Episode 27 – The National Innovation Forum Prequel with Catherine Livingstone and David Thodey

Nov 24, 2023

I’m delighted to bring you a special podcast leading up to the 2023 National Innovation Policy Forum, presented by Cooperative Research Australia, to bring leaders from business, government, research – and boundary spanning organisations to focus on the future of the Australian innovation system.

 I had the opportunity to have a pre-forum conversation with co-patrons Catherine Livingstone AO and David Thodey AO for their thoughts on the current innovation landscape, the role of policy, and the importance of a shared vision for Australia’s future. In our discussions we touch on the notion that innovation is a fundamental part of what we do as individuals and as a society and discuss how that inherent tendency intersects with government policy and its role in the national innovations system. We touch on the challenge of individuals being caught in small pockets of the system and the need to view the broader innovation landscape, the previous diagnoses of the innovation system, most recently reflected on by Dr John Howard and the need to reach beyond the political cycle to establish stable policies that encourage longer term investment from research and corporate sectors.

 We also set the scene for the Forum around the challenges of translation and scaling innovation into successful businesses. We reflect on research translation and the gap between innovation exiting the research and early stage (venture) sectors and moving through scale and into more commercial, customer orientated settings and explore aspects of market, research culture and the local tolerance of failure.

 We hope you enjoy this special podcast that sets the stage for the National Innovation Policy Forum, where these critical discussions will unfold.

Transcript

CB: Hello everyone, and welcome to this special edition of Tech Transfer Talk. My name is Cameron Begley, and in anticipation of the National Innovation Policy Forum in Canberra on the 27th of November, we’re joined today by the patrons of this event, David Thodey and Catherine Livingston, who will need no introduction, I imagine, to people who are involved in the technology transfer space and hopefully all of our listeners know those two names. Catherine and David, welcome to the podcast.

CL: Thank you, Cameron.

DT: Yeah. Thanks, Cameron. Good to be here.

CB: Thank you. And it’s great to have you and, you know, to launch into things pretty quickly, Tech Transfer Talk, and indeed, the National Innovation Policy Forum is all about innovation. So, David, why is it so important? Why are we having a forum about it?

DT: Well, it’s a great place to start, Cameron. But you know, I mean, innovation is so critical, I mean, in our society and the community, but so importantly in our economy. And I think it goes fundamentally to our desire as humans to create and to innovate. And that plays directly out into economic and value and quality of life. So, I think it underpins everything we do in Australia. And that’s why it’s so important. And yeah, it also relates to our competitiveness of the nation, because innovative nations continue to do things differently by new ways to do things. And it becomes a way of being and doing. And, as you’re referring to, it changes industries, creates jobs, and creates a sustainable nation. So that’s why it’s so important. And it really drives the fundamentals of who we are, as a wonderful country.

CB: Yeah. Indeed. David. And, just to bring you in, Catherine, David touched on an interesting point there around the social and economic aspects. There is a bit of a tendency or, to focus on the spin out and the new venture and the generation of economic returns. But I think the importance of innovation in social and environmental and government circles can’t be understated.

CL: Well, I think that’s right, Cameron. And I’d go back to what David said, that innovation is a fundamental human activity. And it’s there. It’s not something that we have to invent. It’s what people do. And people are really at the centre of innovation. But the point that I think we really need to make in this forum, and it is a policy forum, which is important. Because there is an innovation system, and we talk about systems somewhat glibly, but there is a system working because there, we are people and that’s what we do. And we’ve got IP, knowledge, we’ve got our human aspirations, we’ve got a government. And then we’ve got the various organisations that we might live and work in. So back to your point about government being important. Well, government holds the policy baton. And this is not an optional extra. This is a core element of the innovation system. And the system is there. We don’t have to make it up. It is actually there. The reason the policy is so important is that is the element that can nudge or intervene, to make sure that the system is optimising for national interest. So, I should say, the bottom line here is we can either watch and hope, or we can nudge and intervene. And that’s why the policy element is so crucial. And that’s the whole intent of this forum.

CB: Fantastic. And the hope, of course, is not a strategy. So, we would like to think beyond that. It’s interesting, you know, the notion that you’ve both shared that innovation is inherent to human activity. We innovate. We solve problems all the time. So, given that is what we do as a species, what is it that we need to do differently to innovate more effectively, efficiently, impactfully, whatever the correct adverb is in this sentence? Catherine, maybe you’d like to take that one on to start with.

CL: Well, I think it comes back to this point about the system, actually understanding what we have. And coming back to the policy element, too often there are policies which don’t recognise the interdependence and the dynamics of the system. So, I think the first thing we have to do is make sure that we collectively understand the system, and that crucially involves government understanding the system before there are policy interventions.

CB: So, perhaps, I could ask the question, why has that not happened over the past 10, 20, 30 years? I mean, is there some insight as to why this may not have happened? There’s speculation. I’ve read. I know John Howard wrote about this only a couple of weeks ago in his article. David, why hasn’t this happened?

DT: Well, I think what’s really important to understand is that this is a complex system and it’s got, as Catherine is saying, many interdependencies. And so often, we get wonderful people caught in a small part of the bigger system. And they think that’s the answer. And then also, I think coming back to the policy framing, we’ve had too much change. And this leaves a decade or long-term system thinking that we need and when we have interventions that keep changing, then we get inconsistency. And we don’t have an environment where educationists can invest with venture capital, where we can look at long term environmental impact. So, we need this bigger picture consistency, but we need this real commitment to staying the course. And then of course, we’re going to adapt as we go forward. And I think Catherine and I have been inspired by the individuals and the wonderful people we have in Australia. So, I get really enthusiastic, but I get disappointed when I see we’re not aligned in our thinking. And we and we have too much change. I don’t know, Catherine. What do you think?

CL: Well, I think you’re being very kind. Disappointed is a very polite way of saying there’s an enormous amount of frustration because the system has memory. And unfortunately, the policy environment has amnesia.

CB: Right. And an interesting contrast. An interesting contrast.

CL: Well, again, it’s because of the, it’s because of our political structure and the way we organise ourselves. And we have electoral cycles, and we have federal and state governments. And every time there’s a change, not even just a change of government, but also it could be a change of responsible minister. Then there’s a whole change in that person’s office. There are new people; they don’t have necessarily have the background; they don’t have the memory. And so, then we have new and well-intentioned policies brought forward, but without context. Meanwhile, the system is trying to regroup and adapt to this new policy cohort. There’s an enormous way, I mean, talk about creative destruction, there’s an enormous destruction of networks and knowledge as we regroup. And then it’s time for the next election.

DT: Yeah. I couldn’t agree more. It’s just you, I mean, I think when you look at other countries around the world, they’ve just had a far greater consistency in policy that sort of has that outside of the political process. And by the way, industry needs to lead here, universities, academia, education. But we do need this policy framework and leadership from government because that’s their role. And if we can do that, I’m sure we can do incredibly well.

CL: I would agree. I mean, there is huge, unlocked potential. And we talk about the productivity agenda. This is right to the heart of productivity if we could get this right. And remembering government is about a third of the economy. So, just an amazing amount of leverage there.

CB: So, so I, it’s interesting referring to that as creative destruction, there in the context is, I almost feel it’s like destructive destruction at times. But setting that aside, you’ve started to touch on how we’re going. You touched on the stability of other jurisdictions, but to bring it into Australia in the first instance, in spite of, if I might start with that phrase rather than as a consequence of but perhaps in spite of the policy turbulence that the innovation system is working through and constantly having its fitness and adaptation tested, how are we going?

DT: Well, that’s a really good question. Cameron, and I will take the glass half full approach initially, because look, we do do well. I mean, if you look at the Global Innovation Index, I think we’re sort of 24th out of 132. It’s not too bad. And when I actually look around the incredible progress we’ve made in the resources sector. I mean, you look, we are a world leader in resources and mining, and I mean, across a whole raft of things and innovation has gone there. Agriculture, I mean, all the way from marine biology through to grain crops, animals. I mean, it’s amazing the incredible innovation we’ve got. But, and then you go down, but as you start to get into the knowledge intensive industries, it starts to wane a bit. Now we’ve caught we’ve got a bit of quantum, which we love, and we’ve got some growing green shoots around biotech. But we just haven’t sort of moved to that next generation. And I think the other thing that sort of relates to what Catherine and I have been saying, I mean, all the common wisdom come out of OECD is that, we’re not as good at commercialisation, where collaboration between academia, industry and government is not as strong as you see in other countries. And also, this sort of question of risk taking, but I’m not sure about risk taking. I think we’re actually quite good risk takers when we, in mining and things like that. So, I think there’s, I mean, my big message is we’re not doing too bad. It’s just we can do so much better. And what a wonderful country with well-educated people, creative, innovative people. So that would be my view. Catherine, I’ve been I’ve been pretty positive here, I know.

CL: No, no, no, no, I’m happy to go with your glass half full. Because, I mean, I think we do have an incredible country. So, the point is, we could be so much better. But, David, if I come to the areas that you’ve highlighted where we do well. So ag, health, resources. The common factor there is we have invested significantly, not just over decades but over centuries.

DT: Yep, yep.

CL: So that is the proof that if you invest and you invest consistently and you have a good collaboration between industry and government, and government – state and federal, then you get the return on investment. The one aspect, David, that I sort of might have a slightly different view, and this is on commercialisation, I think we are actually very good at commercialisation, if we get to that point. And without the TRL scale, if we get up to TRL level nine, we do well. But where we don’t do well, is the translation.

CB: And that’s interesting. Interesting nuance. Yeah. Interesting.

CL: It’s a big issue. And I think the forum on Monday is really going to probe this particular dimension. And it’s not that we don’t have the great ideas, it’s how we get those ideas through that technology, typing, you know, scaling up. And that’s where there is much higher risk. It does need more resources. Universities, research institutes, can’t put the money in because they’re not going to be funded to do that. Business doesn’t quite want to take the risk there. And that’s why there is definitely a role for government in that area. So, and where government has had that role, it’s worked extremely well. So…

DT: I think that’s a really good point, actually, Catherine. Sorry, Cameron, because it is, that is, sort of not the Valley of Despond, but it’s that, it’s a deep hole because we’ve seen a lot more capital come into the venture end, which is sort of, through translation, starting a little bit of revenue. And that’s gone up enormously in the last 6 to 7 years. But still back that translation end, it is hard work. And that’s where governments need to step in because that’s a little, I don’t, because there’s, no one else is going to do it. And there’s a little bit of market failure there, yeah, I agree.

CB: I’m interested to explore that a little bit more. That translation issue, if I might, Catherine and David. The way you’ve categorised the translation challenge, I think is very fair. So, what is it about Australia that is lacking here? Because translation is done effectively in other jurisdictions. So, what is it particular to Australia? I do actually have some views if you if you’re reaching, but I’m interested to probe you guys as to what is different about Australia.

DT: Or you want to go on that one, Catherine, or maybe we should ask Cameron.

CL: Yeah, I think so, because there isn’t actually anything different about Australia. Because every country grapples with this, every country. But I, I think what hasn’t been recognised adequately in Australia, that this is a phase that needs attention. And it’s where government really does have a role. And this isn’t picking winners. This is risk sharing. And you know, 1 in 10 will survive, but that’s a good outcome. So, you might say and maybe, Cameron, you point out that we, it’s not that we’re risk averse, it’s that we don’t accept failure.

CB: Uh, yes. That’s a bit of a cultural setting there, I think.

CL: Well, I wonder.

DT: So, Catherine, do you think also, I mean, I’m going to use the US example, which is not always a fair… And of course, I know there’s no magic bullet here, but the willingness from where research takes place and, then you need translation of the wonderful people we have working in research and development. Then step out, with support to really take it on. Do you think we’re as good as we need to be in that area? And there’s an encouragement to do that? Or does sometimes our, the silos or the systems within academia and maybe in industry, just that wall’s too big to go over. Or do you think that’s too simplistic?

CL: No. It’s interesting because if, it does, it is seen as a wall. And it doesn’t need to be. And I look at the catapults in the UK. And the different, you know, different objective. But they enable the people to stay in academia but work with industry in the catapult framework so that they don’t have to make this binary choice. Am I still in research or am I in industry? They can keep working. And this is another point that we’re going to probe. The forum is the important of infrastructure, research infrastructure around which people can collaborate still with their respective roles, whether it’s academia or industry. They don’t have to choose but give them a place in which to collaborate.

DT: I like that. Yeah.

CL: I do think there’s something in that.

DT: Yeah, I really agree, I really agree, and so don’t force this sort of black and white decision and allow people to move more seamlessly. I really agree with that. And I think it could really yield real, real value creation across a whole raft of things. Sorry, Cameron, you probably have the answer for us, but…

CB: I wouldn’t go so far, but I think you have moved into an interesting conversation around the binary choices that appear to be in Australia around, while you’re in academia or you’re in industry, whereas that is a much more fluid flow in a lot of other innovation systems and there’s no labelling. Oh, well, you’ve had time and industry, therefore you’re no longer an academic or vice versa. And I think, I do personally think that’s a bit of a limiting issue in this country. That we don’t sit comfortably with this moving between the two because they both have great merit. I think one of the things that perhaps we haven’t touched on around why Australia is a little bit different around this translation, and this is something that I’m hypothesising and have done for a while, is that the markets into which we are seeking to place or translate these innovations are not of sufficient scale and perhaps, not even sufficiently dynamic. If you’re in Europe, if you’re in North America, South America, China, India, you have a scalable market. For us to scale into markets, we then have to accumulate frequent flyer points. And that might be one of the limitations, I feel, of that translation, because we are, for better or worse, we’re 28 million people on, towards the edge of the planet. And there’s not enough scale here to offset the costs of building scale, particularly in the biophysical sciences. If you want to, if you want to make things you need scale to compete. But I feel we’re just sort of, we’ve got, I don’t know that we can easily solve that, but we’ve got to think our way through how we access markets and address markets with these, through these translation phases. But that that’s, that’s my…

DT: And I think that is the reality. And, and I, as you rightly say Cameron, we can’t change that. However, it is a far more connected world than we’ve had ever.

CB: Absolutely.

DT: And maybe there’s just some clever ways we can do that, I think, living with that constraint. I mean, Catherine, probably has more experience on this with cochlear than any other executive in Australia. But I think, Catherine, you did get on a plane, didn’t you? And you travelled the world. And look what we have now.

CL: I think that’s right. I’d probably make two points. One, if you start with a global business model, that’s really helpful because you’re not trying to sort of be local and then go global because that becomes a psychological hurdle, I think. And Cochlear certainly did global from the beginning, but yes, it does involve a lot of travel. But the other point, I’d add, increasingly business models are digitally based. In which case, you could have scale from Antarctica, if you wanted to. So, the issue comes with meeting customers, not so much delivering the product, etcetera but becoming known and, but does require a presence. And if I look at a business like SafetyCulture, which has done extremely well, and now is worth billions, but it’s had to establish a presence in the US. So again, it’s, it’s you don’t have to be binary about this. You can have presence in Australia, presence in the US, presence in Europe. And you just have to work the business model, that hopefully means you don’t have to spend so much time on a plane. But you will have to.

CB: You will spend some time on a plane.

DT: Yeah. Yeah. That’s right. Yeah, I think that’s right, Catherine. And it is about your orientation of thinking. I think starting global, thinking about that. I mean, and be it Ramsey, Zero, WiseTech, I mean, all these companies, if you’ve got to, have been incredibly successful. Atlassian is another great example. We can do it if we think about it correctly and still keep real domain excellence here in Australia. But we, but it’s not going to be, but it’s we’ve got to look outwards. I think part of the problem, well challenge, I won’t say problem. You know it’s pretty good living in Australia, I like living in Australia and I’m pretty happy here. The economy’s pretty strong. You know, we have our moments. But, so it does take this sort of bigger impetus and drive and energy to do it. But we need to, we need to as a nation. And I think we can really benefit from everybody. Lift the standard of living.

CB: Yeah, yeah. So, as we look to these other jurisdictions and look outwards, what is it? And I’ll, perhaps I’ll start with you. Catherine, what is it that we’ve observed that other countries are doing well in these innovation systems? And how are they getting this right?

CL: Well, I’d come back to that no-one’s getting it right. But I think, where we see more rather than less success is this consistency over time, and making choices about where the investment dollars going to go. If we’re talking about public investment. And we are very averse to picking winners, it’s very pejorative when someone says that. But that shouldn’t preclude choosing a few areas and investing and committing, such as we have done in ag, in resources, in health. We pick those as winners, or the system picked those as winners. Demanded the investment. Now, in areas where we don’t have a natural, sort of attribute, if you like, and this is in the digital side. Whether it’s quantum computing or whether it’s AI, I would say space. Because actually, we do have a natural advantage in space because of where we are. So, making these decisions about okay, well let’s, we’ve got a natural advantage, let’s leverage it, let’s invest in it. And that’s the point at which we, we baulk. We say, ‘Oh, industry’s got to put the money in, we don’t want to pick winners’, etcetera.

CB: Yeah.

CL: That I think is our Achilles’ heel.

CB: Yeah, David?

DT: Yeah. No, I just sort of really agree with Catherine. And again, coming back to the first point, the country said that, appear to have done well. And I agree with Catherine. There is no one who is this shining light, but they’ve just had consistency. And it’s allowed industry and academia and government to sort of work together to greater good. And yeah, look at there’s lots of different models, that triple helix Switzerland or the Scandinavian model, but even the US has been great. You know, I mean they’ve, they invested in the university system in Northern California and the Bay Area, and that, look at what, that yield now. But we’ve got to find what’s right for us. And that’s where Catherine’s going. I pick all the best things, but let’s make it ours. And then let’s go get alignment and commonality of vision and policy framing. And then, I think we will just get that alignment and there’ll be the multiplier effect. So, because we don’t, we do not lack talent and capability. We do not lack, in fact, we’re blessed with more than many other countries. It’s just how we get a bit more alignment with it. And uh, so yeah.

CB: David, I think it’s interesting you picked up on that idea of find what’s right for us. There has been, I think, numerous attempts to transplant or graft on the systems of others and try and have them take root here in Australia. And perhaps we, if we think about it as a research question, we haven’t actually done any research into what the right approach might be for us. We’ve tended to try and pick up and translate or transfer, rather than take and adapt. Would that be a sort of a fair observation?

DT: Yeah. Partly though. I mean, we should go to Catherine, because, you know, the CRC program, it sort of had elements from around the world. It’s been incredibly successful, incredibly successful. I mean, our infrastructure, look at the Australian Institute of Marine Science. CRC, I mean, CSIRO, I mean, CSIRO, I mean, it’s still an incredibly publicly funded research organisation partnering with industry. You know, we’ve got great infrastructure. We just need more of it and consistency with it. So, yeah, but I think overall, your point is, we’re not just going to lift and shift. It’s sort of understand and implement. And then, we’ll use the agile word and then, we’ll modify it for what’s right. And yes, we live in a federation and that creates its own set of challenges. Do you think that’s right, Catherine? I mean, yeah.

CL: Well, I do, and I again would, would reinforce the CRCs. I mean, we’ve had other countries come to Australia to look at our CRC model because it has been successful and it has endured over time, and it’s been evolved and reviewed. But it’s an anchor point that people understand. And the introduction of the CRCPs was an innovation…

DT: It was really good policy.

CL: Which was very good. I would also support that CSIRO itself. I mean, there are other countries that had an equivalent and they dismantled it and did other things with it, that has not worked well. So, the interdisciplinary framework of CSIRO is extraordinarily important. I’d also point to the R&D tax incentive which, when it was introduced, led the world as a policy framework and in my view, it’s been very successful. I know there was an unfortunate period where various parties sort of gamed it. And, but again, that’s with every policy. You’ve got to make sure that that doesn’t happen. But as a predictable, predictable platform for companies, it’s been really successful. So, the one area that is problematical and we do, we do need grants. And it comes back to the transition point at the high-risk point. That aspect has seen a lot of turbulence – stop start, stop start. And that’s been, that’s been damaging.

DT: Yeah.

CB: Yes, the R&D tax credit is a great example. It has stood the test of time, from both sides of government. It has stood up, notwithstanding, there was some gaming, but in principle it stood up. But, so I think that’s a great example, as are the CRCs and yes, the unwinding of CSIRO-like entities in other parts of the world has not played out well. New Zealand is probably a great working example of unwinding and how it didn’t work. The picking of winners is an interesting thing. And I guess that’s largely about the philosophy of the Productivity Commission and the Treasury, that we believe in free markets, to the point where we don’t favour anything above anything else. Is that pretty much the problem there?

CL: And I, can I say…

DT: Yeah. You go there, Catherine.

CB: No, please get on me. Get on my back.

DT: I’ll take you on this one.

CL: No, no, no, you’re exactly right. We can believe in free markets, but this is a global market which will optimise globally. It will not optimise for Australia.

CB: No, it will not.

CL: If we want to optimise for the national interest as part of a global player. This is not Fortress Australia, but we want to optimise our system to leverage our strengths in a global market. We have to decide what those strengths are and invest behind them. And we have had so many studies that have looked at our strengths, our sectoral strengths, and they all come up with more or less the same answer. But then we do another study just to check that that was right. And then we do another study to check that that was right. We pull this plant out of the ground one more time to look at the roots and see if they’re growing. Shame on us.

CB: Yeah. I do I do think, Catherine, that’s a very elegant way that you’ve described as optimising for the national interest and drawing its distinct contrast with that notion of Fortress Australia. I think that’s a really interesting way to frame it.

DT: And the other half of that is not protectionism.

CB: Not protectionism. No, no, no. Which sort of looms large at the moment, I think it’s fair to say, um. So how just, you know, the question then as we move into the policy forum on Monday, is how do we partner with government? How do we improve the settings domestically so that our innovation system can be better? And David, I might throw that to you to start with.

DT: Well, I think I think what’s critical is that we get a meeting of the minds of both the problem and the opportunity. And I think that’s really why we’re having the forum. And then to build a common understanding with government about the system, because the frustration is that people solve for the minutia rather than looking at the whole. And we talked about it before. You prod it, you know, doing more in venture capital. But that’s not enough unless you’ve got great ideas coming through or, so it’s sort of everything’s interdependent. So, I think getting that common understanding, and then helping government put in place this policy framework that we can all get in behind and then support, because that’s what we need. And look, we’re not going to change the political process. But as much as we can give outside of that, and that’s why we’re having this forum is to get that meeting of the minds, and then hopefully move forward from that. So, I think that’s what we need to do. And, it should be an ongoing process because this will change and evolve. And we need to get that process on an annual, 18 month rolling cycle, so we keep going. So that would be my recommendation. What do you think, Catherine?

CB: Catherine?

CL: Well, I mean, I absolutely endorse what David has said, and it’s making sure that government is, recognises that it is such an important player in the system. Because it’s an important part of the economy and because it holds the policy baton. It would be nice to see innovation policies in a similar way that many policies have to have a sort of regulatory impact statement. It might be nice to see innovation policies having a system impact statement to go with them, because then that would drive the system’s perspective. And, might throw up some interesting conclusions. And actually, the design of the policy and I use the word ‘design’ very deliberately. Design is missing in action, and we need to bring it much more into the frame because design is iterative and that is what a system needs, is iterative thinking, adaptation.

DT: With that, with that national, I’ll say corporate memory, but that understanding what’s gone before so we can continually reform. Anyway, it’s been a good discussion.

CB: It has been, it has been. Catherine, David, thank you very much for taking some time pre forum to share your thoughts leading into the day. And we’ll certainly look forward to seeing you both on Monday and being more expansive in your remarks, and working in the room to see if we can drive the national innovation policy to a better place. Thank you both very much.

CL: Thanks, Cameron. Thanks, David.

DT: Thanks, Catherine. Thanks, Cameron.

spotify-podcast-badge-blk-grn-165x40 Created with Sketch.
EN_Google_Podcasts_Badge Created with Sketch.