Half of Australian Businesses Underspend on Innovation

Most of us accept that innovation is imperative to business. It fuels competitiveness, profitability and feeds our entrepreneurial spirit. Unfortunately, though good intentions aren’t enough and the fact is that more than half of business owners spend less on innovation than they do on their annual grocery bill.  That’s not very innovative!

“If you have always done it that way, it is probably wrong”

~ Charles Kettering


Many projects end up losing money, frustrating employees and heading into the abyss. Yet, large corporations spend billions of dollars annually in pursuing innovation.

Authors from the Harvard Business Review believe that innovation projects fail as a result of resources being spent on the wrong type of innovation. Too much money is being spent on attention-grabbing activities that are straightforward to do such as outrageous PR stunts and shocking videos, procuring new technologies and buying more facilities. However, innovation lies in changing the design of a current service system, introducing new customer service experiences, or a much better business model.

At Board Associates, we like to distinguish between “capital I” innovation and “little i” innovation.  Not all innovation needs to be the big bang approach.  In fact, following the advice of Jim Collin’s we actually recommend against it in the first instance until your innovation is proved (see “firing bullets and then cannonballs” in his book “Great by Choice”).


The real question is, for a successful innovative idea to take off, how much should we as business owners be spending?

The Australian Bureau of Statistics has recorded that half of Australian business owners spend less than $25,000 on innovation activities.  That’s less than the average family grocery bill. It’s less than your spending on keeping the lights on (electricity) and probably less than you’re spending on toilet paper and stationery.

We accept that we need to invest in marketing to grow our business.  Why don’t we apply this same thinking to innovation?


We’d challenge you to think of it like this:  “how much is an appropriate investment in your growth?” If you believe there’s opportunity to grow from $10m to $50m, surely that’s worth a little focus and a little cash.


 The problem with innovation implementation and success is a lack of strategy. A strategy is nothing more than a commitment to a set of coherent, mutually reinforcing policies or behaviours aimed at achieving a specific objective and competitive goal.

Great strategies promote alignment among diverse groups within an organisation, explain objectives and priorities and help centre efforts around them.

Companies regularly define their overall business strategy (their scope and positioning) and identify how various functions; such as marketing, operations, finance, and particularly R&D – will support it. However, firms rarely communicate their strategies to align their innovation efforts with their business strategies.

Without an innovation strategy, innovation improvement efforts can easily become a grab bag of proclaimed best practices: dividing R&D into localised autonomous teams, generating internal entrepreneurial ventures, setting up corporate venture-capital arms, pursuing external associations, embracing open innovation, collaborating with customers and implementing rapid prototyping, just to name a few.

A company without an innovation strategy won’t be able to make trade-off decisions and choose all the elements of the innovation system.


Board Associates innovation experts, Justin Cloete and Peter How regularly run innovation and ideation workshops for clients.  If you’ d like to find out more, contact us here

Entrepreneur’s Shiny Ball Syndrome

The great thing about entrepreneurs is their abundance of innovation and ideas.  The bad thing about entrepreneurs is…their abundance of ideas.

Often what stands in the way of growth is not the lack of opportunity but being distracted by too much opportunity.

“The essence of strategy is choosing what not to do.

— Michael Porter

We see it every day in those managers who fire off emails to their team over the weekend, sharing their free time inspiration.  The ones who burst in on Monday morning and say “I’ve had a great idea!” (for the 4th time that month).

Is this you? Are you running from one opportunity to the next, always following the new shiny ball?  Well, the good news is, you’re not alone.


The problem is that by looking everywhere, we focus nowhere and this is one of the biggest inhibitors to growth: the lack of focus in a consistent, single direction.

Let me give you an example, I once worked with an energetic young business owner who ran a cloud computing business.  To grow his firm he was launching a new service offering, expanding interstate, starting a consultancy and launching an iPhone app.  Any one of these initiatives could have been successful but taken together, they fragmented his attention, his passion and his resources. It’s no surprise that within 12 months he had cancelled all of these initiatives.

Many business owners face this problem.  The key is to focus on just one and more importantly, focusing on the right one.


When you have an abundance of ideas and opportunities, how do you choose? Well the right one lies at the intersection of what is right for the business and what is right for you.  More specifically you need to identify:

the next logical opportunity given the business’s stage in its lifecycle and

the opportunity aligned to your big picture and overall game plan (direction, purpose, goals and values).

If you have these defined it allows you to focus on not only one shiny ball, but the right shiny ball.


As entrepreneurs, we need to create a filter.  We need to establish guidelines that help differentiate between the strategic initiative and the shiny ball.  Here are a couple of tests to get you started:

  1. Is it aligned to the big picture?   Does it contribute to the goals, purpose and direction of your business?  If it’s not going to help you reach the end game, then it’s an opportunistic distraction rather than a strategic initiative.
  2. Does it accelerate your business strategy?  You should have a game plan for your business – a series of milestones or a roadmap of how you’re going to move forward.  If the initiative helps you get there, great.  If it doesn’t contribute to the milestones you’re working on, then it’s a shiny ball.

Questions like these help you stay the course in your business.  This is not to say you shouldn’t explore and innovate but they allow you keep your weekend inspiration in perspective and focus your energy, passion and more importantly, the finances and efforts of your team.