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.
The Government doesn’t really believe in Innovation or more correctly, its heart isn’t in it. The pressure MP’s get each day is coming from the incumbents, monopolies and established businesses. The pressure to cut Corporate Taxes is a great example. Instead of increasing Tax revenue to support innovation, they are under pressure to do the opposite. Most of the lobbying is coming from Mining and the LNP see this as the key to GDP growth, not SME’s.
Innovation is really a side show and marketing so the LNP are seen as a progressive party.
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Dr Connery,
I found this piece interesting. I think a lot more needs to be written and there around how Australia is developing a culture of innovation and how vital this is for our long term prosperity. No doubt you would have noticed that on Monday night, shadow Finance Minster Jim Chalmers used his John Button Lecture address to highlight that Australia is ‘dangerously ill-prepared” for technological changes transforming labour markets. Not engaging in a critical assessment and debate around of how we’re spurring innovation and futureproofing our economy is simply dangerous.
I do have a couple of things though that I’d like to put out there and hear your thoughts on. Firstly, I was a tad concerned by you saying “Another ugly fact of life largely overlooked is that a large number (but not all) successful innovators are university drop-outs”. One of my favourite HBR pieces ever was written by Dr Thomas Chamorro-Premuzic and examined 5 Characteristics of successful innovators (https://hbr.org/2013/10/the-five-characteristics-of-successful-innovators). Amongst the factors TCP identifies through research, is the importance of formal education at training. He notes “Contrary to popular belief, most successful innovators are not dropout geniuses, but well-trained experts in their field.” I appreciate the need to resource emergent entrepreneurs, although I often think that we need to be really careful in championing this route to young undergrad students given the above. Not sure if you’ve dedicated more thought to how you envisage grants for young entrepreneurs working, but I’d love to get your take on how this kind of a thing could be most efficiently structured given the state has limited resources.
In relation to your point on education, and being perplexed at the lack how gov invests millions into brick and mortar institutions, I’d also like to get your take on what you see the role of tertiary education as being in securing Australia’s economic future. The incumbent gov has made substantial cuts to tertiary education (http://theconversation.com/fed.....tion-77177), and from my end, I find this to be quite alarming for a host of reasons. I think there’s a lot of room for innovation in the way we conceive of education in itself, so would love you to elaborate a bit more on what you see university’s role being in taking Australia forward.
I think a key part of the problem is that we have is also cultural (something which education can address). One of the nightmare fuel facts about Australia and innovation is that our population gambles more on the Melbourne Cup than the entire VC industry invests in startups each year according to this GE report in 2015. If this isn’t changing … I suspect we’ll all find ourselves in a spot of bother fairly soon (https://www.gereports.com.au/2015/12/29/28-12-2015innovation-economies-what-s-the-secret-sauce/)
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I think we have a very innovative government.
The way they have cobbled the copper wire and tin cans together to create the NBN is remarkably innovative and like no other system I’ve encountered in the world. Note to self: Must check out what Kenya is doing now that they have sped past us in the Akamai speed tests.
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Hi James
Understand where you are coming from. Tend to agree although it may also be a perception thing. If we could convince the government to make the corporations spend the $30b on innovation rather than just hand the cash over to be distributed to shareholders. That would be a step in the right direction.
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Hi Daniel
Thanks for your thoughtful comments. Looking at what you asked.
Firstly, I was a tad concerned by you saying “Another ugly fact of life largely overlooked is that a large number (but not all) successful innovators are university drop-outs”.
I simply hate the way media presents entrepreneurs as Uni drop-outs intimating they are not really good students and or are simply not up to the challenges of uni life. What I was trying to say is the so-called dropouts are in fact their best students … the unis are losing the plot when they can’t accommodate these talented students.
Secondly, grants for young entrepreneurs. IF we had a decent VC system in place students would earn a decent salary while they worked on innovative products and services. Many of the brightest students would never consider the on-going uncertainty of becoming an entrepreneur as a viable career option I have often heard faculty members saying to computer science under grads “when you graduate you could work for Google” they should be saying “when you graduate you will be able to compete with the search engine giant!”
Thirdly, I completed my PhD 2 years ago as a mature age self-employed student. Nearly all my colleagues are still struggling to find permanent work. There is no tenure for academics these days so you have to question the on-going commitment to PhDs … most will stop at a Masters in future. I think MOOCs will shake the sector up. And I think shorter accredited courses on specific topics is more useful career-wise and for the country.
Finally, re funding innovation. Australia now has trillions tied up in superannuation. Every year more money is tipped into the existing share market. Even a very small percentage of these funds would make a huge difference for would be innovators.
Hope this helps … I could go on!
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Hi JG
Know exactly how you feel. When the last Labor Govt came up with the original fibre-to-the house model I was all for it. And went on the record – see my local MP Sharon Bird’s speech in Hansard. When the present PM in his role as Minister of Communications bastardised the whole thing no one I repeat no one in academe or industry for that matter agreed with the NBN using the old copper from the node. But they said nothing or very little anyway! Unfortunately pure politics stuffed up another great innovation. Very disappointing.
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