Systematic innovation: what it is and who should take responsibility

Innovation pays, and the benefits are even greater when organisations develop systematic innovation capability, according to a recent study by The University of Melbourne and the Australian Institute of Management.

This large-scale survey of professional managers across Australia found organisations perform better when management embrace a structured, planned and organisation-wide approach to innovation.

What is systematic innovation?

Systematic innovation equates to sustained innovation, rather than haphazard or unplanned activities, that create value and secure competitive advantage for organisations.

Organisations that successfully undertake systematic innovation generate a series of innovations that deliver business value.

The development of systematic innovation capability requires a holistic and integrated approach to innovation across the entire organisation.

This means managers get involved in innovation projects, and innovation is prioritised in the business strategy, which is strongly aligned with technology.

It also requires organisations to take calculated risks, and for them to involve customers in the innovation process. Finally, it’s essential that employees are rewarded financially for innovation contributions, and competitors are benchmarked.

Innovation can occur as the occasional ‘lucky break’, but no business should rely on such an approach.

Systematic innovation capability is the ultimate competitive weapon for organisations, as it has no ceiling on it, and can be applied in a broad range of ways, from achieving cost reduction through innovation in process management, to creating new streams of revenue.

Australia faces challenges in achieving and maintaining global competitiveness in terms of cost, service and quality.

As Australia looks to build its future beyond the resources boom, the research findings make it clear innovation is a means of achieving competitive advantage, and a key profit driver for successful organisations.

“We found that firms with proven innovation performance were three times more likely to have higher revenue growth, profitability and productivity. Such firms were also three times more likely to report higher levels of cashflow, cost advantages and long-term competitive advantage,” said Tony Gleeson, CEO of the Victorian and Tasmanian arms of the Australian Institute of Management.

“The findings also confirmed organisations that failed to embrace innovation as a systematic performance tool were likely to be chronic under-achievers. Such under-achievement translates into lower levels of growth than innovative competitors, fewer development pathways for employees and greater difficulty in attracting, developing and retaining skilled people.”

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