Turnbull’s Innovation Nation – “not just for start-ups”
Hello everyone, great to be here.
When Barbara (Simon) first asked me if I could speak on innovation at the CIO executive council, I was at first a bit hesitant, for its the CIO’s of our nations corporates that their organsiations look for leadership when it comes to innovation. They are in fact the custodians of innovation of most Aussies businesses.
Yet I am also cognisant when it comes to innovation Australia has a poor record in global terms, our corporations have similarly poor record when compared with their international counterparts. In fact in the OECD we have a few records we can’t be too proud of.
As a nation our country ranks no 17 on Insead’s global innovation index. To put the ranking into perspective, if we just look at how we fair geographically Australia ranks behind Singapore (7), Hong Kong (12) and South Korea (13) and even New Zealand (15).
Innovation in the corporate sector reflects this, with only 18% of Aussie corporations having a highly aligned innovation strategy, where as 44% of international businesses are. We also have the lowest levels of collaboration between Industry and research in the OECD. OECD figures also show that only 6% of all Australian businesses have record of collaborating internationally while the OECD average was 3 times that.
For years Australia has rested on the laurels of our mining boom. We can do so no more. Thankfully our new prime minister Malcolm Turnbull gets this stuff, and one of the first acts was the announcement of the landmark innovation statement to the Nation on 7th December 2015. Innovation now is on the national agenda and no doubt innovation now will be on the corporate agenda as well. Now more real as opposed to the lip service of the past.
So how does the Aussie corporation innovate and change our current paradigm amongst the silos’s, the risk averse cultur where failure is frowned upon and finger pointing thrive. Among the politics, the bonuses and current remuneration structures… who would be willing to bell the cat ? that would be a great risk.
But the risk of not innovating is greater, there are hundreds of examples around us, technology is disrupting every industry, no industry is safe no company is safe, how ever big or small, when the paradigm shifts everything goes to nought… Some of the innovations in the fintech area can have serious ramifications on our financial sector for instance which has been a gold mine for dividend seekers in past decades. Futures of the big retailers of the likes of Woolworths and Coles, as big as they are from an Aussie perspective cannot rest on their laurels and not let innovation be front and centre of their corporate agenda.
In this light I would like to take a look at the market capitalisation and the wealth creation of some of the most innovative businesses in the world.
Apple has a market capitalisation of 657Billion as at 8th December 2016. While may many nay sayers will then say, but yet apple is different they are apple and its all because of Steve Jobs and so on… yet .. if you look at the graph below you will see Apple did not always enjoy such an enormous market share. The chart below courtesy Capital IQ will show in 2004 Apple’ market share was nearly 1 or 2 % of what it is today and in fact Apple market share from 1982 to 2000 shows little growth as per the chart below courtesy Fortune magazine.
So I would like to make a few key points here, when Steve Jobs took over Apple in 1997, Apple had something close to 1 quarter worth of cash left. It was the innovation footing Jobs put in place then that resulted in Apples resurgence, yet it wasn’t until 2007, nearly ten years later when the iPhone was launched that Apples share price really began to move and increase its wealth to shareholders.
It should be noted Steve Jobs was at the helm at Apple in the 80’s and yet, its market cap kept stagnant, which proves the point that, it was when Jobs and Apple really took innovation seriously and make innovation its no 1 priority that Apples shareholder values grew nearly 100 fold in less than a decade between 2004 -2013. As Steve Jobs said in his biography being kicked out of apple was the medicine he needed. The medicine that helped him and Apple understand what was required for Apple to be the most valuable business on the planet.
If a cash strapped Apple, with a toxic cluture as they had on Jobs return can do it, I believe any organisation with the right leadership with innovation as their foremost priority can change shareholder fortunes similarly. Any leader worth their salt must have innovation as their top most priority. The question is what is the medicine we need and our nations corporate leaders need before they can transform their organsiations the way Jobs did.
The worlds most disruptive businesses are innovating their way while disrupting several industries and businesses. The top 10 as of Nove 2015 are as per Business Insider are as follows
The valuations of these businesses dwarf some of our largest and oldest corporations. Woolworths in comparison has a market cap of less than $30Billion as at now. In comparison Amazon’s market cap at December 2015 is nearly $250 Billion. It highlights how safe our corporations have played.
I now like to share with you the finding of the Boston Consulting Groups 2015 study on the top 50 most innovative corporations in the world. Most importantly most of these innovative corporations shared two common themes.
- Innovation was the No 1 priority in 22% of these firms, while innovation was one of the 1st 3 priorities in 79% of firms. Does the leadership of our nations corporate have what it takes to make innovation their No1, 2 or 3 focus? I can’t see why not as thanks to Malcolm Trunbull Innovation is right and centre of our nations agenda.
- Science & Technology
The worlds most innovative firms also shared in common four key areas of focus.
- Well run R&D Process
- Technology Platforms
- Exploration of Adjacent Growth
Speed was seen as more important than scale, as speed delivered, way shorter time frame to market, speed allowed first mover advantage and also helped catch competitors napping.
Well run R&D processes allowed the firms to innovate efficiently and cost effectively, automation of process helped identification of best ideas to bet on, with a focus on “doing the right work” and “working the right way”. 74% of the great innovators used lean process while the poor innovators did not.
Technology platforms were key to innovation and was seen as most important. Technology lead innovation was hard to do but delivered the best payoffs. Technology platforms were crucial in innovation, where they were 3D printing in improving manufacturing or the use of mobile, imaging and geo location technologies in saving transportation and fleet sizes, and improved delivery schedules.
Adjacent growth was crucial for growth and provided new opportunities away from traditional markets available to the firms. Amazon provides one of the best example where they first start selling books, and then they use their ecommerce capability to sell everything else, then as they build over 80 fulfilment centres to meet their own demands, they move in to providing these facilities to smaller businesses to empower them to compete on the same terms with the likes of Walmart. As they build their data centres for their own needs, they move to provide these facilities to clients around the world building a multi billion dollar data centre businesss.
Four Key Characteristics of innovative firms
- Culture of innovation
- Collaboration – Internal & External
- Power of people
- A mission that matters
Important of a culture that is open to innovation is paramount , a culture where failiur is acceted,
Win and losses are celebrated, a safe environment for those innovating with the right incentives and empowered to move the road blocks that stand in their way,
Colloaboration internally amongst cross functional teams, customers, suppliers, external corporations, agencies, thought leaders, crowd sourcing, international manufacturers and customers.
The power of people are supreme, getting multiple perspectives with every layer of the organisation empowered to ideate safely.
I would like to share with you the following more points more the purpose of discussion and analysis.
10 Actions points to help create a culture of innovation
- Before we say no to new ideas – consider
- Celebrate wins and losses – risk taking
- Understand areas of innovation to foster
- Seek opportunity for new and different perspectives
- Empower champions to overcome roadblocks
- Give employees tool to make their case
- Redefine Metrics, Measurement and Incentives
- Create a safe place for experimentation
- Be curious continuously
- Where are little improvements possible
I think its important also to identify the
10 Biggest obstacles of innovation
- Long development times
- Selection of idea to commercialise
- Risk averse culture
- Leadership commitment
- Lack of coordination
- Insufficient stream of ideas
- Marketing innovations
- Lack of customer insight
- Poor performance measurement
- Compensation not tied to innovation
Its time we looked to see how the obstacles can be removed. Innovation is exciting when done right, it energises and galvanises the organisation when done with a focus. It delivers purpose and meaning to its people and unimaginable wealth to all stakeholders.
We live in exciting times, I wish you all the best for happy innovating.
Dinesh De Silva is CEO of NetStripes, an Aussie tech start-up that has transformed the way business owners will create their digital presence forever.
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