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18.12.2015 The power of innovation: Weekender Column 96

We all know that the Federal Government will spend over $1 billion in the next four years to promote research, development and innovation. Malcolm Turnbull wants to drive an “ideas boom” in the nation to replace the slowing mining boom.

The entire concept started me thinking about innovation as it relates to local government and small business. Concepts that are applicable in the small business world are often applicable in local government as local governments around the State – with a few public-money constraints – can be thought of as small to medium-sized businesses.

Many people might question my sanity when I speak about innovation and local government. All three levels of government are often seen as incredibly risk-averse and conservative while successful business people are often seen as risk-takers and innovators.

Innovation is often thought of in terms of product innovation. People may logically conclude that the iPod was a wonderful new innovation. In fact, the iPod was not the first MP3 digital music player. Some would argue that it wasn’t even the best. Why, then, has Apple sold over 1.1 billion iPods and iPhones? Their real innovation was the iTunes Music Store and the ease of which users were able to load music onto the iPod. Whether that be from existing CDs or purchased music, consumers wanted an easy and intuitive experience. The innovation was not the product but the process.

The key to successful businesses is ongoing innovation. Kodak was established in 1888. In 1999 they had a 74 per cent market share in the 800 million rolls of film sold each year in the US alone. By 2006 that market had dropped to 200 million rolls and in 2012 they filed for bankruptcy. Kodak believed they could continue to deliver the same business model that had been successful for over a century. Their innovative approach stopped.

Blockbuster was the world’s largest video rental company. In 2004 they had 9,000 stores in the US and employed 60,000 staff. In 1997 a little company called Netflix offered home deliveries of videos to save people a trip to the video store. In 2000 Netflix was offered for sale to Blockbuster for $50 million but the offer was declined.

In February 2007 Netflix had delivered one billion DVDs but realised that the future was in streaming videos not delivering videos. By 2010 Blockbuster had gone bankrupt and Netflix had changed its business model so quickly that within months it had gone from the fastest growing customer of the US Postal Service’s mail service to the largest generator of Internet traffic in the US in the evening. Netflix now has over 60 million global subscribers in 41 countries.

Look at some of the people on the Forbes Rich List. Bill Gates (#1), worth $79.2 billion, was the first to see the value in computer software rather than hardware. Jeff Bezos (#15), worth $34.8 billion, knew that there had to be an easier way to purchase books and hence Amazon was born. Mark Zuckerberg (#16) can spend his time posting photos of his $33.7 billion on Facebook knowing that he has an impact on over a billion people every day. Larry Page (#19) and Sergey Brin (#20) – with almost $30 billion in the bank each – can’t begin to count the 3.5 billion searches that occur on Google every day and Michael Dell (#47) has 19.2 billion reasons to say that his innovation of selling computers direct was what the market wanted.

Innovation doesn’t have to occur on this scale though.

Many Colleges and Universities offer flexibility in the way their courses are delivered. Visit any café across the city and you will witness students sitting at a computer studying or completing assignments. Ivy College has gone a step further. Not only can you study online but traditional semester intakes have been replaced with rolling start dates and a self-paced study model with no set timetables. As with many innovative ideas, it seems so logical and obvious – after someone else has thought of it.

Corporate Travel Management (CTM) identified that up to 20 per cent of an organisation’s business travel is not paid to airlines or motels – but to taxis. They found that there were many instances of more than one employee travelling to or from an airport at the same time but unaware that a fellow employee was travelling on the same journey. CTM developed some simple software called SMART Taxi that alerts business travellers from the same company of taxi-sharing opportunities. One client saved over $25,000 in taxi fares in the first year of implementation.

In local government as in business, research, development and innovation are not performed in a department. To be truly innovative, an organisation has to have AOI. An ‘attitude of innovation’. That means from the top to the bottom, every employee has to have the freedom - and confidence - to suggest ideas. Employees need to know that ideas are encouraged and they won’t be ridiculed if they bring forward new methods of operation. The fear of failure often holds back many brilliant ideas. Many people want to play it safe and suggest nothing. My favourite Seth Godin quote expresses that concept perfectly. “Playing safe is very risky.” I would find it very frustrating being involved in an organisation where everyone said nothing because they wanted to play it safe. I would rather ideas flowing forth and then picking the gems from those.

Councils across the State need to encourage innovation from their Councillors; staff and communities. When the shackles are removed, it is quite amazing what the results will be. Dubbo is performing incredibly well at the moment – on all metrics – because our Council and our community are innovating at multiple levels.

Thanks for reading my random thoughts throughout the year and I wish all readers the best for Christmas and I look forward to hearing your innovative ideas next year.