The 2021 NAB Business Innovation Index has revealed that innovation is on the rise as businesses across Australia make difficult decisions to focus their efforts after a turbulent 2020. After falling to a survey low 51.2 pts at the height of the COVID pandemic, the NAB Business Innovation Index recovered to 53.3 pts in 2021. However, this is still below the levels seen from 2016-2019.
In 2020, widespread supply chain and cash flow disruptions forced business closures and job losses in Australia, which saw innovation from doing things more quickly or efficiently fall. But the crisis also brought change and adaptation, with innovation from doing things differently up sharply.
With business conditions returning to multi-year highs and ongoing signs of improvement in the economy, innovation in 2021 is being driven by doing things more quickly (up 7.8 pts to 50.2 pts) and cost efficiently (up 5.5 pts to 53.8 pts). While innovation arising from doing things differently has fallen post the initial COVID spike (down 7 pts), it remains the biggest contributor to overall innovation (standing at 55.9 pts).
NAB Group Executive Business & Private Bank, Andrew Irvine, said last year presented many companies with a unique opportunity to take stock and focus their business on the strongest opportunities:
"After years of consistent GDP growth in Australia, the arrival of the pandemic was a real shock to the economic system and to companies across the country. This crisis, however, forced many businesses to clean up their balance sheets, sell off unnecessary stock or equipment and refocus their efforts where the real opportunities for growth lie."
Innovation was higher in all Australian states in 2021 with Victoria once again crowned Australia’s most innovative state (up 2.0 pts to 55.7 pts, ahead of SA at 54.5 pts). Innovation improved the most in Tasmania (up 5.6 pts to 46.0 pts) but it remained the least innovative state by some margin.
Meanwhile, mining has emerged as the most innovative sector (up 13.2 pts to 58.6 pts). There were also notable improvements in manufacturing (up 10.0 pts to 54.0 pts), transport and storage (up 8.2 pts to 49.9 pts) and construction (up 6.2 pts to 49.9 pts) - although the latter two sectors here were still classed as the least innovative industries in the 2021 survey.
"The innovation we are seeing now is more concentrated on investing in new equipment or new premises to take advantage of new ideas they developed during 2020," Irvine commented. "'Pivot' was a great catchphrase for 2020, but this year is all about doubling down on the opportunity. COVID-19 has created new opportunities for growth and those businesses that invest in innovation are likely to outperform post the pandemic."
During the onset of the pandemic, Victorian business Spacecube - who create modular infrastructure from waste materials - found that almost instantly their product had a wealth of new uses, including the creation of a COVID-19 Medical Facility at Monash Health.
Spacecube CEO, Mark Davies said this year the company would be looking to build on the new uses they uncovered for their product by helping Melbourne’s hospitality sector recover with increased seating capacity for restaurants, bars and cafes and increasing awareness of their brand.
"With the support of our business banker, we were able to focus on taking our product to markets that didn’t previously exist," Davies said. "In the matter of weeks, we were forced to expand and adapt to avoid being pigeonholed during the pandemic. That was 2020 - our focus now is to build on our product and get our name out there to grow our business."
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