Poor leadership to blame for innovation dearth



Leadership Advice | Management | News

By Stephanie Zillman

Innovation. It’s that elusive ingredient that separates the ‘good’ from the ‘great’. But what exactly is it, and how can more Australian companies get their hands on it?

Innovation is described by Tony Gleeson CEO, Australian Institute of Management (AIM) Victoria and Tasmania as a key profit driver for successful organisations.

Beyond this, those that fail to embrace innovation are likely to be chronic under-achievers.

“We find that firms with proven innovation performance are three times more likely to have higher revenue growth, profitability and productivity. Such firms are also three times more likely to report higher levels of cash flow, cost advantages and long-term competitive advantage,” Gleeson said.

Gleeson was commenting on the findings of a new University of Melbourne and AIM research report, which surveyed 2,400 businesses from all sections of industry and government to shed light on the issue of innovation.

The survey data confirmed that a dearth of innovation translates into lower levels of growth than innovative competitors, fewer development pathways for employees and greater difficulty in attracting, developing and retaining skilled people.

The report, Innovation: The New Imperative, firstly identified the main reason organisations fail to innovate: poor leadership.

And with poor leadership as the root problem, myriad flow-on effects follow, including:

  • Organisations being too risk adverse
  • Employees not being rewarded for innovating
  • The exceptionally long lead time it takes to develop ideas

Lead researcher Professor Danny Samson, from the University’s Faculty of Business and Economics, said leadership is “crucial” for innovation.

“Effective leaders put in place the right strategies. They know that systematic innovation needs to be properly resourced in terms of processes and people skills, and they recognise staff must be properly encouraged,” Samson said.

Gleeson added that current economic conditions demand innovation.

“The end of the resources boom means our nation’s future wealth ambitions are dependent on leaders and managers becoming champions for innovation,” he said.

“We need to look to countries that haven’t had the advantage of our abundant natural resources — countries like Japan and Germany — and recognise innovation in those countries is entrenched and underpins their high living standards.”

The major obstacles to innovation were identified as:

  • Lengthy development times
  • Not enough great ideas
  • Insufficient support from leadership & management
  • Ineffective marketing and communication
  • Not enough customer insight
  • Inability to measure performance
  • Lack of coordination within the organisation
  • Difficulty selecting the right ideas to commercialise
  • Remuneration not tied to innovation
  • Risk averse culture

*The report was written by Professor Samson and Dr Marianne Gloet from the University of Melbourne in collaboration with the Australian Institute of Management.
**Most of the participants in the study were members of the Australian Institute of Management.

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