A Smart Way to Encourage Innovation

Australia is an innovative nation and the number of programs available to foster ideas and talent is growing. Cameron Cooper reports. Coming from a physiotherapist, Mark Alexander's admission is somewhat surprising. "I don't want to be pushing on people's backs for the rest of my life," says Alexander, who in the past has kneaded the fatigued muscles of the London Broncos Rugby League team and Australian Olympic athletes such as Cathy Freeman. It is not that the Melbourne-based physio is down on his profession; he just has bigger business goals in mind and wants to help patients worldwide with his breakthrough treatment for back pain. Alexander is the creator of BakBalls, a spinal mobilisation device that fits the anatomical shape of the spine and allows self-treatment of back ailments at home. With an estimated nine in 10 Australians suffering from back pain at some stage, at an annual cost of billions of dollars in treatment and lost working days, Alexander and his fiancée Tara Garson seem to be on a winner. A sufferer of back pain himself, Alexander trialled golf balls, squash balls, rolling pins - everything - before settling on the rubber prototype for BakBalls after tests at the Olympic Park Sports Medicine Centre in Melbourne. "The results, in terms of patient feedback, were just fantastic," he says. "There wasn't one patient who didn't rave about it." Patient praise aside, Alexander has had some big breaks. The first came in October 2004 when BakBalls won $100,000 in the University of Queensland Business School's "Enterprize" business plan competition. The second stroke of luck came via a six-minute, prime-time appearance on the Nine Network's A Current Affair. The exposure generated 1.5 million hits on the BakBalls website in the first week and created marketing momentum that continues today. An inventive lot Alexander is one of an inventive breed of Australian business people who love to push the boundaries. The Australian Government is strongly encouraging innovation through a $5.3 billion investment to continue its Backing Australia's Ability initiative, bringing to $52 billion the amount Canberra is investing in science and innovation over the decade to 2011. Other initiatives, such as the Australian Innovation Festival, are also promoting the cause. Designed to foster ideas and talent, more than 700 events across the country during this year's festival in May attracted 400,000 people. The festival offered platforms devoted to science, technology and manufacturing, while other initiatives were designed to nurture young talent, develop regional communities, and assist the arts and education. Peter Westfield, Chair of the Festival's Advisory Council, disputes suggestions from some quarters that Australia lags behind other nations in terms of innovation. "I think we are a very innovative culture," he says. Westfield believes our give-it-a-go attitude and capacity to see tasks and problems differently are strengths. State governments are without exception, he says, driving innovation as the 'cornerstone of their economies'. Queensland is promoting its endeavours better than most through its Smart State campaign, but Western Australia (mining), the Northern Territory (tropical and desert knowledge), Victoria (biotechnology and IT), South Australia (wine manufacturing and marketing), Tasmania (eco-tourism) and New South Wales (tourism and financial services) are also on the case. Such programs must continue, according to Westfield : "Innovation is like motherhood: you can't say anything wrong about it. But at the same time - if we are not innovative we are dying." A question of attitude Few people doubt Justin Herald's innovation credentials. He built a $15 million clothing empire on the back of a $50 investment - and then walked away. For the founder of Attitude Gear, it is all part of his commonsense approach to business and life. Sure, Herald says, he could have created a new T-shirt range. For him, though, it was a case of been there, done that. Instead, Herald has become his own brand. Through his Tailored Management team, he now writes business books, endorses products such as BMW cars, and has just released an online business management tool that will help businesses track their innovations and progress. For Herald, innovation is about breaking the mould. "It's about doing something different - it's about doing something better," he says. In 1995, a defiant Herald went into business after being admonished at his father's church for having an attitude problem. With $50, he bought four T-shirts on which he printed the slogan: "In the end, it's all a matter of attitude". Some mates snapped up the T-shirts, and then he bought and sold some more. Soon, he could barely keep up with the demand. However, retail outlets were reluctant to stock his clothing, so Herald called on a no-cost sales force - his customers. When they complained about not being able to buy his gear in shops, Herald told them to give the retailers an Attitude Gear card. Today, the Attitude Gear brand of clothing and related lines sells in more than 2500 stores across Australia . Now a regular on the public speaking circuit, Herald believes smaller operations can often outflank their larger rivals. "With too much structure you are confined too much," he says. "I don't want that at all - with big business, their systems are so set that they can't actually be innovative because the system doesn't allow it." His opinion is backed by a recent study from the Melbourne Institute of Applied Economic and Social Research, titled The Effects on Firm Profits of the Stock of Intellectual Property Rights, which claims that older companies have more trouble extracting profits out of their inventions than start-up companies. Herald promotes a business culture of 'thinking stretch marks'. He is a big fan of allowing people to make mistakes. "Success is just about going through a whole heap of failures." And he encourages people to think big: "I want people to step beyond their normal self and that's how I got Attitude to where it got to. I had to think bigger than my $50." Removing the pain In a new Boston Consulting Group survey of 940 executives from 68 countries, including Australia, 74 per cent claim their companies will increase spending on innovation this year, up from 64 per cent in 2004. Organic growth is seen as more desirable than acquisitions alone. The survey, however, identifies a problem in that only half the respondents are satisfied with their returns on innovation, while many managers regard their competitors as superior innovators. At OccCorp, a Melbourne firm that provides an in-house injury and work cover management solution for organisations, Chief Executive Krishan Aggarwal has no such doubts. He says OccCorp has few genuine rivals as it seeks to remove the OH&S headache for companies, particularly manufacturing plants, that typically see more work-related injuries and illness. Rather than leaving human resources departments to manage costly occupational health and safety (OH&S) claims, OccCorp controls the process and aims to help get injured or sick workers back on their feet faster. Results suggest the OccCorp system cuts lost time from workplace injuries by an average of 66 per cent, while slashing medical and hospital costs. The workers, too, get healthier faster and appreciate the hands-on approach to their recuperation. "When you come down to what we are doing it's fairly logical," Aggarwal says. "But the innovation lies in actually engaging all the players and working towards the common objectives, which is the wellbeing of employees and the employer." While OccCorp is a great idea and has achieved significant results for its clients, Aggarwal says getting access to broader markets has been a challenge. The strategy has been to surpass customer expectations and to let customers champion OccCorp. He adds that truly innovative companies will inevitably make mistakes as systems are finetuned. At OccCorp, some errors are acceptable as they are overseen and outcomes controlled through in-house systems. Aggarwal says: "It does not mean that we are willing to compromise our service level but, in terms of employees being able to innovate, we have that latitude." A creative streak As one of the driving forces behind the Australian Innovation Festival, Peter Westfield is well placed to comment on Australia's most innovative organisations. He points to often-cited companies such as Cochlear, ResMed, CSL, and Vision Systems as examples of Australian innovation, but says giants including BHP Billiton - "the world's most efficient mining company" - and Australia Post - "one of the most innovative organisations in the federal sphere" - should not be forgotten. To be innovative, Westfield says companies must be open to new ideas; seek out creative solutions; be conscious of their standing in relation to competitors; and be aware of the environment in which they are operating. "The overriding thing about innovation is people - it's the ability of people to look at creative solutions." At BakBalls, Mark Alexander agrees that surrounding himself with great people is essential if his prize-winning back treatment is to evolve into a long-term business success. "I have admitted to myself what I don't know and I've sought out people that do know; and that way I've minimised mistakes," he says. Treating backs has been the easy part. Getting the business model right has been "quite a learning curve". Despite currently studying an MBA, Alexander concedes he has gone from being a physiotherapist at the top of his game to a business person "at the bottom of my field". He is unfazed and is confident that BakBalls is just the first of many products he will develop to remedy common spine-related ailments. "Innovation to me is absolutely crucial because unless you can get into the minds of your customers or the market you will always be left behind."