When people think of innovation, they often think of the big tech unicorns – the kinds of companies that IPO on the back of “hockey stick growth” despite having a multi-year journey towards turning a profit. Sometimes, however, it’s the businesses closer to home, some of Australia’s private and family-owned businesses that are the biggest innovators of all.
A rethink about what innovation means for businesses could be a crucial part of expanding to new markets, adding new revenue streams or commercialising an everyday solution implemented in your industry.
It’s the businesses that take the time to step back and recognise where their creative thinking and problem-solving could be monetised that have an edge. Like many things in business, this is often easier said than done. Further, research into Australia’s private and family-owned businesses has revealed that many business owners don’t consider themselves to be innovators. For these businesses, innovation is table stakes and a part of solving problems every day.
Who are Australia’s innovative business owners?
The Pitcher Partners Business Radar: Understanding the businesses that drive Australia’s economy report analyses and provides insights into privately-owned and family businesses across Australia.
Canvassing over 400 Australian private and family business owners and operators in Australia’s mid-market, the Business Radar is an independent research report that investigates the common challenges that business owners and leaders have on their radar. Turning these challenges into opportunities and remaining opportunity ready is critical for the future success of these businesses, and that’s a big part of what innovating is all about.
Innovation is the status quo for many businesses
As the engine room of Australia’s economy, contributing 20 per cent of the country’s net tax revenue and employing between 20 and 200 staff in each business, private and family-owned businesses see innovation as the status quo.
As outlined in the Pitcher Partners Business Radar, many business owners and leaders enter an existing market when they go into business. The top three reasons respondents started their businesses were to achieve work-life balance, follow a passion and to have control of their destiny. For these people, it’s not necessarily about reinventing the wheel with a new product or creating a new market, it’s having the ability to deliver their products and services in a way that helps their customers while affording them the freedom that comes with owning and operating a private business.
Shifting how problem-solving is viewed is a great opportunity for businesses. In fact, it’s the problem-solving in itself that’s innovative for so many private and family-owned business across Australia. But, sometimes it’s not as straightforward as deciding to turn a solution into a scalable offering, especially for business owners and operators stretched between working in and on the business every day.
Some of the common reasons why businesses don’t capitalise on commercialising their innovations include the need to focus on the core business and the steep learning curve and investment of resources that may be required to package new solutions. For many business owners, quantifying all the resources needed – time, people and money – can be enough to realise that the resources required may not be worth the risk. Commercialising your innovation, however, could be the push your business needs to move to its next stage of growth.
Commercialising innovations could be the answer to challenges throughout the business lifecycle
Respondents to the research for the Pitcher Partners Business Radar confirmed that innovation is “front of mind” for business owners, particularly as their business approaches the maturity stage. According to the research, one of the top opportunities identified by just over 50 per cent of business owners at the seed, growth and mature stages of the business lifecycle was gaining access to new markets. Traditionally, one may think of gaining access to new markets by finding new export markets for existing products and services. There are, however, opportunities for businesses to capitalise on new markets by commercialising their innovation.
It’s important to remember that innovation looks different for every business. For an auto-parts manufacturer, customisation to its engineering processes could be its ticket to serving a range of manufacturing subsectors. For another business, a restructure of its operations, asset ownership and finances could mean new revenue streams and more available cash flow. Importantly, innovation isn’t about being the next tech giant. It’s about recognising the commercial opportunities available in your day-to-day problem-solving.
How can businesses innovate in the current environment?
With all the challenges business owners have had to address this year, it’s been an opportune time to do some detailed analysis and planning. Previously, this exercise may have been something a business did once or twice per year.
The need for businesses to adapt quickly, especially in the wake of the dynamic nature of COVID-19 restrictions shows just how resilient business owners need to be. It’s understandably difficult to be told that your business will need to close its doors with 48 hours’ notice, or that if your business is deemed an “essential service” you have days to implement a raft of changes. The ability for business owners to act so quickly demonstrates the resilient nature of Australia’s business owners.
It’s going to be an interesting and challenging road ahead for Australian businesses over the coming months. By cultivating a growth mindset and constant curiosity when you review your business’s strategy and operations, you may realise that now is the time to achieve your goal of scaling your everyday problem-solving for different markets.
Attributable to Gavin Debono, a partner in the private business and family advisory division at Pitcher Partners Melbourne