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BUSINESS INNOVATION


The development, introduction or implementation of new or significantly improved goods, services, processes or methods is generally considered to be innovation. Innovation is often seen as a continuous process. Refer also to Explanatory Notes 22 to 27.

Key indicators of innovation include broad types of innovation (goods or services, operational processes, organisational/managerial processes, marketing methods) and status of innovation (introduced or implemented, still in development, abandoned). Data for key innovation indicators were published in
Summary of IT Use and Innovation in Australian Business, 2005-06 (cat. no. 8166.0).

For the first time, in the 2005-06 BCS, businesses were asked to provide more detailed information about the types of innovation they had introduced. This data is presented in this release and is additional to that already published on the broad types of innovation. The additional breakdowns are only available for innovations introduced or implemented, i.e. are not available for those still in development or abandoned.

Broad types of innovation

Goods or services - Any good or service or combination of these which is new to a business (or significantly improved). Its characteristics or intended uses differ significantly from those previously produced/offered.

Operational processes - New or significantly improved methods of producing or delivering goods or services of a business (including significant change in techniques, equipment and/or software).

Organisational/managerial processes - New or significantly improved strategies, structures or routines of a business which aim to improve performance.

Marketing methods - New or significantly improved design, packaging or sales methods aimed to increase the appeal of goods or services of a business or to enter new markets.

Status of innovation

Introduced or implemented - the business successfully introduced or implemented an innovation during the reference period (although the innovation does not need to have been commercially successful).

Still in development - the business was in the process of developing, introducing or implementing an innovation during the reference period but work on the innovation was still in progress at the end of the period.

Abandoned - the business abandoned the development and/or introduction of an innovation during the reference period (i.e. work on the innovation ceased without full introduction occurring).

Goods or services

Goods or services innovation introduced, 2005-06(a)(b)(c), by type, by employment size
			Employment size
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
			%	%	%	%	%
	Goods or services innovation introduced(d)
		Goods	7.6	13.8	15.7	18.9	9.9
		Services	11.9	14.7	17.4	^28.5	13.2
		Any goods or services innovation	16.5	22.8	30.2	^43.4	19.3
	No goods or services innovation		83.5	77.2	69.8	^56.6	80.7
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Proportions are of all business in each employment size category.
(b) Excludes any goods or services still under development at the end of the reference period or those for which development was abandoned during the period.
(c) Goods or services innovation includes any new or significantly improved goods or services.
(d) Businesses could report more than one type.

A total of 19% of businesses reported the introduction of new goods or services during the year ended 30 June 2006. A higher proportion of businesses introduced new services (13%) than new goods (10%). This was the case across all employment size categories.

Operational processes

Operational process innovation introduced, 2005-06(a)(b)(c), by type, by employment size
			Employment size
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
			%	%	%	%	%
	Operational process innovation(d)
		Methods of manufacturing or producing goods or services	4.5	11.0	11.5	17.6	6.9
		Logistics, delivery or distribution methods for goods and services	4.9	8.1	7.8	15.4	6.0
		Supporting activities for business operations (e.g. maintenance systems or processes for purchasing, accounting or computing)	9.1	21.8	25.7	35.1	13.9
		Other operational processes	1.4	1.7	3.1	2.2	1.6
		Any operational process innovation	15.7	29.0	35.1	^45.9	20.8
	No operational process innovation		84.3	71.0	64.9	^54.1	79.2
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Proportions are of business in each employment size category.
(b) Excludes any operational processes still under development at the end of the reference period or those for which development was abandoned during the period.
(c) Operational process innovation includes any new or significantly improved operational processes.
(d) Businesses could report more than one type.

New operational processes were introduced by 21% of businesses during the year ended 30 June 2006. New supporting activities for business operations (e.g. maintenance systems or processes for purchasing, accounting or computing) was the type of operational process innovation reported most by businesses (14%), followed by new methods of manufacturing or producing goods or services (7%) and logistics, delivery or distribution methods of goods or services (6%). This ranking also holds within each employment size range. Businesses with employment sizes 5-19 persons and 20-199 persons had similar levels of reporting for each of the types of operational process innovations compared to those with employment of 0-4 persons and 200 or more persons which were generally much lower and much higher, respectively.

Organisational/managerial processes

Organisational/managerial process innovation introduced, 2005-06(a)(b), by type, by employment size
			Employment size
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
			%	%	%	%	%
	Organisational/managerial process innovation(c)
		Knowledge management processes to better use or exchange information, knowledge and skills	9.0	20.1	26.4	^38.1	13.4
		Major change to the organisation of work within the business (e.g. changes to the management structure or integrating different departments or activities)	3.8	13.6	22.8	^37.5	8.0
		Changes in relations with other businesses or public institutions (e.g. through alliances, partnerships, outsourcing or sub-contracting)	4.3	6.9	6.8	^19.4	5.3
		Other new or improved organisational/managerial processes	1.3	1.4	2.3	1.1	1.4
		Any organisational/managerial process innovation	14.3	29.6	42.3	^55.0	20.7
	No organisational/managerial process innovation		85.7	70.4	57.7	^45.0	79.3
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Proportions are of all business in each employment size category.
(b) Excludes any organisational/managerial processes still under development at the end of the reference period or those for which development was abandoned during the reference period.
(c) Businesses could report more than one type.

During the year ended 30 June 2006, organisational/managerial process innovations were introduced by 21% of businesses. New knowledge management processes (to better use or exchange information, knowledge and skills within the business) was the most commonly reported type of organisational/managerial process innovation by businesses at 13%. This was followed by major change to the organisation of work within the business (such as changes to the management structure or integrating different departments or activities) and new or significant changes in relations with other businesses or public institutions (such as through alliances, partnerships, outsourcing or sub-contracting), reported by 8% and 5% of businesses respectively. The ranking of most commonly reported to least commonly reported types of organisational/managerial process innovations introduced holds for each employment size range, with the exception of 0-4 persons employed.

Marketing methods

Marketing method innovation introduced, 2005-06(a)(b), by type, by employment size range
			Employment size
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
			%	%	%	%	%
	Marketing method innovation(c)
		Changes to the design or packaging of a good or service (excluding routine or seasonal changes)	3.9	7.3	10.0	14.9	5.3
		Sales or distribution methods (e.g. Internet or web sales, franchising, direct sales or distribution licences)	6.9	10.8	13.4	14.1	8.4
		Other marketing methods	2.9	4.8	5.4	3.4	3.6
		Any marketing method innovation	11.2	19.0	24.5	26.0	14.3
	No marketing method innovation		88.8	81.0	75.5	74.0	85.7
(a) Proportions are of all business in each employment size category.
(b) Excludes any marketing methods still under development at the end of the reference period or those for which development was abandoned during the period.
(c) Businesses could report more than one type.

A total of 14% of businesses reported the introduction of a marketing method innovation during the year ended 30 June 2006. New sales or distribution methods (such as web sales, franchising, direct sales or distribution licences) was the most prevalent type of marketing method innovation introduced by businesses, reported by 8%, while 5% of businesses reported changes to the design or packaging of a good or service (excluding routine or seasonal changes). This order of prevalence occurs for businesses in each of the employment size ranges apart from businesses with 200 or more persons employed for which it is the reverse.

In most cases, for each detailed type of innovation the likelihood of a business having introduced that type of innovation during the year ended 30 June 2006, increased with the employment size of the business.