In The Loop - The Newsletter of the Australian Business Foundation

ABF explores innovation and productivity connection

At our AGM Forum on 24 November 2004, the Australian Business Foundation, with its members and friends, soughtto advance knowledge and understanding about the essential drivers of Australia’s long-run economic and productivitygrowth.

The Australian Business Foundation’s research adds to a body of international evidence thatinnovation is the key to generating the next wave of economic and productivity growth.But how exactly does innovation contribute to productivity and prosperity?

ABF Chief Executive Narelle Kennedy set the scene for the discussion, to cover "what we know" from ABF'sresearch and to set the starting point for the Forum's presentations. Key points included:

• The knowledge economy is real and not a short-lived fashion.
• Successful firms compete by their superior ability to learn and to harness and use their own distinctive sources of knowledge.
• Don’t equate science, technology and research with innovation.
• Don’t fall for simplistic notions of Australia’s innovation challenge.
• Acknowledge Australia’s recent strong economic performance and enviable productivity surge, but avoid complacency about where Australia’s future economic and jobs growth is to come from.

Four expert speakers then took the floor to present their ideas on how innovation is linked to productivity.

• David Robinson, MD of Bishop Manufacturing Technology Ltd, suggested that the impact of innovation on economic and productivity growth flows from competitive advantage for business. Firms gain a competitive edge through consistently improving their business offering and by having excellent knowledge of their customers' problems and anticipating future challenges.
• Mark Bradley, CEO of ATP Innovations Pty Ltd, painted the picture of Australia's fragmented industry structure and low absorptive capacity for new technology and R&D created by universities, CRCs and other research institutes. We need public policies to address this low absorptive capacity and to foster linkages between our knowledge infrastructure, business and government.
  
• Andrew Stevens, Managing Partner, Business Consulting Services, IBM Australia, charted the typical lifecycle stages of innovation from invention, to disruption, to application, the latter being the "golden era" when economic benefits become pervasive. The challenge for business is to spot the emerging trends and capitalise on them. Andrew suggested growth and productivity will increasingly come from innovation that transforms business models and that results in distinctive, even unique capabilities in firms.
• Professor Mark Dodgson, Director, Technology & Innovation Management Centre at the University of Queensland, suggested a new way of thinking about the innovation process. Replace "Research and Development" with "Think, Play, Do", which better describes the innovation pattern, especially in Australian firms. Competitive Advantage also relies on a business's ambidexterity to innovate incrementally while looking for the disruptive breakthrough.

Key issues from the speakers' presentations and the audience interaction that followed have been summarised andare available on the ABF website.

ABF kept the momentum going with a further event exploring the innovation-productivity connection. Gary Banks, Chairman of the Productivity Commission, addressed a private roundtable of business leaders and public policy makers organised by ABF in March.

Gary reflected on Australia's productivity performance over the last decade and the role played by competition and micro-reform initiatives. In the context of the challenges for economic growth and community well-being in an ageing society, Gary reinforced the importance of continued productivity enhancement in Australia.He flagged areas for further reform, including health, infrastructure and natural resource management, and acknowledged the importance of business investment in research and development and other innovation activities (view Gary's presentation slides - PPT file).

The 2004 AGM/Forum is available from the Australian Business Foundation on DVD, as well as a highlights package. Contact ABF for more details.

ABF Sustainable Development study launched

ABF's latest research study, Sustainable Development and Business Success -Reaching Beyond the Rhetoric to Superior Performance was completed and launched in Sydney and Melbourne in March.

Authored by Suzy Goldsmith and Professor Danny Samson from the University ofMelbourne's Foundation for Sustainable Economic Development, the research takes a fresh look at an often simplistic debate and gives business leaders some clear frameworks to help them think through their own sustainable development approaches.

The research aimed to answer the question:

"How far and in what ways can sustainable development and social responsibility practices contribute to usiness productivity, performance and long-term success?"

The study clarifies the nature of the connection between sustainable development practices and long-term business success. It depends on the depth and quality of the sustainable development practices themselves, and their fit with the company's distinctive business strategy and culture.

ABF was delighted to invite Linda Funnell-Milner, Group Manager Corporate Social Responsibility at National Australia Bank, to reflect on the study's findings. Linda is recognised as one of Australia's leading executives in business sustainability and corporate responsibility, and ABF was most fortunate to have Linda's expertise as part of the Reference Group for this particular study.

Linda reinforced the study's finding that firms will perform best on sustainability when they aim to develop deep and embedded business processes across the organisation, as opposed to a shallow or piecemeal approach driven by an individual business unit or level of management. (Read Linda's full speech - PDF file.)

Audience participation was a highlight of both launches, facilitated in Sydney by Geoff Allen (Chairman, Allen Consulting Group) and in Melbourne by George Littlewood (former Head of Community Relations for Rio Tinto and currently Adjunct Professor at Deakin and RMIT Universities).

Professor Danny Samson also presented the findings of the ABF study at the 2005 Sustainability Series on 2 and 3 May in Melbourne and Sydney respectively.

Sustainable Development and Business Success can be purchased direct from the Australian Business Foundation. It is also available in soft copy from the ABF website.

To purchase a hard copy, or to obtain the launch presentations on DVD, please contact Pauline Constantine at ABF for more information - (02) 9458 7553.

The latest thinking on making Australia's cities and regions prosperous & liveable

Mention urban and regional planning and it conjures up transport routes, business parks and shopping centres. Mention infrastructure and we think of roads, ports and tollways.

But the real debate is about how to develop strong, vibrant and prosperous cities and regions equipped to face the challenges of fundamental changes in demographics, jobs, work patterns and more intense global competition for Australian firms and products.

How do planning, infrastructure and regional development fit with what we now know about the drivers of modern innovative economies and liveable communities?

ABF has invited two experts to speak on how Australia can build hubs of high performing industries in regions, providing the jobs and lifestyles their communities desire.

Professor Ed Blakely is internationally regarded as a leading scholar in sustainable planning, infrastructure, transportation and local economic development.

Professor Blakely is Chair of the expert panel overseeing the NSW Government’s Metropolitan Strategy and has most recently been involved in planning New York City post-9/11.

Previous to his appointment as Professor of Urban and Regional Planning at the University of Sydney, Professor Blakely was Dean of the Robert J. Milano Graduate School at the New School University in New York. He was also Dean of the University of Southern California's School of Urban and Regional Planning and Chair of Urban Planning at the University of California at Berkeley.

 He is an author of 8 well known books and has received numerous international awards for strategic planning.

Marcus Spiller is President of the Planning Institute of Australia and Director of SGS Economics & Planning. His consulting experience spans land economics, regional development, housing policy, infrastructure funding, policy co-ordination systems and business planning for cultural institutions. 

Marc has taken up secondments as lecturer in urban economics at the University ofMelbourne, adviser to the Minister for Planning and Housing in Victoria and senior executive in the Queensland Department of Housing, Local Government and Planning.

Marc is also Adjunct Professor in Urban Management at the University of Canberra and is a Director of VicUrban, the Victorian Government's land development company.

ABF is delighted to welcome speakers of this calibre to lead our forum. This is an event not to be missed!

WHERE Penrith City Council
             601 High Street
             Penrith NSW

WNEN   Wednesday 18 May 2005
TIME    2pm - 4.30pm

REGISTRATION: Download the invitation
                            www.abfoundation.com.au/pdf/regdev.pdf

For more details contact:
Pauline Constantine
foundation@australianbusiness.com.au
02 9458 7553

Innovating For Growth - Michael Raynor's exclusive presentation

The importance of business innovation for boosting the competitiveness of Australian firms is a recurring theme from the Australian Business Foundation's research.

On 27 April 2005, ABF members and friends were invited to a special event by DeloitteConsulting, a Corporate Member of the Foundation.

Co-author of the Harvard Business School bestseller The Innovator’s Solution: Creating and Sustaining Successful Growth, Michael Raynor presented his main theses on disruptive innovation (read a book review of The Innovator's Solution - PDF file).

Michael suggests companies need to ask themselves "what problem are our customers are trying to solve", rather than trying to deduce customer motivations and needs through market segmentation.

In his presentation Michael explained his thesis of low-end disruption, in which companies offer products with less (but enough) performance and functionality which appeal to lowend consumers, creating completely new markets.

Michael used several well known case studies to illustrate his point, one of which wasSouthwest Airlines in the United States. Southwest did not compete for existing airtravellers, but went after those using long-haul coach, rail and cars. Southwest offered a no-frills product at a specific price point to appeal to these people who were previouslynon-consumers, thus creating a whole new market. This successful innovation has nowbeen replicated worldwide in the air travel industry, including in Australia.

Another interesting case study that Michael used was that of Intel Corporation. Having built a globally dominant position in the microprocessor market, Intel easily outmuscled its closest rival, AMD, for market share. The company was at the forefront of the significant improvements in speed and performance of computer chips in the late 1990s.

However, Intel CEO Andy Grove was worried the success of AMD's cheaper computer chips which were gobbling up the lower end of the market. Going against the conventional wisdom of the IT industry and his own company, Intel released the Celeron chip, which he described as "just good enough" for people who only want to do some word processing and internet surfing. By doing this, Intel prevented AMD from disrupting the company and assuring success in the low and high end of the market.ABF was pleased to have the opportunity to advance its thinking on business innovation, drawing on Michael Raynor's insights and practical experience with firms around the world.

Welcome to new ABF Director

The Foundation is delighted to welcome a new Director to its Board. Greg Whiteley is Managing Director of Whiteley Industries Pty Ltd, manufacturer and exporter of medical disinfectant products. ABF welcomes Greg to the Board as nominee of Australian Business Limited, the Foundation's founder and principal sponsor.

The Foundation would also like to express sincere appreciation to Robert Burke and Alex Hartman, long-time Directors of ABF, who both stepped down from the Board having served several terms. ABF thanks Robert and Alex for their substantial contribution to ABF and its work.

Food for thought

Question:

Which Australian Cabinet member said in 2004:

"Future success for manufacturers lies in moving up the value chain. My vision is of a manufacturing sector made up of highly skilled, knowledge intensive, highly productive, innovative manufacturing businesses... Businesses delivering high quality goods and services into the global market place, introducing new products and processes, creating new markets" ?

Read on for the answer...

Websites of interest

From time to time ABF comes across websites that may be of interest to ABF members. In this issue, In The Loop features the website of a European-based hub of SMEs with an interest in business innovation, clustering and technology diffusion.

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Held in the Italian city of Bologna in 2000, the first OECD Ministerial Conference on SMEs and Globalisation spawned a series of international initiatives to take forward the policy recommendations recommended at the conference. The so-called "Bologna Process" is marked by actions aimed at moving forward the SME Agenda at the international level and strengthening policy dialogue and co-operation between OECD and non-OECD countries on issues related to the needs and challenges of SMEs in a global and knowledgebased economy.

The International Network for Small and Medium Sized Enterprises (INSME) developed from an initiative proposed by the Italian Government within the Bologna Process.INSME is a global NGO with a mission to encourage the development of synergies, alliances and collaboration between governments, international organisations and NGOs, intermediaries and their networks with regard to strengthening and setting up new policies, programmes and initiatives on innovation and technology transfer to SMEs.

INSME aims to facilitate alliances, disseminate knowledge, promote networking and encourage international cooperation and political dialogue.

For more information - http://www.insme.info/

ABF media release

MEDIA RELEASE
16 March 2005
Sustainable Development - Beyond the Rhetoric

Corporate sustainability and social responsibility increasingly appear as front page business issues, while greater social and environmental activism is pushing the standards for Australian businesses ever higher. Yet this debate is simplistic and fails to linksustainable development with long-term business strategy, according to a new report.

Sustainable Development and Business Success is the latest research report from business think tank, the Australian Business Foundation. The research involved interviews with Australian companies, varying from large corporations to small privately-owned firms, as well as with industry associations.

Authored by Suzy Goldsmith and Professor Danny Samson from the University of Melbourne, the report argues that companies should recognise that sustainable development is more than simply reacting to a single stimulus like managing compliance or protecting reputation.

"With this research we are moving the debate beyond the simplistic case for sustainable development for business – doing the bare minimum to avoid going to jail or being shamed in the community", said Narelle Kennedy, Chief Executive of the Australian Business Foundation.

"Rather, a stronger argument for sustainable development rests in companies pursuing a coherent set of high quality practices that are closely aligned with their specific business strategies", she said.

Corporate philanthropy as seen in recent months after the tsunami crisis should be applauded, but sustainable development for business does not begin and end with "doing good".

"Leading companies are proactive and innovative in leading stakeholder expectations and adopting sustainable development principles accordingly. Their motivation is not born of altruism or charity. In fact, the motivation for adopting sustainable development practices hardly matters", said Professor Danny Samson, project leader of the research.

The report found that sustainable development practices are more likely to contribute to long-term business success when they are:
- Strategically congruent with the business – specifically, by contributing to the business strategic requirements of stakeholder support, efficiency and market edge.
- Deep practices that achieve genuine improvements in sustainable development outcomes, rather than superficial tick-a-box efforts.
- Mature, leading edge approaches that offer the best available value proposition for the business.
- Well integrated with other business practices, thus promoting efficiency and effectiveness in implementation.

The Australian Business Foundation, sponsored by leading industry organisation, Australian Business Limited, is an independent business research think tank founded in 1997 in response to concerns about Australia's declining position on world competitiveness benchmarks and fuelled by the urgency for fresh insights and practical intelligence to boost Australia's capabilities and global competitiveness.

Our Sponsors

The Australian Business Foundation is principally sponsored by its founder, Australian Business Limited - the eminent industry organisation.

The Foundation is also delighted to have major corporate sponsorship from:

• UBS and
• Westpac Business Bank.

These prestigious firms are thought leaders, and we are pleased to work with them to advance knowledge and debateabout the future prosperity and growth of Australian business.

The Last Word

ANSWER:

Patricia Hewitt, Secretary of State for Trade and Industry, UK Government (born in Canberra and educated at ANU).

[With thanks to Professor Mark Dodgson - from his presentation at the AGM Forum!]


A big welcome to the new members who have joined the ABF membership community since the last issue of In The Loop. Feel free to forward this newsletter on to your colleagues and associates.

Remember that this newsletter is not only the primary communication between ABF and its valued membership, but is also an instrument for members to interact with each other. The Foundation encourages its members to use this forum to contribute to the knowledge network that is the ABF membership community.

If you or your organisation is working on a product, service, research project or event that furthers new thinking on Australia's business competitiveness, innovative capacity and opportunities from a knowledge-based economy, please contact us and we will spread the word!Comments, questions, suggestions, please contact:Peter Clifton-SmithResearch AnalystPh: (02) 9458 7342
Fax: (02) 9929 0193
foundation@australianbusiness.com.au
http://www.abfoundation.com.au/

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This publication is intended to provide general information for the benefit of members of Australian Business Foundation Limited (ABN 56 067 381 999) and should not be relied upon in place of specific legal or professional advice. While all care has been t aken to ensure that the information contained in this publication is true and accurate no responsibility or liability is accepted by Australian Business Foundation Limited or its staff for any claim which may arise from any person acting in reliance on the information set out in this publication.