BUSINESS INNOVATION



As indicated in the Explanatory Notes, the Business Characteristics Survey (BCS) collects key indicators of IT use and innovation in Australian business annually and more detailed information for each of these topics is collected every second year (i.e. in alternating years). The 2007-08 BCS collected detailed information relating to the use of information technology by Australian businesses.

Summary innovation data for 2007-08 were first released in Summary of IT Use and Innovation in Australian Business, 2007-08 (cat. no. 8166.0) in June 2009.

This release provides a detailed breakdown of the broad types and status of innovation.

Summary of innovative activity in Australian business(a), key indicators, by employment size, 2007 - 08
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses which introduced any new or significantly improved:
	goods or services	18.0	28.2	29.5	34.6	21.9
	operational processes	13.5	23.1	28.7	45.5	17.6
	organisational/managerial processes	13.2	26.0	38.3	45.9	19.0
	marketing methods	11.8	18.7	22.1	21.6	14.6
	any of the above (i.e. innovating businesses)	31.6	49.8	60.0	65.9	39.1
Businesses with innovative activity which was:
	still in development(b)	17.9	28.6	35.5	46.2	22.5
	abandoned	5.7	9.4	8.4	6.8	6.9
Businesses with any innovative activity (i.e. innovation-active businesses)		37.0	56.1	65.9	70.8	44.9
(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period, i.e. at 30 June 2008.

The scope of innovative activity as measured by the Business Characteristics Survey (BCS) covers four broad types of innovation (goods or services, operational processes, organisational/managerial processes and marketing methods) and three statuses of innovation (introduced, still in development and abandoned). The combination of these yields two measures of innovation: innovating businesses (i.e. those who have introduced or implemented at least one type of innovation) and innovation-active businesses (i.e. those who had undertaken any innovative activity).

During the year ended 30 June 2008, 45% of Australian businesses were innovation-active, with the proportion of innovation-active businesses increasing with each successive employment size range. At the industry level, over half of all businesses in Wholesale trade, Retail trade and Manufacturing were innovation-active.


Goods or services

Goods or services innovation(a), by employment size, by status, 2007 - 08
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses which introduced any new or significantly improved:
	goods	9.9	16.6	16.4	19.3	12.3
	services	11.3	17.5	19.1	21.9	13.7
	goods and/or services	18.0	28.2	29.5	34.6	21.9
Businesses with any activity related to new or significantly improved goods or services which was:
	still in development(b)	9.8	13.1	16.4	24.5	11.3
	abandoned	2.3	2.9	2.5	4.2	2.5
(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period, i.e. 30 June 2008.

In total 22% of businesses reported the introduction of new or significantly improved goods or services during the year ended 30 June 2008. A slightly higher proportion of businesses introduced new services (14%) than goods (12%). This was the case across all employment size categories. By industry, the propensity to introduce new goods was higher for businesses in industries traditionally associated with goods, such as Retail trade and Wholesale trade (both 30%).

Having new goods or services still in development was reported by 11% of businesses. In contrast, 2% of businesses reported abandoning activity that was intended to result in new goods or services. Businesses in Information media and telecommunications recorded the highest proportion of new goods or services still in development (21%); with those in Wholesale trade recording the highest proportion for abandoning activity associated with the development of new goods or services (8%).


Operational processes

Operational process innovation(a), by employment size, by status, 2007 - 08
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses which introduced any new or significantly improved:
	methods of manufacturing or producing goods or services	6.5	8.2	10.0	15.8	7.3
	logistics, delivery or distribution methods for goods or services	3.5	5.2	7.0	13.8	4.3
	supporting activities for business operations, such as systems or processes for purchasing, accounting or computing	6.3	16.1	19.1	33.9	10.2
	other operational processes	0.3	1.1	1.5	1.1	0.7
	any operational processes	13.5	23.1	28.7	45.5	17.6
Businesses with any activity related to new or significantly improved operational processes which was:
	still in development(b)	6.3	11.9	14.9	29.4	8.7
	abandoned	1.0	2.8	3.2	3.7	1.7
(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period, i.e. at 30 June 2008.

New or significantly improved operational processes were introduced by 18% of businesses during the year ended 30 June 2008. Supporting activities for business operations, such as maintenance systems or processes for purchasing, accounting or computing, was the most reported type of operational process reported by businesses (10%). This was followed by methods of manufacturing or producing goods or services (7%) and logistics, delivery or distribution methods for goods or services (4%). This ranking holds for all employment size ranges, except for 0-4 persons, where the proportion of businesses introducing new methods of manufacturing or producing goods or services was about the same as those introducing new supporting activities for business operations, such as maintenance systems or processes for purchasing, accounting or computing.

At the industry level, Wholesale trade recorded the highest proportion of businesses which introduced new improved logistics, delivery or distribution methods for goods or services at 12%, double that of Manufacturing.

New operational processes still in development were reported by 9% of all businesses. A smaller proportion of businesses (2%) reported abandoning activity that was intended to result in the introduction or implementation of new or significantly improved operational processes.

For operational process innovation still in development, businesses in Mining recorded the highest proportion (17%) followed by Electricity, gas, water and waste services (14%); then Manufacturing and Information media and telecommunications, both at 13%. By industry, relatively small proportions of businesses reported abandoning innovative activity associated with new operational processes, with Manufacturing and Health care and social assistance (both at 3%), recording the highest proportions.


Organisational/managerial processes

Organisational/managerial process innovation(a), by employment size, by status, 2007 - 08
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses which introduced any new or significantly improved:
	knowledge management processes to better use or exchange information, knowledge and skills within the business	8.6	17.1	24.7	26.9	12.4
	organisation of work within this business, such as changes to the management structure or integration of different departments or activities	3.8	10.4	19.2	29.9	7.1
	relations with other businesses or public institutions, such as through alliances, partnerships, outsourcing or sub-contracting	3.6	5.2	3.4	6.6	4.0
	other organisational/managerial processes	0.2	0.5	1.3	1.9	0.4
	any organisational/managerial processes	13.2	26.0	38.3	45.9	19.0
Businesses with any activity related to new or significantly improved organisational/managerial processes which was:
	still in development(b)	5.0	12.5	15.3	23.7	8.0
	abandoned	1.2	2.8	2.8	2.7	1.8
(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period, i.e. at 30 June 2008.

During the year ended 30 June 2008, new or significantly improved organisational/managerial processes were introduced by 19% of businesses. Knowledge management processes to better use or exchange information, knowledge and skills within the business was the most commonly reported new type of organisational/managerial (12%). This was followed by major change to the organisation of work within this business, such as changes to the management structure or integrating different departments or activities and significant changes in relations with other businesses or public institutions, such as through alliances, partnerships, outsourcing or sub-contracting reported by 7% and 4% of businesses respectively.

Businesses in Administrative and support services (17%) recorded the highest rate for introducing new or significantly improved knowledge management processes to better use or exchange information, knowledge and skills within the business. Businesses in Construction, Rental, hiring and real estate services and Transport, postal and warehousing (all 4%), were least likely to report major changes to the organisation of work within this business, such as changes to the management structure or integrating different departments or activities.

New organisational/managerial processes still in development were reported by 8% of all businesses. A smaller proportion of businesses (2%) reported abandoning activity that was intended to result in the introduction or implementation of new or significantly improved organisational/managerial processes.

Across industry, the proportion of businesses reporting new or significantly improved
organisational/managerial processes still in development ranged from 4% for Electricity, gas, water and waste services and Construction to 12% for Professional, scientific and technical services and Health care and social assistance.


Marketing methods

Marketing method innovation(a), by employment size, by status, 2007 - 08
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses which introduced any new or significantly improved:
	changes to the design or packaging of a good or service (excluding routine or seasonal changes)	3.3	5.8	9.1	10.5	4.5
	sales or distribution methods, such as Internet or web sales, franchising, direct sales or distribution licences	7.4	12.5	13.0	13.3	9.3
	other marketing methods	2.9	3.1	4.5	2.9	3.1
	any marketing methods	11.8	18.7	22.1	21.6	14.6
Businesses with any activity related to new or significantly improved marketing methods which was:
	still in development(b)	9.1	14.9	14.9	12.7	11.2
	abandoned	3.5	4.5	3.8	2.6	3.8
(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period, i.e. at 30 June 2008.

Overall 15% of businesses reported the introduction of a new or significantly improved marketing method during the year ended 30 June 2008. New sales or distribution methods, such as Internet or web sales, franchising, direct sales or distribution licenses was the most prevalent new type of marketing method reported by businesses (9%), while 4% of businesses reported changes to the design or packaging of a good or service (excluding routine or seasonal changes). This order of prevalence occurred for businesses in all of the employment size ranges.

Changes to the design or packaging of a good or service (excluding routine or seasonal changes) were most commonly reported by businesses in Wholesale trade (9%). This industry, along with Retail trade, recorded the highest proportion of businesses with new sales or distribution methods, such as Internet or web sales, franchising, direct sales or distribution licenses (both 16%).

Among the four broad types of innovation reported in this release, 11% of businesses reported having marketing methods innovation still in development, making this type of innovation the equal most common type of innovation still in development. This is in contrast to the ranking of marketing methods innovation as being the type of innovation with the lowest proportion of implementation. Marketing methods innovation was the most commonly reported type of innovation for which activity had been abandoned during the year ended 30 June 2008 (4%).

By industry, the proportion of businesses reporting new or significantly improved marketing methods still in development ranged from 5% for Transport, postal and warehousing to 17% for Information media and telecommunications. Accommodation and food services and Other services recorded the highest proportion of businesses abandoning activities associated with the development of new marketing methods (both 6%).