Small Business

Why our future depends on innovation

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The great business mind Peter Drucker summed up business success as innovation and marketing. And this week regrettably we learnt when it comes to innovation we rank 16th out of 30 nations.

It gets worse with only two per cent of 2800 senior executives in a worldwide survey for GE’s Innovation Barometer recognising Australia as a hotshot innovating country.

But it’s not all bad news with another report commissioned by GE from US-based the Milken Institute finding Australia was among the top nations for its performance in such measures as collaboration between industries and academia, the business environment and patent production.

And while that sounds like back-patting stuff for the Gillard Government, there is a disconnection issue that Canberra, and for that reason the country should be concerned about.

First, Australian executives feel their nation's innovation environment has not improved in the past five years. And second the Milken report found local bosses were "fairly negative regarding a number of areas where the nation actually performs quite well".

So there have been improvements but they have not been marketed well. We were ranked as a leader in university-industry collaboration, with the Federal Government's $3.5 billion spending on 44 cooperative research centres underlined as important steps.

But against this the Innovation Barometer found only 64 per cent of respondents said it was easy for companies to partner with universities.

One of my favourite business clichés is, “if nothing changes, nothing changes” and this is the advice I offer to the Gillard Government in 2012.

The GE reports were instructive and taken together point to the Government’s failure to comprehend the Drucker lessons. Innovation has happened – though it has been limited to the predicable areas of research and development, as well as university encouragement to work with business.

Cutbacks have been made to funding to small business for accessing R&D grants and export development grants. Exporters make the best of SMEs and so giving incentives to make Australians think about overseas markets would be great leadership.

Personally, I think the Gillard Government needs to show as much interest in leading local entrepreneurs to change, innovate and collaborate, as they did in rescuing inefficient carmakers to keep Aussies in work.

I don’t begrudge spending money on keeping people in work but it is a band-aid solution, with the high dollar making it hard for manufacturing, unless our products are world class and can compete high up the value chain in global markets.

I have said this before and I will say it again – Julia Gillard needs to stop leading Labor voters and start thinking about the whole country.

I Googled “entrepreneur + federal government + Australia” and came up with “Federal Entrepreneur Government Loans”. There are loans from $1500 to $10 million and what a great innovation.

But here’s a thought – why not actually market it? That would be a nice change.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Thursday, February 02, 2012

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