Innovation is a new idea, more effective device or process. Innovation can be viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society.
In business and economics, innovation is the catalyst to growth. As Davila et al. (2006) notes, “Companies cannot grow through cost reduction and reengineering alone… Innovation is the key element in providing aggressive top-line growth and for increasing bottom-line results”.
Innovation is critical to businesses as it produces positive changes in efficiency, productivity, quality, competitiveness, and market share. Organizations can also improve profits and performance by providing work groups opportunities and resources to innovate, in addition to employee’s core job tasks. Google employees for example work on their own projects for 20% of their time (known as Innovation Time Off).
Innovation by businesses is achieved by formal research and development (R&D) for “breakthrough innovations”, on-the-job modifications of practice, through exchange and combination of professional experience, incorporating users into focus groups to generate ideas, by chance, and as a result of system failure.
Malcolm Turnbull’s Innovation Statement released on 7th December 2015 provides tax incentives for early stage investors. The tax incentives will apply from 1st July 2016 and provides concessional tax treatment for investors including a 20% non-refundable tax offset on investments, capped at $200,000 per investor per year and a 10 year exemption on capital gains tax, provided investments are held for three years.