Dr Jana Matthews
Last evening, I had dinner with several CEOs who have almost completed our nine-month Growing South Australia’s Companies Program. All are running and growing companies with revenues between $8M and $20M, hence are creating jobs and economic benefit for South Australia. During dinner each CEO/MD provided an update on what had happened in his/her company since August when we completed the second of three modules in the program.
Much has happened in the past three months, both good and bad. One company had lost a contract worth several million dollars. Another had lost a COO in a tragic accident. One had separated from a partner. Another CEO was in the midst of a tendering for a contract that would be 40% of their yearly revenue. Another had achieved 50% of this year’s anticipated profit in the first quarter!
Updates aside, the conversation quickly turned to each company’s plans to grow over the next three years, and what each CEO was doing to grow. It became quickly apparent that every single CEO was using innovation to transform some aspect of his or her business.
One company has developed a new infusion pump that has just been awarded an Accelerating Commercialisation grant. Another was working on a product that would kill weeds without using chemicals, would require the design and development of a new piece of equipment, and could totally transform the company’s brand. A third company was developing an innovative business model that’s disrupting the way legal services are priced and delivered. Another CEO had just returned from his fourth trip to the US, where he’s been developing innovative marketing strategies that are tailored, dynamic and automatically delivered. The customer of the company that hauls logs asked them to come up with an innovative solution to a specific problem related to cutting down trees.
These are all examples of companies doing what the Government is telling us to do: innovate to grow. While some may think that innovation is the purview of start-ups, our CEOs know that innovation is essential for growth.
The UniSA Centre for Business Growth works with CEOs and executives of companies turning over $2M – $50M with 5 – 200 employees. When the Centre surveyed 120 CEOs before they came to our Growth Assessment Clinics (2014-2016), it found that only 39% of the CEOs felt their companies were “good at innovating”. But what does that mean?
The word “innovation” is frequently used and seldom defined, so we’ve attempted to put some meat on those bones by teaching our CEOs twelve different ways to innovate and asking them to rate their companies’ proficiency in each: products, technology, services, organisation, customer experience, operations, management, processes, cost/pricing, sales, business model. Here are the types of innovation they said they were proficient in- before they come to our programs:
Table: Where SMEs are Innovating
Although 59% of the CEOs felt their companies were good at product innovations and 52% said their companies were good at technology innovations, only 21% felt they were good at sales innovations, and fewer than 1 in 5 (18%) said they were good at business model innovations.
Innovation is a key pillar of growth, and we discuss innovation in each of the three modules of our Business Growth programs. We teach our CEOs how to innovate, how to lead and manage innovation, and how to create an organisation that supports innovative thinking.
In order for Australian companies to be more innovative, we must:
- De-mystify innovation. Make it tangible, explain what it is and how it should be managed. Provide examples of companies, like those above, who are innovating.
- Teach our business executives, across all our industries, how to manage the “fuzzy front end” and the “speedy back end” of innovation, how to drive more innovation in their companies and develop innovative organisations.
- Understand that tech startups are not the only ones that must innovate or die. Small and medium sized companies must also innovate – or they, too, will die.
Businesses that innovate do indeed perform better, have higher turnover, make more profit, and create more jobs. To move Innovation from concept to reality, CEOs need to learn how to build a culture that supports innovation and growth, how to select, lead and manage people, design new products with customers, and develop new business models in response to customer’s needs and wants.
The fact that all of my dinner guests last night are already engaged in developing several different types of innovation (e.g., products, services, processes, technology, sales, and business model) is hugely encouraging. It suggests that they are already implementing what they have learned in our Business Growth program. If we want Australia to maintain its global economic position, we must do more than exhort companies to innovate. We need to teach more CEOs the mechanics of innovation and growth.