Federal Small Business Minister, Bruce Bilson, is calling on SMB's to embrace an innovative culture following a new report which reveals seven of 10 SMEs are failing to reach their growth potential.
The Culturing Success report launched by Microsoft indicates thousands of Australian SMEs could become innovation leaders and increase their revenue growth if they knew how to successfully address workplace obstacles such as fear of change.
The report, provides a comprehensive analysis of what makes an innovative SME and has practical advice for other businesses on how to increase growth potential.
Microsoft Australia managing director, Pip Marlow, said innovation was vital to the success of any business, no matter how big or small.
“However, our research reveals that many businesses find it difficult to develop a culture of innovation because of barriers including working in silos, fear of failure, employee distrust and poor collaboration,” Marlow said.
The Culturing Success report was developed in partnership between Michael Henderson, a corporate anthropologist, and research agency AMR.
More than 500 SMEs were involved in the survey which revealed 33 per cent of SMEs were considered innovation ‘Leaders’ – businesses that are adept at responding to change, threats and opportunities in their markets
While 43 per cent of SMEs were innovation ‘Cruisers’ – businesses with an interest in innovation, but that tend to under-deliver in practice.
Further, 24 per cent were innovation ‘Laggards’ – businesses with little or no appetite for innovation.
SME Leaders that embraced innovation performed better than other businesses in the survey.
About 39 per cent of innovation Leaders reported that their revenue was growing faster than the average rate for their industry, compared to 24 per cent of Cruisers and 23 per cent of Laggards.
Leaders also recorded stronger performance across total revenue, business efficiency, market share, staff satisfaction and customer loyalty.
Billson said improved workplace culture was a driver of innovation.
“Innovative businesses are generally successful businesses, constantly looking at ways to improve and to grow their business,” he said.
“As the Intergenerational Report released by the Government demonstrates, we need to improve our productivity as a nation and get more small businesses to become leaders of innovation.”
Grattan Institute, productivity growth program director, Jim Minifie, said the report contributed to a growing body of evidence showing just how important organisational culture was to innovation and growth.
"It also suggests practical steps SMEs can take to reset their cultures,” he said.
Microsoft also launched an online tool to help SMEs measure their innovation performance and receive a tailored report with actionable tips about how they can become more innovative.
Marlow said Microsoft’s new self-assessment tool was the first of its kind to help small and medium-sized businesses identify their culture-related obstacles and then implement tangible solutions to become true innovation leaders.
It identified six cultural traits including a high level of customer focus, an awareness of and appetite for innovation, a supportive working environment, visible and involved leaders, engaged employees and authentic internal dialogues.
Microsoft recommends five practical strategies to help them improve.
These include evaluating current performance, addressing cultural barriers and creating the right environment, creating innovation-oriented collaborative networks, encouraging flexible work practices and attracting next-generation staff.
mPort chief executive, Dipra Ray, who co-founded a new business that develops pods which can map a person’s body in 3D for clothing measurement, health and fitness purposes, said his business would not exist without a passion for innovation.
“More businesses are discovering that innovation and collaboration are keys to success for businesses of all sizes,” he said.
“If you don’t innovate you won’t survive in a world that is getting smaller, faster and smarter.
"Joined-up innovation is all about collaborating with different businesses to get strategic solutions that provide wins for your business, your partners and ultimately wins for your customers.”