The Australian Innovation Community

Tim Colebatch
May 1, 2007

THE wave of innovation in Australian business over the 1990s and early 2000s is flagging, a pioneering innovation index published today by IBM and the Melbourne Institute reveals.

In findings echoing official data showing a slowdown in productivity, the new IBM-Melbourne Institute Innovation Index of Australian Industry reports that innovation activity went backwards in 2005, after a decade and a half of growth.

The new measure uses a broad definition of innovation, to measure it by activity in six areas: research and development spending, applications for patents, trade marks and designs, organisational restructuring and productivity growth.

Between 1990 and 2004, it estimates, innovation activity grew by 29 per cent. It was led by increases in trade marks registered (up 91 per cent), increased intensity of R&D spending (up 65 per cent) and increased intensity of patent activity (up 41 per cent).

But in 2005, the index fell 2.6 per cent. Patent and design applications fell sharply — accelerating a long-term decline in design activity — as productivity and organisational innovation also slipped.

Melbourne Institute researcher Paul Jensen said it was unclear whether this was a one-off, or a break in the long-term trend.

But IBM hopes the index will focus more attention on the imperative of innovation. "Australia's industry leaders are embracing innovation to drive growth", said IBM Australia chief executive Glen Boreham. "However, according to the results of the innovation index, there is the potential for much more to be done.

"Our hope is that, by empowering local industry leaders with the necessary information, we can, together, have a more informed debate and build Australia's competitive future on a path of successful and competitive innovation."

IBM director of strategy and marketing, Megan Dalla-Camina said IBM asked the Melbourne Institute to set up the index because innovation is a key driver of growth and Australia lacked a rigorous measure of it.

Since 1990, the survey found, innovation has been most intense in the wholesale sector, rising on average 7.4 per cent a year.

But mining has been going backwards in innovative intensity this decade.