On the face of it, business innovation and community-led change are opposites.
Business innovation aims to boost the commercial and technology capabilities of business enterprises and the performance of the economy as a whole. Community-led change is focused on activism and people power, designed to foster innovation on social issues and self-determination, wealth creation and social cohesion in local communities.
Community-led change emphasizes improved wellbeing and quality of life. While business innovation is concerned with new ways of working productively that result in more sales, jobs and profitable livelihoods.
One is a clear economic development strategy, and the other a classic example of community development.
However, these two concepts have more in common than first meets the eye. Both business innovation and community-led change serve the ultimate purpose of creating better lives for people – both through earning a good living and having a good life.
Both also work for transformation, not business as usual. They are ambitious in their aims, whether it is re-inventing business offerings or even entire industries, or empowering local communities to generate and invest wealth locally.
Whether explicit or not, innovation, in its widest sense, is central to both business and community change activities.
Further, both business and community change share modern methodologies such as open innovation, crowd sourcing and co-design, aimed at welcoming and curating diverse perspectives. Both are tasked with addressing complex societal and economic challenges and opportunities that don’t have easy answers.
Official efforts to monitor and report on Australia as a wellbeing economy, measuring both economic and social progress, is recognition of the interdependence between the two and the added value that results for both.
The shared purpose between progressive economic and social initiatives is often masked by narrow understandings of the active ingredients of business innovation. Namely, business innovation is equated with new-to-the-world technology or scientific breakthroughs, R&D spending and linear ‘mind to market’ commercialisation, or entrepreneurial start-ups. Little attention is paid to non-technological innovation and to steady, incremental ingenuity in mainstream businesses.
Sometimes called the human dimensions of innovation or innovation eco-systems, a wider view provides important insights into the realities of innovation. Drawing on previous Latest Thinking articles on this website and recent policy commentary by the Acton Institute for Policy Research and Innovation, a more open and dynamic picture of innovation emerges as follows.
Not just ideas, but impact
While innovation is more than just technology and research breakthroughs, it is less than just any form of creativity, bold new idea or entrepreneurial flair. Innovations hinge on execution; they must be put into action and make an impact by demonstrably addressing opportunities and problems that matter.
Innovation is distinguished from R&D because it puts smart ideas into practice, not just generating them. Innovation is a complex and uncertain process, open to serial experimentation and responsive to market demands.
As Gopalakrishnan Nair, R (2025) comments: Technology appears at the end of a science pipeline; innovation emerges through a spider’s web of interactions, false starts and surprises….. boosting innovation is not achieved by R&D spending but through building innovation capacity as well.
Learning, not ‘light bulbs’
The dominant concept of innovation as R&D is challenged by the literature and practice of innovation management. Innovation management explores how value from innovation is created, captured and deployed. (Dodgson, Gann and Phillips, 2013, Dodgson, 2018).
The key insight is that there are many ways of innovating, not just by original discoveries and inventions. Chief among these is learning—learning by doing, by using existing knowledge and productive technologies, and by interacting with others.
Be alert for innovation in how enterprises learn and absorb knowledge, how they manage their people, understand markets, organise relationships with customers and other key parties, and the business model they use for earning money and sustaining the enterprise.
Not a solitary pursuit
The popular view of innovation seeded by the gifted lone scientist or tech genius is questionable. Rather, innovation operates as an eco-system, involving multiple actors, intermediary organisations and first-class collaboration skills.
Innovation eco-systems thrive where businesses, researchers, universities, government agencies, consumers and entrepreneurs are co-located and enjoy dynamic interactions, and where issues are debated, knowledge shared and joint action taken.
Collaboration involves solving problems by cross-fertilisation of knowledge and expertise, managing relationships, building trust and shared interests, negotiating diverse opinions and outlooks, undertaking joint ventures and seeding stable industry clusters, innovation eco-systems and communities of practice.
Innovation for all
The case that innovation benefits ordinary people, not just knowledge workers, is still to be made. The public at large either ignores innovation as irrelevant or fears it as a source of job losses and service closures.
Innovation must be managed to benefit the wider population, including those who are most likely to become the casualties of economic transformations.
A good starting point is with essential work and workers of the everyday economy, those providing the goods and services that sustain our daily lives. They include nurses, teachers, aged care and child care workers, those in retail, transport and the like.
The everyday economy is an intersection point between economic prosperity and social wellbeing. Action here is high impact because it serves the important and growing care sector. It also reinforces the social ties and human interactions crucial for social cohesion, resilience and a sense of belonging and community identity.
Though not well-recognised, strengthening the performance of the everyday economy is an innovation strategy-because it unlocks the untapped potential of communities.
Conclusions
These attributes of business innovation, from contemporary studies and practice, update how innovation contributes to economic success. But, at the same time, these attributes all serve a social purpose, which aligns with community-led change aspirations of diversity, belonging and empowerment.
The key insights linking community-led change and business innovation are:
- Greater value is likely from innovation initiatives that integrate both social and economic impacts, eg. businesses operating commercially as social enterprises such as mobile laundry services for homeless people, or cafes or plush toy manufacturers and retailers employing asylum seekers.
- Innovation is primarily social and relational, rather than technological and transactional.
- Societal benefits from well-managed innovation depend on the diffusion of ideas and technologies, old and new, across industries. (Gopalakrishnan Nair, R, 2025).
- The democratisation of innovation is a potent emerging force, through open innovation approaches, engagement of a broader array of stakeholders and action on issues that cross sectors.
- The concept of ‘place’ (e.g. local communities, digital spaces) is a unifying unit for analysis and action, where business and community interests converge and where innovative collaborative economic and community development pilots can be stress-tested.
In short, while distinct areas of work, business innovation and community-led change share more commonalities than differences. They share purpose, transformative aspirations, a commitment to innovation in its most up to date form, strong collaboration skills and methods of operation with high social and/or economic impact.
Their interdependence is an asset which allows them to learn from each other, and add value and opportunities to succeed.
REFERENCES:
Dodgson, M., Gann, D.M., Phillips, N. (2013), Oxford Handbook of Innovation Management, Oxford University Press
Dodgson, M. (2018), Innovation Management. A Research Overview, Routledge
Howard, J.H. (2024), Beyond the Lab: The Critical Difference between R&D and Innovation, Acton Institute for Policy Research and Innovation, 2nd August 2024
Howard, J. H. (2025), Changing Policy Mindsets 1: The Critical Differences between the Science of R&D and the Practice of Innovation Management, Acton Institute for Policy Research and Innovation, 11th March 2025
Gopalakrishnan Nair, R. (2025), Changing Policy Mindsets 2: What’s in a Name? The Role of Definitions in Australia’s R&D and Innovation Policy, Acton Institute for Policy Research and Innovation, 18th March 2025
The Kennedy Company, (2022), Innovation: Where the Economy meets the Community, September 30th 2022, https://kennedy-company.com/2022/09/30/innovation-where-the-economy-meets-the-community/
The Kennedy Company, (2023), Lessons from the World of Innovation Management, 10th July 2023, https://kennedy-company.com/2023/07/10/lessons-from-the-world-of-innovation-management/
The Kennedy Company,(2024), High Tech Innovation Districts Under Scrutiny, Part 2, 3rd June 2024, https://kennedy-company.com/2024/06/03/high-tech-innovation-districts-under-scrutiny-part-2/
Wilson, B. (2025), Building Place-Based Innovation Systems: The Challenge of Effective Capability Development, EDA webinar, March 2025, www.edaustralia.com.au
The Kennedy Company 