The culture of innovation has evolved beyond the Turnbull mantra

It’s no wonder the Turnbull government’s innovation mantra has fallen flat. It offers strategic tax breaks and incentives to increase risk appetite as a means of innovation, when the true culture of innovation is actually to manage and minimize risk.

This is a key principle of the new culture of innovation emerging in the design and startup industries. Australian leaders are behind the ball on this culture, in many cases struggling to catch up.

Australian innovators and entrepreneurs have complained about the state of the national innovation culture for years, and for good reason. According to the Australian Innovation Systems Report 2015, only 16% of Australian companies have a high-performing innovation culture, compared to 44% of the world’s top 100. On top of that, 39% of Australian companies have little or no innovation culture at all. .

Australian startups account for the bulk of the top 16%. These companies define a new culture of rapid innovation, collaborative and committed to minimizing risk.

Corporate Australia is eager to embrace the startup path. But businesses need to understand that the rules have changed.

Fifteen years ago, a company was considered innovative if the CEO and board forced a constant flow of new product ideas through the company’s innovation pipeline. Innovation was a carefully planned process, driven from above and linked to key strategic goals.

In 2016, innovation is synonymous with entrepreneurship, self-organizing teams, quick ideas and inexpensive customer experiences. This is a completely different concept and practice from innovation.

What motivated this change? The answer is complex, but it essentially concerns the rapid rise of a suite of methods that have changed the nature of work in the worlds of design and tech startups. These methods allow innovators and entrepreneurs to develop new products and services quickly, at minimal cost and with limited risk. They are: agile software development, design thinking and the lean start-up method.

Agile software development was born in 2001. Agile developers work in self-organizing teams to build functional software in short iterative sprints. They oppose planning-intensive “waterfall” approaches because they lead to budget blasts and software that no one wants. Instead, they create software in close collaboration with customers and users. This reflects a hacker approach to software development: build, test, learn and iterate.

The mindsets and practices of hackers have fueled the design world since 2004, when IDEO founder David Kelly started the dschool at Stanford University. The dschool established “design thinking” as a core program for the Silicon Valley design industry.

The IDEO version of design thinking combines an anthropological investigation of the usual behavior of users with the hacker-type approach of agile development. Dschool students learn to work in self-organized teams to rapidly prototype and create innovative products and services that meet customer needs.

Since Eric Ries published The Lean Startup in 2011, self-organization and rapid prototyping for learning have become essential features of the startup industry. Ries relied on Steve Blank’s customer development methodology, a process of validating business model assumptions, augmenting it with the idea of ​​a “lean feedback loop”, a cycle of experiences which helps entrepreneurs quickly identify a business model.

In today’s startup world, putting together a prototype and testing it with customers is how people start a business. Spreets, the Australian group buying site, used the lean startup method to go from concept to launch within a month. Spreets was bought by Yahoo7 for A $ 40 million nine months later.

Through self-organization and rapid prototyping, start-ups are able to innovate faster and at lower cost than traditionally structured companies, minimizing costs and business risks.

If the government is truly committed to fostering a culture of local innovation, it should invest in training entrepreneurs and business leaders in this new culture of innovation. Ultimately, tax breaks are a bad mechanism for fostering a culture of innovation. They can encourage entrepreneurs to take risks, but they don’t encourage them to actively mitigate risk through customer experiences.

In addition to reducing the costs of entrepreneurship, a good innovation policy should help increase the efficiency of entrepreneurial enterprises. This can be achieved by teaching people to prototype innovations, fail, and learn quickly.

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