Australian small businesses have their sights set on being world-leading innovators. That is the main conclusion of the SME Pulse 2018: Strategies for Sustainable Growth– a research report published by American Express.
Data from 3000 SMEs across 12 countries shows that Aussie firms are outpacing their international peers in their plans to invest in research and development, incorporate customer feedback into R&D and co-create with customers.
But this enthusiasm for innovation risks being held back by ineffective design and execution of their plans. Only half of Aussie small businesses say they are effective at developing and implementing innovations to products and services or ways of working. Additionally, only 46 per cent say they are effective at quickly responding to changing business demands.
How can SMEs turn this enthusiasm into true innovative action?
Put people first
Australian SMEs plan to engage their staff as a key asset for innovation. Businesses say they want to encourage their employees to be more creative (57 per cent); allocating specific time for idea generation and promoting a more innovative culture.
They are also committed to investing in new skills to achieve this, with 78 per cent planning to invest in training and development programs in the next three years and 72 per cent planning to ensure competitive salaries and supportive cultures.
Organisations that succeed in encouraging their employees to create new ideas and innovations will not only be able to succeed and grow, they will also save money and time that may otherwise have been spent dealing with staff unhappiness or rehiring.
Embrace ethical and sustainable business practices
Almost three quarters of Australian SMEs say their customers are demanding more sustainable products and services. As a result, most (86 per cent) say that ethical and sustainable business practices are now key to company growth and profitability.
Becoming an ethical and sustainable business doesn’t have to be expensive or difficult. Businesses can start immediately through measures like fitting energy efficient bulbs, reusing or recycling materials and undertaking a review of existing operational practices. With many companies already on a path to implementing the necessary policies and practices, sustainability is an ideal place to start an innovation journey.
The benefits of moving towards a more sustainable business model are clear; for example, the Sustainability Advantage programin NSW is helping more than 500 businesses save a combined $95 million a year through advice, training, education and networking opportunities to develop environmental sustainability practices.
Take calculated risks
Encouraged by confidence in the domestic and global economy, almost two thirds (63 per cent) of Australian businesses in our survey reported they would willing to take big risks to garner big rewards.
This attitude will only support creating an innovative culture. Doing things differently and disrupting the status quo – particularly at a time when that business may already be running successfully – can often seem unnecessary, or even unwise. However, companies can only truly innovate and see successful results by embracing calculated risks.
Step back, and remove internal barriers
Perhaps the biggest barriers to innovation identified in the report are internal. Half of Australian small business executives say being too focused on running the day-to-day business is a constraint on success. In addition, it can be hard for businesses to change their existing policies, procedures and ways of working.
Innovation comes from having the freedom to come up with new ideas and business leaders must find that freedom without getting mired in day-to-day tasks. If internal policies and procedures are blocking success, SMEs should focus innovation on solving this issue to clear the way for new ideas around customer, product, and other mission-critical business areas.
Innovate for success
Innovation can be difficult for all businesses, regardless of their size. Australian SME enthusiasm is an ideal first step and distinguishes the country from its global competition. By identifying how to take the next step and successfully develop and implement innovations, companies can grow, succeed, and compete not only at home, but around the world.
Martin Seward, Vice President, American Express Global Commercial Services Australia and New Zealand.