It's been a prime ministerial buzz word for months but if you don't know what "innovation" actually means, you're not alone.
Almost half the Australian businesses who rate themselves as innovative actually aren't, according to research from Commonwealth Bank, which says many firms are mistaking improvements for innovation.
The bank says 82 per cent of firms believe they are innovating but that only 44 per cent are doing so, according to standards recognised by the OECD (Organisation for Economic Co-operation and Development).
"For example, if you take a very highly innovative global firm like Apple, when they're launching a new iPhone, launching a new colour range or changing the basic dimensions of the phone would be an improvement," Commonwealth Bank business and private banking group executive Adam Bennett said.
"But when you're introducing Siri or a brand new operating system, that would be what we classify as an innovation."
Locally, the same applies - albeit on a smaller scale.
"If you took an accounting firm, an improvement might be changing the way you pass information between yourself and your customer," Mr Bennett said.
"But if you implement a new cloud-based accounting platform that fully automates and integrates the client and the accountant, that would be what we would define as more of an innovation."
The OECD-recognised Oslo Manual defines innovation as introducing something new or making a significant improvement in one or more of business processes, products and services, organisational structure, and marketing practices.
The innovation is assessed at being either new to firm, new to market or new to world.
CBA, which released the preliminary findings of its Unlocking Everyday Innovation report on Saturday, said South Australia is the most innovative state or territory with 51 per cent of businesses surveyed being what the bank calls "innovation active".
NSW/ACT and Western Australia are next, with 46 per cent.
The full report is released in November.
