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How businesses innovate today
and what that means
for the workforce
Grant Kearney
Australian industry lnnovationXchange Network,
Australian lndustry Croup Tyree Foundation
This chapter examines the.evolving workplace
in light of business demands for it to be
innovative. lnnovation is defined u, ,ooing something
new or aif"."iil, that adcls value or
is useful'. w-irile change anc.r innovaticn h-ave
o""n .-onriun" i" u".i"";r, there are
significant differences between the past and present (and
future) in both the pace of change
and its unpredictabirity. To manage, and indeed profit
from ihis new environment,
companies and whole economies must bring into
alignment their culture (or mindset), their
systems and processes, and their resources.
Current and future conditions demand a new, rnore
open and trusting workprace where
diversity and creativity are encouraged and recognised
for their ongoing contribution to
innovation' Valued emp.royees, at ail revers, from
managernent to the shop froor, wi1 not
onlv be those with 'hard' technicai skiils, but arso
the ,softer, sociar skiils required for
decision-making and managing rerationships. Furthermore,
siu"n ihu rpu"a of
technological change, companies wirr require
a workforce capabre of adapting and
integrating new technologies vrithin existing processes
and systems, and conversely,
adapting existing business systems to accommodate
emerging technorogies.
This will require members of a workforce to
be confident in their capacity to reach
beyond the comfort zone of personal experience,
as well as beyond the internal boundaries
of their job description. lt will require an education
system that recognises the inherent
creative capacity of the individuar, and which
can buird, and indeed restore, the
environment of trust needed for individuars
to express their creativity.

Defin ing innovation
T HAS BEEN SArD

that innovation is the servant of many masters-everybody

has an opinion and a definition of what 'innovation'means,
and when

attempting to define it, it's helpful to take a
wide view of innovation, treating
How businesses innovate today

and;ffi

Thke for example. innovation is doing something new or differently which adds value or is useful. 60 Vocational education and training and innovation: Research readings xt. another. the internet technology. Coinciding ' In this context. products or services. getting products to market. they are just ideas or concepts. or a concept proven and executed. which began by connecting computer networks at several universities and research laboratories in the united states. but can in fact be old ideas applied differently. and really took hold with the arrival of the world wide web.seful to the community in rvhich it is appiied. Important to defining the concept of innovation is the notion of 'doing'. corporate innovation must take place as part of a globalised. moving at an exponential rate across all fields of human endeavour. began shortly after the Second world war. banking and to hundreds of other areas in life. between companies and across economies. The simple patenting of a technology does not necessarily make it an innovation. as good or as bad as they may be. more 'open' system. it is not an innovation. a 'whole of organisation' issue refers to the fact that innovation is not simply about new technology. *. Unless the technology. so too. and how the business deals with new ideas conceming any of these issues. Change is constant How often have we heard ihe maxim that change is constant-this is true and has always been so. . and which is now being applied to the home delivery of food. This deiinition provides an insight into the key elements of innovation. service or product adds value to a bttsrness operation or is rr. doin-g sornething new or differently that adds value or is useful becomes the foundaiion upon which innovations are built. online stock trading.it as 'a whole of organisation' issue. Equaliy. Further. just because something is new or different. may alsc be regarded as of little vaiue or use ir'. particularly if it is never applied or commercialised. Thus.' It's not just science and technol ogy. ot research and development. U I _ . The web has accelerated the flow of information and knowledge across the globe. process. what might be regarded as an innovation in one contert or cornmunit'/. it also refers to corporate culture and business mod-"is. including ways of financing. dealing with customers. but unless an idea can be validated and applied. businesses have alwavs had to innovate. Today however. Ideas are the seeds from which innovation grows. inside companies. The difference today is that change is faster. although these are obviously critical components of a modern irurovative economy. 1t would seem that this shift towards what we might describe as'open innovation. it is not necessarily an innovation. Not all innovations are necessarily new ideas.

because no company can stand alone in a global economy. How an economy or a company organises itself (its systems and processes) in terms of its creation. Even rnajor corporations such as IBM and Proctor & Gamble are simply not'smart' enough or sufficiently resourced to do ii alone. The third fundamental for business success is a company's resources in terms of intellectual property.999. production and distribution of goods and services is fundamental to its success. see diversity as a powerful business tool. These three phenomena have stimulated a major shift in the way in which not only companies. As recently as 1.must. Today's innovative companies. tn:st and diversitv-opunilesu. it must bring into alignment its culture (or mhdset). To share ideas. financial capital and physical assets. We all know of the experience of the worker who shared an idea for a business improvement or innovation with a supervisor or colleague. Mindset (culture) The culture of an ir. need to interrelate. At a shop floor level. companies. It is no coincidence that the most successful economies or corporations have a cohesive. This need for openness brings lvith it an increasing reliance on trust. we would associate the power of organisational culture with notions of homogeneity or'sameness'.ncvative or smart company today must be i:rcreasingly based on openness. however. To help understand the impact of all of this on how companies innovate. those guilty of this type of behaviour will be discredited. 'Share and be prepared to learn'. As new processes and systems for innovation are adopted in the workplace. this requires workers to be open to new ideas and to be willing to accept external input. only to have it plagiarised or stolen. In this context. and the consequences for the workforce. As Henry Chesbrough (2003) says in Open innoaation: The new imperatiae for creating and profiling from technology. For any company or economy to be successful. the movement of capital. but entire economies. its systems and processes/ and its resources. dominant internal culture or mindset. Proctor & Gamble recognised this when the company appointed a director for external innovation.with this were three other significant factors-the globalisation of financial markets. This has always been so. There will simply be no place for this type of behaviour in the new workplace. it is perhaps useful to think in terms of the three fundamentals for business success. Increasingly. such as new technology. companies are coming to recognise the value that different perspectives can bring to the creation of new products and How businesses innovate today and what that means for the workforce 6'l . especially the rise of venture capital. and the increasing mobility of a highly educated workforce. 'diversity'has been seen to be little more than a compliance issue or at best the imposition of extemal 'political conectness'. to accept input from others requires a willingness to trust. Traditionally.

lt inueases the scope of possibilities and allozus our people to come up with more creative business solutions. As one participant in the consultations observed: Using diaerse work teams broadens the way ute see things.. Productiue diaersity: inuesting in your organisation and Australia's future. can be of aital importance io business. IBM's Diversity Mission Statement provides an insight to this shift: IBM aalues diaersity and recognises the need to capitalise on the skills. p. for the unique (Department of Immigration and Multicultural and Indigenous Affairs 2003.iii . tound that businesses see diversity as essentially an issue of skiiis. encouraged and respected. ffii X!g:e-: ffiffi] a3.5) Individual creativity and innovation are important skills of a diverse workforce and can be used by smart companies to extend traditional business boundaries. The skills and talents to be found in a diaerse workforce . Valuing diaersity in IBM uncoTJers new perspectiaes. the Australian Human Resources Institute and 64 other organisations. taps different knowledge and experience. (Department of Immigration and Multicultural and Indigenous Affairs 2003. The resulting report. and generates ideas. smart managers now recognise that the last person they want to employ is a clone. religious and sexual diversity to intellectual diversity. it is ebout businesses being able to riraw new skills to the organisation or make better use of the skills they already haae.. ffir ffi*. suggestions and methods not otherwise considered. lijlPjirt: :!qi' seryices/ solving problems and the generation of new opportunities. Here the emphasis shifts from a focus on ethnic. the Department of Immigration and Multicultural and Indigenous Affairs hosted a series of business consultations around Australia in partnership 'with Drake (the human resources company) the Australian Industry InnovationXchange Network. opinions and talents of all segments of its workforce. that is: ..15) The report conclucied that: Dioersity can proaide signifcant henefits to business through creating zoorkplaces that treat eaeryone taith respect. giuing us an outstanding woricforce in the industry---a workforce where dffirences are expected. We inaest in our people to deaelop their strengths.. (rBM 2003) In2002.. (Department of Immigration and Multicultural and Indigenous Affairs 2003.8) Vocational education and training and innovation: Research readings rl i . p. to explore the reievance and business benefits of Australia's language and cultural diversity. which encournge new ideas and perspectiaes and where workers feel ualued and appreciated contributions they can ffir.tffi &.*. It is clear that d-iversity is being increasingly seen as rnuch more than 'sirnply recognising difference'. p.

The job advice provided by many parents 20 years ago would have been along the lines of. The days r'vhen a skilled iraciesperson could enjoy a long career inside an isolated workshop are rapidly passing. there will be greater pressure on staff at all levels to better relate to their clients. As innovative companies re-organise their processes and systems to get closer to the market and their customers. either to other units within their company/ or directly with customers and clients. brings with it imporiani impiications for the VET secior and the future of the workforce. trust and diversity within a workforce demands that our vocational education and training (VET) system provides a learning environment which reinforces and develops these qualities. horizoniai systems. while others talk about'listening to the customer'. Some processes or business models capable of effectively and efficiently converting its resources intc economic output. The issue here is that the success of an economy or a company is in large part determined by its ability to put in place systems. An. bui the 'softer' social skills required for decision-making and managing relationships.li . closer to the'coalface'.obvious implication of all this is that tomorrow's skilled tradesperson will need to have a higher level of decision-making capability and relationship skiils. There is also an attendant need for lower-level managers to be able to connect extemally. technically skilled workforce which understands business. Our vocational educatiorr and training system wiil need to provide for a workforce which not only possesses the hard technical skills. many more employees at all Ievels will carry the company's reputation with them and represent the company to clients. The shift from. Being able to'fit in'is increasingly less important than an employee's ability to understand and contribute to the goals of the business through creative engagement with their work. As organisational structures become increasingly flat and integrated.. 'find a job that's safe and secure. Ensuring success in the workplace today and in the future will require a very different mindset. It is perhaps more accurate to say that Henry Ford's introduction of mass production changed the world. Capabilities: Systems and processes would say that the invention of the motor car has changed the world. you can't go wrong with a trade. Be reliable and make sure you fit in'. Whatever the terminology.closed to open economies ancl from closed industrial 'silos' to more Lntegrated. A consequence of companies moving closer to the consumer is the need for a competent. This imperative for openness. Some call it'mass customisation'. there is a growing need to push decision-making further down the management chain. A skilled tradesperson who understands and appreciates the impact their technical How businesses innovate today and what that means for the workforce 63 .

Mich. it is often siid thut companies themselves no longer compete. For example. a parent simply iannot imagine what types of jobs will be available in 20 years time. Today companies must innovate within an ecosystem that is far more complex than in the past. For example. manufacturers and distributors around the globe.ael Garrett. Large multinational corporations in particul ar. Executive Vice-president of Nestle recently sharec his thoughts on innovation in large companies and the need fcr innovatir)n across the entire business. whereby new ideas *"ru gur. others jockey to form strategically important alliances with suppliers.o ronger haue sares managers. alut however. u 'nanoelectrician'? I4/hile the vET system faces a chalrenge in being able to predict and identify emerging employment trends and skill needs in order to bulld firelong trainin! 64 Uo. The rerative simplicity of the 'virfuous cycle'. workers not only need to be ahle to operate in a rnore complex organisational structure." companies increasingly rely on the licensing of their intellectual property. Their is to manage the complete relationship iob in a way that gets the best business outcome for our eistomer and lor us. so too. workers have always had to go to where the jobs are.rritipl" production sites foi single iroiucts scattered around the gloLe to service local markets. Giuen the size and complexity of the business we do wiih our retailers.capabilities can have on a company's business in the fullest sense. ."r. they also need to be more agile and willing to reskiil. his diughter) to pursue a career similar to his own. will there be such a th"i.orr.ionul .u. p2B) As a consequence of these large-scale business innovations. iryhil" . but today these have been consolidated and localed in single sites to maximise econ_omies of scale. A Nestl6 initiative which began some ihree years ago recuced the number of external suppliers from a reported d00 0c0 to t6z 000. Previously a company like Neitl6 or Electrolu* tiuy havre had .rg u. Twenty years ago anelectrician may reasonably have been expected to encourage his son or (if he was enlightened. will be far more valuable than a technician who can only see the technology.Iichael Garrett observed: Despite hauing tlrc number one or number two brand in most categaries around the world. the manager or supervisor who can appreciate the impact of technoiogy on business opportunity will be far more valuable than the administrator who-is only maintaining schedules.. is giving way to an array of complex new business models. developed and taken to market using the own resources. are reorganising how they do business.r. the difference now is that the types of jobs # changin'g at an ever-increasing pace. "o*puiy. but that suppry chains compete. anci as N. we nolo haae business managers."ruted within a company. we haae learned that tistening anel responding to consumers means deaeloping new u)ays and nera structures. (Garrett 2003.

brtihey also need to look for entirely new legal and business structures. may easily be defined as the available financial capital. determined by the financial available to a particurar "upitrl company at any given time. As the capacity of a worker to contribute to the intellectual capital of a company becomes increasingly important.'Ihey will seek out and rnvest in emplol. The emergence cf a knowledge econorny s-'-rggests that companies will hcreasingly need to place greater eri'lphasis on the allocation of capital resources to the"ir worktbrce. It is just possible that the current corporate structures which have evolved to serve the industrial economy may themselves evolve over time as we search for new ways to do business in a global economy. the rore of an employee has generally been one of sen ice to the internai compan)r machrne-not only in terms of plant. It is possible now to imagine a future where the emphasis is reversed. tr/ A . in this context. given the speei or technological chinge How businesses innovate today and what that *. . Companies have for a long time recognised their workforce as an important resource (although I suspect in the early days of the Industrial Revolution this was often not the case) while balancing the illocation of iimited capital between the development of a skilled workforce and the maintenance of efficient production and distribirtion assets. in subsequently the company will require its workforce tolecome skilled.s worker will not only be required to have these skills. but vvho can expand the business. investment in new equipment and technol ogy wilt obviously remain a priority.^ u knowledge economy. adopt skills or be retrained to maximise return on investment and production output. companies are becoming increasingly lware that. in fact. tomorrow.programs. so too r.u* fo-. it is just possible that there is an even bigger chalenge looming. Companies will continue to allocate their available capital to physical assets.-. and processes. in the pasi. while yesterday. to a large part. The way we do business in 20 years may. however. In the future. the company may invest heavily new equipment and technology because it fits existing ryri.s worker (and in some cases today's worker) has been required to have the siill necessary to operate particular machinery or to perform a particular function.I. but unlike in the past. smart companies will invest more heavily in their human capital. be nothlg hke the way we do business today. but importantly to the processes and structure of the system. The quantum of resources available is.r'ill vocational education and iraining programs which develop these new skills. but will. theie technologies will increasingly be 'enablers'. human capital and physical assets. not only must they change the way they organise themielver. Resou rces Resources. particularly new technologies. rjnder the old system.ees who can not only operate iheir business. tt" *o*for* OS i 1 ! I t. more importantly. be expected to contribute to the company's ongoing innovation p-""rr.

while there can be no doubting the positive poiential to flow from team learning and team-working approaches with good leadership. Creative new business procedures. how to collaborate with each other and how to represent their ideas to others. such as how to generate and capfure ideas. but creativity in a wider sense is an absolutely essential ingredient of a successful business culture. the acceptance. Here the notion of creativity is important. Many recognise. and more importantly. In summary. w-e need to be cautious not to allow the notion of team work to simply become another form of consensus-driven peer pressure. the real challenge l^rill be to create a lvorkforce with the basic personal skills r. Here I might add a rvord of caution on the obsession of 'team building'. people's ability to perform these Processes will ultimately be determined by broader factors such as individual confidence and creativity. will demand significantly higher levels of base competencies. and conversely. an enthusiasm for the power of differences of all types amongst staff. for example. are all elements of a creative and innovative culture. the vital role of creative design in underpinning consumer product innovations. What does all this mean for the workforce? While the vccational education system rnay be required to train the nanoelectricians of the future. companies a workforce capable of adapting and integrating these technologies will require within the company's existing processes and systems. the environment of trust needed for indiviudals to express their creativity.r'hicir will be ciemanded in a world where the orily constants are change and the pursuit of competitive advantage through innovaiion. And it will require an education system which recognises the inherent creative capacity of the individual and which can build. and beyond the internal boundaries of their job description. to collaboration and to the sharing of knowledge. such as biotechnoloEy. This will require members of a workforce to be confident in their capacity to reach beyond the comfort zone of personal experience. adapting existing business systems to accommodate emerging technologies. A successful team demands that its individual members bring their full capabilities and individual skills to the game. while there will be value in programs to train people in some of the processes. an open-minded attitude to new ideas. Does all this mean that the vocational education system should introduce a basic innovation training skills program? Many would be familiar with the ongoing debate over whether or not it is possible to teach innovation. companies will be increasingly concerned to invest more heavily in their human capital resources. 66 Vocational education and training and innovation: Research readings . or deveiep computer courses applicable to emerging indusiries. and indeed restore. but in tum.g and the risks inherent in investing in such technologies.

Canberra. summary of nationwide business consultations. InnovationXchange Network. pp.zffi . responsibility for such training belongs with the primary and secondary education systems or with the wider community. reproduced in FastThinking magazine. IBM.nected economy'. Sydney. Harvard Business School Press. customers and partners in the hyper-cor. Financia! times. Spring 2003. Harvard. Englewood Cliffs. Sydney. Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) 2003.i . issue 2. DIMIA.'Diversity Mission Statement'. IBN{ 2003. R 2003. Productiae dioersity: Inaesting in your organisation and Australia's future. August 2003. 'Living networks: Leading your company. speech to Australian Industry Group National Forum. MA. References Chesbrough. Dawson. How businesses innovate today and what that means for the workforce 67 t. at best. H 2003. The role of the VET system is to contribute to the education of a skilled workforce-and a fundamental skill in a knowledge economy is the capacity to think and act creatively and openly with confidence.Prentice Hall. Open innoaation: The new imperatkte for creating and profiting from technology. M 2003. Garrett.w' It .{ 'i i There will be those who will argue that this is not the role of a VET system and that. I would urge that this is not so. NJ.