, investment or procuring newly emerging solutions. Corporate and government procurement of startup services in Australia is one of our top recommendations and focus areas of ours.  As a director of the AT&T Foundry, a Silicon Valley Innovation centre, we found strong success in reviewing over a thousand startups a year to look for innovative ways to accelerate internal business functions.  Examples included video billing, security, ivr and augmented reality in retail.

Outside an organisation, start ups and developers are a powerful path to value in open innovation, leveraging APIs, and solving problems worth solving once defined and communicated by large organisations.   Think Kaggle, NASA Space Challenge with 9000 people 700+ submissions, or a range closer to home such as Transport for NSW App Hothouse.

7)    Innovation Hubs and Centres

Finally, innovation centres and hubs have the purpose to provide a unique environment to stimulate, inspire and accelerate change.

These may be internal as persistent spaces to drive design thinking or agile across a range of projects, community driven for cross pollination such as co-working spaces, incubators or accelerators, or more growth focused, such as deep collaboration and prototyping of new growth areas which may be disruptive to the core of the organisation, in the interests for an organisation to disrupt themselves.

In Australia, PwC calculates Australia has a technology trade deficit quantifiable at $28billion, where we are lagging behind commercialising our innovations.

General tools of the innovation trade:

Finally, you’ll see from the infographic we’ve outlined four commonly used approaches around new thinking and innovative digital delivery.  Generally there is some overlap, however broadly:

Customer experience refers to human centred design, with tools such as journeys, personas, wireframes and ‘web’ design.

Design Thinking is best utilised for approaching constantly changing, undefined problems and leverages human centred design, empathy, what if and iterating through prototypes to test results and continually validate and iterate.

Agile is a project delivery approach involving elements of the above, with less questioning of the “brief”, and more about iterative, cross functional teams. Individuals and interactions are prioritised over processes and tools, working software over comprehensive documentation, customer collaboration over contract negotiation, and responding to change over following a plan.

Lean Startup is an approach involving a kind of scan, focus and act, valuable especially for identifying an initial minimum viable product and investing scarce resources with an awareness of customer value propositions, unique selling points, channels, costs and revenues.

In summary, a range of approaches and perspectives can be taken toward innovating, the areas Australia probably has under realised include corporate – startup collaboration, accelerating innovation for growth around future trends, and the structure and rigour to balance commercial metrics with creativity through testing and learning.

 

 

Contributor

Kate Bennett Eriksson

Kate is PwC Australia’s head of innovation and disruption.

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