However the competitive nature of international markets means that with out continuous efficiency gains these niche markets will be lost. It is only through boosting the performance of the whole innovation system that Australia can develop and maintain a competitive advantage, and prosper into the future. Traditional sources of competitive advantage, like cost and quality, will yield only incremental growth, whereas innovation can provide sustained growth. In traditional sectors, innovation ensures business survival by giving a firmer foothold in the market and by increasing export capacity. In emerging growth sectors, innovation enables new and healthy companies to take the place of businesses in traditional sectors and, very importantly, shifts production to job creating sectors.
Innovation is also the key to protecting the environment.
Innovation can be defined as applying new ideas to products, processes, services, organisation, management or marketing. But newness by itself is not innovation - it only becomes innovation when it yields market value. Successful innovation is a never-ending process and firms must continually innovate to retain their competitive edge. Innovation policy is not the same as research policy. Research policy is aimed at advancing scientific knowledge, whereas innovation policy is aimed at helping businesses innovate successfully, that is helping them to get new products and processes onto the market.