The term ‘innovation’ is in danger of becoming meaningless from over-use. More likely than not, ‘innovation’ is equated only with breakthrough discoveries and technologies, like cures for disease or quantum leaps in computing power and its applications.

The reality is that innovation is more commonplace and more widespread. Innovation by business enterprises and workplaces is often hidden in plain sight, downplayed as ‘just doing business properly’ or know-how that is tacit and learnt from experience, not recognised by formal qualifications.

This kind of innovation is hard to measure, and many of the reputable international Innovation Indices seem to give more weight to indicators like levels of R&D, patents, educational qualifications, and ‘new to the world’ inventions. These measures are important, but they are not the full story, especially for a country like Australia with a relatively small and local industry and customer base.

But, understanding of the wider dimensions of business innovation is growing. Innovation studies in contemporary literature and practice, eg from the OECD, are being used to add new questions to innovation surveys. This serves to produce richer findings about innovation performance particularly at the enterprise level.

From an overview of the international research on innovation, the following essential attributes of innovative business enterprises can be identified:

• Open, outward-looking organisations embedded in a wide spectrum of quality relationships and networks, and with an exceptional ability to learn, including learning by doing; learning by the use of next generation technologies and equipment which provide new productive capabilities; and learning by interacting with others.

• Closeness to customers that provides a thorough understanding of needs and demand, as an avenue for providing superior value for money in the eyes of the customer, including with business offerings that meet latent, unexpressed needs and preferences, or engaging customers directly in the production of the goods and services they buy.

• Deep, up to date subject matter knowledge in their industry and adjacent industries, market intelligence and knowledge about trends, potential disruptions and forces for change, understanding of technology developments and foresighting of new technologies and convergence.

• Collaboration for problem-solving and for knowledge sharing and application, especially with universities and research organisations, in clusters and regions, or in virtual cross-sectoral or multi-disciplinary communities of practice.

• Strong and deliberate building of new competitive capabilities within the business enterprise, which increases its ‘absorptive capacity’. This refers to the set of processes, routines and skills by which enterprises acquire, assimilate, transform and exploit knowledge to produce distinctive and dynamic capabilities that give them a competitive advantage that others find hard to imitate or substitute.

• Agile and capable managers and skilled and empowered employees engaged in the constant search for new and emerging market opportunities and needs, and how these can be matched with the enterprise’s own design, operations, financial, engineering and organisational capabilities.

Surveys of Australian innovation performance need to investigate these attributes.  Some recent initiatives are:

Australian Innovation System Report 2013

UQ Business Innovation Scorecard