Over the last year, the Australian Business Foundation in fulfilling its mission to advance knowledge, expand mindsets and foster informed debates and imaginative solutions about Australia's prosperity, has gazed into the future.

We have delved into the key trends, forces for change and critical uncertainties likely to impact on business in Australia to the year 2015. And as a result, we have imagined four different plausible pictures of the future.

These different pictures of the future revolve around how we cope with forces like globalisation, the transforming effects of the internet and new forms of consumerism, environmental sustainability and the rise of the knowledge economy.

At the core of our futures scenarios project and other more traditional research on what makes for high growth, high return businesses and economies,is the message that innovation is the critical factor to whether Australia makes the grade in the future.

The term "innovation" unfortunately is at risk of losing meaning through overuse, as Catherine Livingstone, Managing Director of Cochlear recently lamented. But, what I mean by innovation is:

• doing novel things or scoring breakthroughs;
• doing old things more intelligently;
• turning new ideas into businesses;
• adapting and gradually improving the way we work and how we organise.

In short, it is about competing on the basis of cleverness and know-how in a world where free and fast information flows reduce the shelf-life of ideas, the duration of first mover advantage, and the product cycles in businesses, making continuous innovation a survival strategy.

The drivers that have led me to this conclusion emerged from the Australian Business Foundation's Alternative Business Futures project, with GBN Australia.

The critical factors we discerned likely to impact on business over the next 15 years or so were as follows:

• The progress of globalisation in the form of the free flow of goods, services, information, capital and skills worldwide. And the likelihood that creating global brands and securing a place in international markets will be crucial to the future, both for individual firms and for Australia as a whole.
• The sheer transforming power of advances in information, online and networking technologies on the way we do business, what and how we consume, and on the very bases of competition in industry and commerce.
• The power of the new consumerism, customisation and personalisation of products and services, where production decisions shift from the producers and owners of capital to consumers.
• The rise of the knowledge-economy, where the intangibles of know-how, innovation, intellectual and human resources become more important to competition and business growth than the usual assets of plant, equipment and hard infrastructure.
• The far-reaching impact on the industrial landscape of both the advent of new technologies (such as micro-electronics, nanotechnology, genetics, new materials and biotechnology) and the convergence and recombination of old technologies in IT, broadcasting, telecommunications and multimedia.
• The rising importance of continuous innovation and lifelong learning in a world competing on the basis of wide and fast dissemination of information and knowledge. But, at the same time, recognising the limits to the value of intellectual property and its protections, given the relative ease of information flow and loss of first mover advantage. Related to this is also the recognition of the limits to the power of governments to effectively regulate the knowledge economy.
• Consideration of Australia's place and scale at the fringes of geopolitics, where in global terms Australia is a taker, not shaper, of trends. This extends beyond the political arena to issues of organisation and location of global enterprise and brands, positioning of economic power in the newly rearranged value chains of the knowledge economy and access to commercial advantages from new technologies.
• At the same time, not underestimating the importance to Australia of political stability, the rule of law, sound financial architecture and social inclusion achievements. In this context, the level of immigration and population policies remain critical to Australia's future growth capacity and ability to sustain its ethos of egalitarianism as a multicultural society.
• The social cohesion of the way the world is moving, whether we have a growing divide between the information rich and the information poor; whether we have more losers than winners from globalisation; increasing information and activism on the social impacts of business decisions, like the use of genetically modified foods; the increasing mainstream concern about environmental issues and factoring these into the bottom line of business.

What do such drivers of change mean for business? They suggest we do need to reinvent ourselves for the information age. The power of ideas and knowledge, and how you unleash and use these seems to me to be a recurring theme for robust business behaviour, no matter what the future might hold.

Jane Hemstritch of Andersen Consulting was quoted in AFR Boss magazine of 2 April 2000 on how firms could successfully respond to the disruption of existing business models by the information revolution. She proposed four "absolute" capabilities every company must possess to compete effectively in the information age:

• speed – fast at everything, from products to decision making;
• customisation – not just new technologies, but willingness to see customers as individuals not uniform markets;
• cost management – not just doing it cheaply, but capturing most value by focusing on what you do best, and outsourcing or creating strategic alliances to handle the rest;
• learning and renewal – even when times are good, focusing on the next change, the ability to continue to learn and freshen up your performance.

These capabilities are just another way of saying innovation. But don't forget, innovation lies as much in cleverly adapting old knowledge as in creating new ideas.

It is easy to fall victim to the imagery of innovation – the talented idiosyncratic boffin, the Generation X techno whizz kid.

But not all radical change is cataclysmic and individualistic. Seismic shifts can occur slowly, incrementally and systemically.

Innovation can also be the province of traditional and mature industries. It can be associated with gradual improvements and adaptations driven by the competitive demands and pressures of the marketplace, or indeed, by the forces of change detailed in our scenarios – social, technological, political and environmental.

Capturing and responding to the latest scientific knowledge, consumer trends and market intelligence and applying new design or enabling technologies can drive productivity improvements across all industrial sectors.

Harnessing such knowledge can itself be highly innovative and can yield rapid growth.

To reflect this, the business mindset should not focus only on the breakthrough ideas of the gifted intellectual, but on creating clever companies with clear strategies, an outward focus, a nose for news and highly resourceful people.

If we succeed, then I can envisage Australia being the "brand" of the 21st century – youthful, energetic, clever, adaptable, inventive and reflecting our cultural values of openness, ingenuity and giving everyone a fair go.

There is something to be said for innovation as a survival strategy and for necessity being the mother of invention.