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Stuck in Neutral

Diagnosing the poor performance of Australia’s innovation system

· Sam Perkins,Innovation,australia

A high performing innovation system allows promising ideas to move right along the chain from humble beginning to groundbreaking solution that stretches across businesses and society. The Australian innovation system is performing below expectations because we assume that “innovation” is a process of generating and disseminating new knowledge. This assumption has a respectable amount of explanatory power and helps us understand the web of investor-inventor-invention, but it contains an unfounded assumption that innovation is deliberate.

Three of the European countries that best bounced back from the Global Financial Crisis of 2008 were Germany, Sweden and Switzerland. Each has a highly developed advanced manufacturing sector which is competitive and yields cutting edge product. Economics Professor Roy Green argued that we should desire such manufacturing sectors because it supports the innovation ecosystem; new ideas and products with a commercialisation pathway are more likely to succeed and be replicated. We shouldn’t stop there, but learn the principle of the remarkable accident. More interface between creative people and practical ideas means more opportunities for a smart kid to stumble across a quirk of a programming method, or for the wrong solution to an unimportant problem to bump into the right application and become a billion dollar idea.

The archetypal “light bulb moment” is still a common story where an ordinary person chances across a great idea, but there seems to be no broad recognition that this is the core of innovation. Career inventors don’t sit at a desk and dream up new ideas in a vacuum, and innovation cannot happen anywhere but at the coalface. Zanzibari drone pilots wrap aluminium foil around their drones to spook birds of prey and prevent them from attacking the aircraft, and land them in bed sheets so their electronics aren’t damaged by the sandy beaches. While low-tech, this situation of a seemingly intractable problem that must none the less be solved is key. It seems we understand this well enough that we’ve long had a saying for it; necessity is the mother of invention.

Why, then, does the National Innovation and Science Agenda Report, the centrepiece of the Commonwealth’s innovation policy, talk solely about how we should invest in education, science and research? Funding for the first stage of the process will not produce the outcomes we want if we ignore the later stages and allow the industries we seek to supply to peter out. There seems to be little awareness of this at the federal level; the video games industry in Australia is booming but the Australian Interactive Games Fund that was pulled in 2014 is still not back on the agenda. A supportive environment does not look like government picking winners among individual companies, but should look like consistent and significant support for industries like gaming that we can see picking up on a global scale.

The renewable energy sector should serve as a harsh lesson in this principle. There has been considerable volatility in clean energy investment in Australia over the last six years, and we saw a sector in which “confidence evaporated” due to policy decisions in this period, according to the head of Bloomberg New Energy Finance. The effect of this environment is to prevent the consistency that innovation needs to grow organically, compounded by weaker direct industry support and hesitance of actors in the space to enter into long-term contracts given the lack of guarantors for new projects.

We should realign our thinking around the problem and provide support for strategic industries with the view to providing room for commercialisation of cutting-edge ideas. This relies on our acceptance of a new attitude that will allow us to provide the right cultural and systemic supports to all parts of our innovation system and encourage the kinds of new solutions we hear so much about in press releases and sound-bites. Australian policymakers need to stop thinking about innovation as something that we set out to do and instead see it as something that happens to occur given the right conditions.

Sam Perkins is a Policy Analyst at FPL Advisory, writing on political risk and change management in regulatory affairs

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