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Innovation might the buzzword echoing across corporate hallways today, but a new piece of research on Australia’s top 100 companies shows deep scepticism from shareholders around the benefits of innovation activities on the bottom line.
The new study, which was commissioned by Terem Technologies of Australia’s top 100 ASX-listed companies found 41 per cent have a publicly announced innovation lab, 23 per cent have a venture fund dedicated to innovation, and 69 per cent account on their financial statements for innovation, R&D or related technology.
But what the report also highlighted was that innovation activities such as these are not being rewarded by the share market without the tangible business results to support them.In fact, the report claimed innovation hype is now being viewed with increasing scepticism by the market.
In addition, the report found companies that claimed a large innovation footprint in their communications to shareholders did not necessarily out-perform companies that did not have the same commitment to innovation.
The top five “innovators by press release” identified by Terem Technologies were Rio Tinto, Commonwealth Bank, Amcor, Bendigo and Adelaide Bank and Aristocrat Leisure.
However, companies producing tangible innovation results are being rewarded even when they do not trumpet innovation.
For Terem Technologies CEO, Scott Middleton, the results suggest companies that want to foster innovation must not only demonstrate actual results from these activities, but also put the emphasis on disruption over iterative improvement.
“Companies can’t talk their way to growth,” he said. “For innovation to have an impact on a company’s performance, it must move the company into a significant, growing market. This takes time and commitment. Innovation around process is important, but these days, it’s just table stakes.”
The report was based on analysing the ASX100 over the short, medium and medium to long term (up to five years), looking at public innovation infrastructure, venture capital funds, collaboration with universities, patents field and board composition. Terem Technologies said it also looked at an organisation’s shareholder-focused rhetoric around innovation by analysing financial reports and press releases.
The report also featured a breakdown of the innovation claims of Australia’s top four banks. According to these findings, all four – CommBank, Westpac, ANZ and National Australia Bank – have innovation labs as well as research collaboration programs underway, and both NAB and Westpac had venture funds.