Aussie business’ mateship myth
Roy Green: Hierarchical management structures hinder innovation inside businesses
The great Australian myth of mateship and working together to overcome adversity does not extend to business collaboration around innovation.
According to the 2016 Australian Innovation System Report from the Department of Industry, Innovation and Science we could do a lot better when it comes to working together on innovative ideas and processes, unless you are in the resources arena.
The report found we have a “weakly networked” innovation system.
“Innovation-active Australian businesses have below average likelihood of collaboration on innovation. Australian industry has low levels of international engagement with respect to trade in goods, services, intellectual property and joint R&D,” the report found.
Miners, however get a let off. They are good at this stuff. “Australia performs relatively well on raw commodity trade and foreign direct investment, consistent with our technological leadership in the resources sector,” the report said.
In Australia, the proportion of innovation-active product and process innovators that collaborated on innovation is lower than the OECD average and 20 per cent lower than the OECD top five collaborative countries – Belgium, Slovenia, Denmark, Estonia and Austria.
It gets no better when looking at supply chain innovation. In the rank table of the percentage of businesses cooperating on innovation activities with suppliers, Australia is 25th out of 30 OECD countries and just 12 per cent of innovation-active businesses undertake this type of collaboration, compared with an OECD average of 21 per cent.
Customer collaboration is also dismal, with Australia ranking 20th out of 30 OECD countries and below the OECD average.
This inability to work together on boosting innovative ideas and processes is costing us big time.
Using ABS data, DIIS found that in 2014-2015, businesses that collaborated on innovation were twice as likely to develop ten or more innovations.
The report suggests that better collaboration between SMEs would let them share scarce resources and spread risk, thus upping their appetite for more innovative projects.
Australia businesses are also extremely poor utilisers of research institutions which is surprising given the potential payoffs. The DIIS report says collaboration with universities and the CSIRO can more than triple the likelihood of businesses reporting annual productivity growth and increases in other performance measures.
Despite this carrot, Australia’s industry’s collaboration with higher education and research institutions ranked the lowest of 27 countries in the OECD.
The report says that in 2014–15, just three per cent of Australian businesses reported sourcing their innovative ideas from higher education institutions.
“Business needs to connect more closely with research and education,” says Roy Green, the dean of the University of Technology Sydney’s (UTS) Business School.
“Research institutions and universities need to do the same,” he says.
“This is a two way street and we need to develop deeper more strategic relationships, not just transactional ones so it isn’t just academics looking for research funds and business looking for free R&D.
“It’s got to be a genuine partnership on a long term basis. You see that around the world, when these ecosystems do get traction it’s because of those deeper relationships.”
Professor Green believes Australian managers are light on for the skills needed to make businesses sing in the technology heavy twenty first century marketplace.
“Business needs to ensure managers are better trained to develop new strategies and business models and make the best use of their talent.
He points to a UTS survey where the area Australian managers were most behind compared to 16 other countries was ‘instilling a talent mindset.’
“That’s a sort of proxy for innovation capability because managers for whatever reason in Australia are not confident or skilled enough to draw on the talent in their workplaces. There’s often a very hierarchical approach.”
If Australian business wants to learn how to build a collaborative culture, it may need to look no further than the nearest university.
The DIIS innovation report found that our research organisations are ranked high on collaborative ability.
Australia ranked 7th out of 37 OECD countries in the share of the world's top one per cent of highly cited publications attributed to international collaboration across all disciplines.
Australian publicly-funded research organisations earned $1.8 billion from research contracts, consultancies and collaborations in 2014, of which $0.3 billion (16.8 per cent) was on collaboration projects.