An arc of innovation has been revealed in Sydney.
It runs from around Kingsford Smith airport through the CBD and North Sydney, north-west to Macquarie University and then south to Homebush Bay and Chullora.
Within that arc are the city's most innovative districts, new research by Deloitte Access Economics shows.
Sydney's CBD and the Macquarie Park-Ryde district topped the list of innovation hotspots followed by North Sydney, Pyrmont, Surry Hills and Neutral Bay.
But Sydney's arc of innovation includes some surprises. Turrella-Arncliffe, near Sydney Airport, was ranked the 11th most innovative district in the city thanks to its dynamic logistics sector. Rydalmere also had a high ranking because it is home to a Western Sydney University campus and takes in the Homebush Bay precinct.
Westmead and Parramatta were identified as districts with the potential to become innovation hotpots of the future.
The study, sponsored by the Sydney Business Chamber and University of Technology, Sydney, used 18 indicators to rank business innovation in districts across the metropolitan area. The authors created a "heat map" which shows how much innovative activity there is per employee in each area.
Many of the Sydney's innovation hotspots hosted, or were close to, a university underscoring the role of research institutions in the city's economy.
"Universities generate knowledge spillovers," the report said. "Beyond pioneering new products, they can help to attract new knowledge resources from outside the region."
The analysis highlighted the rise of dynamic knowledge-industry hubs on the fringes of the CBD. Pyrmont-Ultimo, Surry Hills, Alexandria, Redfern and Neutral Bay were all ranked in the top 10.
While Sydney already has a "global reputation as the ideas hub of Australia" the study identified 138,000 businesses across the city that could be described as "non-innovators" because there was no evidence they had made any significant change to their offerings, processes, organisation or marketing for three years.
Deloitte Access Economics estimates that if just 10 per cent of those firms "did something new every year" Sydney's gross regional product could increase by $25 billion.
Deloitte's managing partner for Sydney, Dennis Krallis, said innovation didn't necessarily mean a revolutionary new invention.
"Innovation is about doing something smarter or simply changing a process or improving a management method, and the business payoff can be spectacular," he said.
Moe Zayden, managing directory of Turrella-based logistics firm Designer Transport, said his company was constantly reviewing and adapting operations to suit clients and streamline services.
"In the current economic environment and the competition and challenges facing the transport sector, innovation is key," he said.
The company located at Turrella because it is within 10 kilometres of both Port Botany and Sydney Airport and relatively close to the CBD.
The Deloitte study said the clustering of businesses and institutions in one location can support "a vibrant local innovation system".
Mr Krallis said governments had an important role to play in nurturing innovation "hot pockets" across the city.
"The right infrastructure and planning regulations can help innovative regions grow more strongly," he said.
The Deloitte study also emphasised the role of collaboration in promoting business innovation.
Dean of the UTS Business School, Professor Roy Green, said innovation thrives in a collaborative context.
"People in concentrated geographical areas can generate high levels of innovation and they can connect because they are in close physical proximity," he said. "There's really no substitute for that proximity, though it can be supplemented by virtual connections through the Internet too."
The Executive Director of the Sydney Business Chamber Patricia Forsythe said economic benefits were already evident in "collaborative spaces" developed for business in the city such as the new buildings at Barangaroo.
