Australian Mid-Market Embraces Innovation to Gain Competitive Advantage
24 September 2014
Bankwest’s Future of Business Series reveals a return to ‘old school’ values at the heart of customer service innovation
Mid-size businesses plan to lead the way in innovation and are actively seeking opportunities to gain competitive business advantages, according to a new report from Bankwest.
The Innovation Report – the third instalment in the Bankwest Future of Business Series – has found the overwhelming majority (91.8 per cent) of mid-sized businesses is embracing innovation as it offers commercial and competitive benefits (90.7 per cent). Almost half (46.4 per cent) currently use it as a tool to gain a competitive advantage against larger business and fend off smaller competitors, with an additional 20.6 per cent planning to do so in the next 12 months.
Customer service experience innovation is the top focus for mid-sized businesses over the next 12 months, with 69.1 per cent of respondents saying it’s a key priority for their business. The next highest ranking priorities for mid-sized businesses over the next 12 months are product innovation (62.9 per cent) and technological innovation (60.8 per cent).
“The term ‘innovation’ is increasingly becoming a buzzword, so it was important for us to define what innovation means to mid-size Australian businesses,” said Sinead Taylor, Executive General Manager of Business Banking, Bankwest.
“Contrary to the perception that innovation is focused solely around technology and its impact on product and product development, our research shows mid-size businesses are most commonly looking to improve existing services and create more efficient work processes, followed by growth and success, and better productivity and performance.”
The Innovation Report revealed almost half (47.4 per cent) of respondents cite their business as an innovation leader, with the same proportion (47.4 per cent) citing their business as an innovation follower. Only 5.2 per cent consider themselves innovation avoiders.
‘Old school’ ways of doing business was also highlighted as a key innovation opportunity for the Australian mid-market. Face-to-face meetings (72.2 per cent), engaging customers over the phone rather than by email (66.0 per cent) and in-person customer meetings (64.9 per cent) were all identified as future innovation opportunities.
“Mid-size businesses have identified innovation, particularly in customer service, as an opportunity to set themselves apart in today’s competitive market,” Taylor said. “At Bankwest, we believe the mid-market is ideally positioned to lead the way in innovation due to its unique mix of available capital and relatively flexible business structures.”
The Report found innovation in mid-sized businesses is more likely to be incremental, ongoing and focused on continuous improvement, rather than radical advances that alter the basis for competition in an industry (37.1 per cent and 20.6 per cent respectively).
Despite a strong desire to innovate within their businesses, balancing cost pressures and securing the right talent remain challenges to many mid-sized businesses’ agendas. Sufficient human resources (37.1 per cent) and financial resources (36.1 per cent) are the most commonly cited barriers to future innovation.
In response to these challenges and market trends, the Report revealed businesses are set to take active steps to enable continued innovation and growth in the future. More than three in 10 (30.9 per cent) respondents already have employees that are dedicated to innovation efforts in their business, while a further 41.2 per cent intend to bring such employees on board.
Additionally, almost three in five (59.8 per cent) mid-sized businesses seek to reduce operating costs in order to keep innovating and grow. A further 48.5 per cent have or intend to develop plans to access finance to effectively develop innovations in their business. More than three in five (62.9 per cent) respondents plan to formally allocate resources to innovation development in their business in the future.
Crucial to driving future innovation efforts in mid-sized businesses is the alignment of innovation strategies to the overall business strategy, as well as optimising an organisational structure that fosters and promotes idea sharing and generation (both 38.1 per cent). These findings were consistent with a previous Bankwest Future of Business instalment, the Leadership Report, which found 61.2 per cent of mid-size business leaders believed fostering ownership of a common vision and goals was a very effective leadership strategy.
“Bankwest is committed to being an innovative organisation and we have introduced “Hack Days” and “Innovation Time Out” to actively foster innovation and develop creative solutions within our teams. The Bankwest mobile banking App was developed in an efficient and cost effective way as a result of this innovative approach and it is consistently rated four stars by our customers,” Taylor said.
“Our own experience at Bankwest has revealed the value of building agility and innovation into the DNA of our business. We are pleased to see mid-size businesses are also placing strong importance on innovation and are taking steps to secure funding and talent to support their innovation agendas,” Taylor said. “Looking for opportunities to maximise both commercial and competitive advantages is crucial so it’s exciting to see the mid-market taking the lead in innovation to secure future opportunities.”
Bankwest provides personal and business banking solutions for more than 1.2 million retail and business customers across Australia. Bankwest customers enjoy access to an extensive network of stores and business centres, direct and third party distribution channels, agencies and electronic banking facilities, as well as 24-hour telephone and internet banking. In 2013 & 2014 Bankwest was named Business Bank of the Year in the AFR Smart Investor Blue Ribbon Awards. Bankwest is a division of the Commonwealth Bank of Australia.
About The Bankwest Future of Business Series:
The Bankwest Future of Business Series is a collection of insights taken from research commissioned by Bankwest on the future of business for medium-sized companies in Australia.Bankwest will deliver ongoing instalments of research from in-depth studies involving key business decision-makers across Australia. The insights gained will identify national trends that company leaders believe will shape the future of business.
Note to Editor:
- This report has been prepared by CoreData on behalf of Bankwest
- The research was conducted between 8th July and 21st July, 2014 via an online quantitative survey of approximately 50-60 questions, developed and hosted by CoreData.
- CoreData’s proprietary panel of more than 132,000 Australian consumers was used to canvass the views of a specific target market – business leaders
- The sample is comprised of 97 respondents, including those in C-suite and senior management positions within mid-size businesses
- The targeted businesses met the following criteria:
- Annual turnover of between $7 million and $250 million
- From the following industries: Agriculture and forestry, education and training, retail trade, professional services, light manufacturing, wholesale trade, financial and insurance services, property & business services, franchising, pharmaceuticals and transport
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