The words ‘productivity’ and ‘flexibility’ get bandied about a lot whenever the economy is discussed. These words seem to be in every article and every piece of commentary about the economy. However, it seems that in the rush to be the first with the latest story about the latest market stats, commentary about innovation is entirely lost.
I mention innovation as it is through innovation that productivity can be lifted.
I also mention it as I recently came across a survey conducted by the Australian Institute of Management into how Australian managers rank themselves on a number of issues. The report suggests that Australian managers didn’t rank themselves well when it came to innovation or thinking globally.
This is pretty damning stuff when you think about it. Yet there is a substantial amount of academic research about the positive links between innovation and productivity. While innovation is often expressed in different ways but it always involves the creation, flow and/or absorption of ideas. Through speed and quality of the creation, transmittal and absorption of ideas innovation is facilitated.
However, innovation depends on an organisation’s ability to create, acquire and manage knowledge. The knowledge economy is something that is yet to be fully realised in Australia. But for many businesses, innovation success involves developing business opportunities by commercialising research and development projects, organisational processes or services faster than the competition.
Organisations can then create competitive advantages through innovation. However, innovation requires deliberate decisions by organisations to invest in skills and knowledge, physical assets, brand reputations, infrastructure etc, to add new resources, to develop different capabilities or extend into new areas and new markets. In this way competition and all important profit motive creates the incentive to innovate.
According to the Australian Bureau of Statistics (ABS), innovation in Australia has been on the increase. In 2007–08 45 per cent of businesses were actively seeking ways to innovate and trending up . Unfortunately the OECD notes that Australian organisations innovating are below the OECD average and well below comparable countries such as Canada, United Kingdom and New Zealand .
And despite the research and reality illustrating the need for innovation to bolster productivity, we’re often told that Australian workers have to be more flexible to increase productivity. However, workers know that the word ‘flexibility’ is a one-way street.
The Voices from Working Australia report told us that workers know all-too-well that flexibility is something management expects of workers yet is rarely reciprocated by management. Workers also know it means less time with family, friends and being less productive because of a lack of a rounded life.
Though this kind of managerial approach is also concerning from the view point of developing an engaged workforce; producing a more productive workforce.
There is a significant body of management research that shows that workers involved in the organisation are more loyal and more productive. This means workers are part of the decision-making processes, have a say in their workplaces, have secure jobs, and are given respect and dignity, resulting in a productive workforce working towards the growth of the organisation. It has been regularly shown that in the organisations with the most engaged workforce, and most secure workforces, are more productive.
There are also a range of case studies that highlight the dangers to business of excessive use of overly restrictive employment practices like casual work, contracting and labour hire, where the response to times of high demand cannot be properly planned for with an insecure workforce. As a result such organisations tend to be incapable of competing resulting in further lay-offs, or more out-sourcing; resulting in the organisation being incapable of planning for unexpected times of high demand.
You can see where I was going and unfortunately it’s a vicious downward spiral. Eventually these organisations are bought out or go out of business; and it’s not the fault of the workers. You just have to see in the Voices from Working Australia  that Australian workers are very loyal and work long hours, so these organisations can hardly put the blame at the feet of their out-sourced, labour-hired, contracted workforce.
Yet we have from the Australian Institute of Management a survey of Australian managers showing that they ranked themselves lowly when it came to being global thinkers and innovators. One would imagine with all the talk about the global economic uncertainties, Australian businesses would be out there seeing what’s happening globally and returning with fresh ideas on how to innovate in their businesses to meet the challenges of the global economy.
And with such a survey in the public domain, it begs the question as to why the big business lobby and their Coalition mates haven’t been taken to task over innovation. Why haven’t the various business pundits and commentators been asking the hard questions of CEOs and Boards about their investments in skills and knowledge, infrastructure, and programs to add new resources, developing different capabilities or taking on new challenges to move beyond what the company is already good at?
Perhaps the keys to Australia’s productivity woes lies in Australian businesses doing more to innovate, rather than seek ways to shift the risk and burden of employment onto its workforces. Creating secure jobs, which everyone can rely on, creates a more productive workforce and more productive businesses. It also creates a more vibrant domestic economy.
1 Australian Bureau of Statistics, Summary of IT Use and Innovation in Australian Business, 2007–08 (cat. no. 8166.0)
2 OECD Science, Technology and Industry Outlook 2008, p. 233
3 Australian Council of Trade Unions, Voices from Working Australia report 2011