With innovation now central to policy in the Turnbull government, a discussion on the "how" rather than the "what" of innovation is emerging.
It was encouraging to hear the Prime Minister highlight in his first statement as Liberal leader that, "the Australia of the future has to be nation that is agile, that is innovative, that is creative." Malcolm Turnbull will release a formal innovation statement this month.
However, in my experience working with firms large and small, the creative aspect of innovation is often misunderstood and often avoided. Creativity is frequently confused with the generation of individual ideas rather than being recognised as the mindset required to enable innovation within an organisation. The mindset or existing set of attitudes embedded in a company, influences their ability to think beyond existing tried and tested methods of problem solving and innovation.
Goran Roos has written in The Conversation how the inputs required for a nation's potential to create prosperity are a direct function of its economic complexity. The layer that underpins these will be the leadership and the mindset firms adopt to undertake the necessary transformation within an organisation.
Creativity will be a key element of a firm's success in this dynamically changing social-technical and social-economic environment, allowing firms to stay close to their future customers.
Whether you are a business-to-consumer or business-to-business startup, SME (small-to-medium enterprise), large or public entity, identifying who your future customer is; what problem you are solving for them; and how you will align your entire business to meet this opportunity, will be critical. This is not a linear process as the ability to get close to a customer in such a dynamically changing environment requires new methods and new leadership approaches.
It is no surprise that successful businesses such as Airbnb and Uber were founded by industrial designers whose professional training meant they knew how to develop empathy with future customers and were able to prototype radically new concepts to drive new business models, finally leading to significant technology investments.
Outside of startups, there has been a rise in the presence of a Chief Design Officer in large corporations such as IBM and Pepsi to drive this change in mindset and leadership across organisations. Indra Nooyi, Chairman and CEO of PepsiCo, notes that, "design has a voice in nearly every important decision that the company makes." The result of embedding design at the centre of a firm's culture can be seen in its resilience to disruption, enabling the business to become the disruptor and be agile in response to change.
In Australia, we have only limited examples of firms who have embraced an investment in mindset to become global market leaders. The winners of the Good Design Australia Business Model awards exemplify the types of leadership and models of innovation required for firms to embrace disruptive change. But they are the exception rather than the norm.
The government's own Digital Transformation Office has set a high bar for the models of leadership and innovation practices required, bringing in a customer-centric experimental culture to address the complexities of digitising government services. More needs to be done for this to be diffused across all business types.
In Australia, the traditional focus on efficiency-driven productivity growth needs to be challenged. Organisations need to embrace uncertainty and ambiguity in understanding their customers within the market in which they compete. This will require both investment and focus by all parts of the innovation ecosystem.
Other nations within our region have made a significant start on this approach to enabling innovation. Having recently returned from meetings in China and Korea, it is clear to me that there is a concerted effort by these governments to frame design leadership as a central pillar in their upcoming innovation policies. China is clearly moving from a manufacturing economy to a creative economy; now it appears to want to become a leapfrog economy. Design as a leadership mindset is central to enabling this new future.
In Australia, we have started to explore what this may mean as part of the Food and Agriculture Business Growth Centre, an initiative of the Federal Government. Innovation is at the centerpiece of this new industry policy. As part of the development of a 10-year strategic plan, Food Innovation Australia Ltd, the not-for-profit company responsible for delivering the activities of the Food and Agribusiness Growth Centre, is using a design-led process to help industry leaders better understand future customer challenges and to frame these as tangible business opportunities for today. This will allow new research collaborations and technology investments to start today, using an experimental model.
The outcomes of the first phase of this work will become available early next year, but the results to date have identified the clear need for a new mindset to better understand future customer value in specific export markets. This is one model of building an innovation capability across industries but more needs to be done.
As the government works towards finalising its innovation statement, ensuring there is a balance between innovation outputs and inputs will be critical to ensure Australia can embrace disruption by becoming innovative, agile and creative. We know "what" the issues are. Now we must turn our attention to the "how". This should start with enabling new innovation mindsets.