One of the central themes of the Cutler Report is the importance of information and the open flow of that information. As the Report notes:
“Innovation in the first decades of the 21st century is more open and pervasive characterised by skill in collaborating and making connections so that knowledge flows and grows and so becomes available to meet customer and community needs…”
The Report emphasises the need to ensure that both the public and private sector organisations, and the governing “rules of the game” in the relevant markets, allow for the open exchange of, and the expansion of knowledge and information essential to these organisations and markets.
A role for Government?
The Report sees a strong role for Government in this. As the Report states:
“Government can improve information flows and support innovation and economic efficiency by encouraging disclosure, assisting markets for reputation to develop and by ensuring that the information and other ‘content’ that they fund is freely available to maximise its use and the value that others can add to it.”
The concept of the cumulative value of knowledge is central to this theme. The more widely and freely knowledge is shared, the better the chances of innovative development coming from that information, as the greater the number of minds there are that are thinking about, sorting, rearranging, combining and adding to that store of knowledge.
The Report also recommends the establishment of a National Information Strategy to “optimise the flow of information in the Australian economy”.
The aim of this National Information Strategy would be to:
- develop standards to maximise the flow of information in private market about product quality; and
- maximise the flow of government-generated information research, or content for the benefit of users.
In addition, the Report recommends that the Australian Government should adopt international standards of open publishing, including by the use of creative commons licensing.
This would represent a major shift in thinking by Government and a positive one. Many of those who interact with Government are, however, likely to believe it when they see it.
Collaboration and knowledge development
For organisations, the Report stresses the need for internal systems that allow for, first and foremost, collaboration within the organisation and, importantly, between the organisation and its customers.
The organisation that will succeed in being innovative are those that will:
“shift to a more distributed, flexible pattern of operations as a move from ‘closed’ to ‘open’ innovation. In this model the innovation process has become increasingly complex. To innovate, firms must involve a greater number of players more closely and intensively to realise the commercial potential of their ideas. This newer openness allows for an increase in the amount of resources and information available to the firm and the opportunities to recombine previously disconnected ideas.”
The Report uses the example of services organisations that already have had to move towards this type of model and, even more tellingly, have had to engage with their customers in the ways in which they provide service. The result, concludes the Report, is that services firms are, on the whole, ahead of other sectors in innovation, quite simply because their customers demand it.
As the Report states:
"Services innovation is strongly driven by customisation, even in individualisation, where discerning customers are not passive, but are fully engaged in designing the services that they are purchasing. Close relationships with customers help services companies defend against imitators and low entry barriers.”
And further that:
“Services innovation brings to the fore non‑technical skills such as teamwork, co‑operation, negotiation and communication; together with new areas like social network analysis….”
In essence, innovative organisations are ones that have learned how to harness and develop the individual skills and experience of their people towards common goals. They also tend to be organisation that have actively promoted “distributed power” models of working, rather than centralised control. An agreed goal or objective is required, but following that, people should be given the freedom and incentives to “get on with it” and to come up with new and different ways of meeting their customers’ needs.
The central theme
If a single theme emerges from this discussion in the Report, it is the increasingly interactive nature of the innovation process. It is not the case any more that an organisation “innovates” and then its customers await and receive the benefit of that innovation. Customers and a wider community of interest play a much more active and interactive role in innovation. Suppliers and customers learn from each other, and customers – particularly services and technology customers – are demanding that their suppliers behave in this way.
There will always be tension in this model, between the need to “open source” this knowledge and information and the need, where relevant, to protect a proprietary development. But overall, markets are becoming increasingly intolerant of proprietary information and those organisations that persist with proprietary are likely to fall behind as they fail to take advantage of the benefits of the more collaborative model.
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