Opinion

Australia’s much-hyped innovation boom has a marketing problem

Ever since the Turnbull Government embraced innovation as its rallying cry, Dr Andrew Connery has been convinced there's one thing missing: marketers.

Politicians and bureaucrats, rightly or wrongly, get blamed for a lot of policy decisions that simply never live up to the rhetoric of their initial release to the public – the fanfare and reasoning sound great, but after years of inaction and/or misguided attempts they simply grate.

Unfortunately the much-hyped innovation boom in Australia has largely remained just that – hype. It’s not as though the country and industry don’t seem to acknowledge the need for innovation (or change generally) but that the fundamentals involved are largely being ignored.

It seems clear to me that the government is being guided by theorists and economists rather than hard-headed business people and/or marketing and advertising professionals.

For starters innovation is a very, and I repeat very, risky business. So it should not be a surprise that when Rigid Efficient Systems (i.e. risk-averse institutions such as government departments and universities) are being promoted as the drivers for the introduction of innovation, things are unlikely to end well.

There’s a well-known saying: “When the only tool you have is a hammer everything looks like a nail.” As a consequence it seems understandable that universities would look to their students as would be innovators and that government in turn would finance the establishment of incubators linked to other on-campus facilities.

The fact that governments would willingly invest millions in bricks and mortar for the institutions but largely ignore the financial needs of the student innovators themselves is perplexing.

Another ugly fact of life largely overlooked is that a large number (but not all) successful innovators are university drop-outs – I could list them but probably the most well-known examples are the founders of Google who both dropped out of their PhDs to establish their fledgling search engine business. In the local space both the founders of Atlassian also spring to mind.

What this all tells me is that these ambitious and bright students recognised that universities would hold them back – they simply could not waste the precious time to establish their great business idea and miss a once in a lifetime opportunity.

So where should we be looking to foster innovation?

Let me start by saying that according to the Australian Bureau of Statistics in the 2014-2015 period there were less than 6,000 start-ups in all of Australia. And it follows most of these had strictly limited resources and very little business experience. The much vaunted Entrepreneurs Program requires turnover in excess of $1.5m p.a. which rules most of start-ups out.

However during the same period there were nearly 240,000 SMEs.  That is established enterprises employing between five and 200 employees. Overseas studies have shown (Germany is usually mentioned as the best example) that SMEs are the natural home of innovation.

There is no reason to believe that Australia is any different.  The fact is that SMEs in this country currently get virtually nothing, from any level of government to promote innovation despite their willingness to have a go, better resources and proven business acumen.

An aspect of innovation currently receiving a lot of research attention, with I believe the potential to ramp up successful innovation in SMEs, is linked to the concept of Open Innovation (Absorptive Capacity) which basically refers to the ability to assimilate external ideas to add value to an enterprise. This acknowledges the basic fact that no one company can possess all the great ideas, and is the cornerstone of the concept of collaboration.

Let’s face it. It is hard enough to be a world-leader in any single field of a globalised market and to expect you can simultaneously develop break-through expertise in multiple fields is usually unrealistic for enterprises of virtually any size.

Large enterprises (employees over 200 in Australia) often have dedicated research and development teams and increasingly they collaborate with other large enterprises to develop innovative new products or services. They also buy start-ups or license technology to help them innovate. They can also look after themselves and don’t actually need any help from government.

If the Australian government wants to really get serious about innovation, it should put in place tailored and subsidised innovation training, tax incentives and low interest loans for the SME sector.

Every SME in this country should also have a framework in place to turn their new ideas into commercial realities.

It should reach out to marketing and advertising professionals to develop a suite of strategies to promote innovation capabilities in high performing SMEs operating in a wide range of sectors.

The CSIRO and our universities are in fact well positioned to provide break through technology to industry. The real challenge is to raise the awareness of the opportunities to players who have both the experience, expertise and motivation to make innovation happen.

Dr Andrew Connery is director of innovation at CTPM.

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