Business growth depends on a new, wider definition of innovation, writes Katie Lahey.

The Business Council of Australia wants a national debate on innovation policy.

While innovation includes a broad range of activities, many policymakers view it as a narrow field focused on and around research and development, and invention.

In a world where information connectivity and the growing dominance of customer service industries are the new realities, we need to recognise and support broadly-based innovation that is not just about inventing technologies or products.

In effect, innovation can be put into two major categories.

There are the brilliant new ideas and inventions - such as the mobile phone or hybrid car - that represent a leap into the future. This innovation is hard to achieve, but of enormous economic and social value.

The other much broader category involves incremental innovation.

This takes in a diverse range of activities that happen daily in business. It reflects the constant goal of finding a better way to organise ourselves, operate and produce better products and services. It might involve a team devising an improved way of responding to customers.

It often involves taking existing technology and knowledge and devising better ways to use them.

The BCA recognises that research and development and support for science and invention remain important.

But governments and policymakers often overlook the second category of innovation. As a result, there is an imbalance in the setting of government policy.

We are also calling for a national debate to highlight the influence policy settings have on innovation, particularly the broad range of activities that contribute to achieving it.

A BCA report found that education and training policies are essential to our ability to innovate. Other important policy areas include infrastructure investment, business regulation, competition policy, the taxation system and workplace relations.

The recent Bureau of Statistics study on innovation in Australian business found 35 per cent of enterprises involved in some form of it.

If our policy settings can be used to improve this level, we stand to benefit as a nation. And those potential benefits are another reason a national debate is needed.

Successful innovation contributes to productivity. In the 1990s, Australia achieved strong productivity growth. But it has been falling over the past five years.

We need to make sure we improve our productivity to compete with and stay ahead of the world.

But there needs to be an effort across the private and public sectors to produce a broadly based approach to innovation.

I believe innovation is a vital ingredient for business growth and sustainability. It is also has the potential to greatly assist the public sector.

After all, the core business of many public sector organisations is to develop and provide services, many of which require a high level of co-ordination and sophistication.

In seeking to find ways to lift our productivity, the BCA's aim is to contribute to locking in higher economic growth that will benefit all Australians.

While calling for a new definition of innovation has created debate, the BCA is encouraged by the many who believe Australia needs a new and comprehensive approach to innovation policy.