Episode 29 – Reflections on National Innovation Policy

Dec 21, 2023

In this episode, we have the opportunity to reflect on the recent National Innovation Policy Forum in Canberra last month with my colleague, Dr Faisal Younus, who participated in the event. Thanks to Cooperative Research Australia, we also have been able to weave some excerpts from the panels into our discussions to try to offer some reflections and insights from the day’s events.

We open with Faisal’s key reflection from the Welcome to Country, followed by some of what Minister Ed Husic said in his keynote address.

We then look to the scale up challenge, which was initially identified at the same event 12 months ago and discussed on the podcast with Dr Katherine Woodthorpe AO in January 2023. With a brief reflection on the challenge of needing midsize firms to take up innovation yet noting their dwindling numbers in the Australian economy, we then reflect on comments made by Dr Cathy Foley AO and Professor Roy Green. We also touch upon the challenging policy landscape over the past 30 years, and the dispersion of investments and resources, likened to the spreading of vegemite on toast.

We follow these government challenges with a few reflections on competition, or perhaps hyper competition, in the innovation system, before turning to the role of markets and the need to be solving a problem. This was highlighted in some of the remarks made by Dr Leanna Read, and Glenn Keys from Aspen Medical. We explore the notion of whether patenting could be the very beginning or the end of the beginning depending on the philosophies of market pull or tech push in various parts of the innovation ecosystem. Time, the one non-renewable resource, which we explored on the podcast with Allison Haitz and through soliloquy in 2022, where Glenn Keys and Phil Morle shared some perspectives from the podium.

We close by drawing some thoughts and themes from the panels around the innovation culture in Australia and the need for collaboration, which was encapsulated by Sally Ann Williams in her remarks, and the complexities and chaos of collaboration remarked upon by Catherine Livingstone AO.

While we couldn’t draw together all the incredible content from the panels, our thanks go to the other panellists who provided the inspiration for this podcast. Professor Andrew Parfitt, Matthew Wilson, Sophia Hamblin Wang, Professor Elanor Huntington, Dr Kerstin Oberprieler, Julia Spicer OAM, Dr Michelle Simmons and Dr Cori Stewart.

Transcript

CB: Hello everyone, and welcome to Tech Transfer Talk. My name is Cameron Begley from Spiegare, a technology transfer advisory firm, and we have a follow-on podcast today from the National Innovation Policy Forum. For those of you that joined us pre-Forum, we had Catherine Livingston and David Thodey on the show talking about what was to come at the Forum, and now we have the opportunity to reflect on what actually happened at the Forum. And through circumstances where I found myself struck down with COVID, we have the opportunity to do a bit of a debrief with one of the Spiegare team, which is Doctor Faisal Younus, who joins me today. Faisal. Hello.

FY: Hi, Cameron. Hello, everyone who is listening.

CB: Faisal. You were there on the day, and I was very pleased one of us managed to make it. Things got off to a pretty fast start with the Minister for Industry and Science, Ed Husic, and a report hit the table and hit the conference. What was the feeling in the room?

FY: Before we jump into Ed’s speech and the feeling in the room, I think one key thing which I took really in heart is a theme that Selina Walker said during the ‘Welcome to Country’. And Selina said that  knowledge is not only power, but it’s progress. And I think, it’s very important for us in this innovation chat, to keep that in mind. So, as you said, Ed had a, delivered a brilliant keynote and he outlined the government’s initiatives to support Australia’s innovation. I thought it was a really well executed speech. And the feeling in the room was very enthusiastic, like people were really keen to hear from the Minister, and they were really keen to get going. Because I think we all know what are the key things that we need to address in Australia’s innovation sector, and it was really good that that report and Ed actually pointed that out. He called for a global mindset shift. And he also emphasised the significance of overcoming the value of debt. So we, I mean, with, between our work, Cameron, you and I, we address these challenges in commercialisation. And we spoke about how innovation is never a linear process, right. So, as you mentioned that he unveiled this research commercialisation report, and it was, highlighted how crucial it is right now for Australia to scale innovation for the growth of medium-sized businesses. And the improvements in, in capacity and sustainability and support for value adding. And once again, he also underscored the need to bring back talented individuals, back to Australia to support economic complexity.

CB: Let’s hear some of what Minister Husic said in his speech.

Ed Husic: The report highlights important demand side issues impacting the capacity and capability of Australian businesses to invest, adopt and scale innovation, and to work together more effectively. What was particularly noteworthy is the assessment of the pressing need to grow medium-sized manufacturing businesses in the country. What IISA has described as Australia’s scale up challenge, and trying to not only do that, but identifying the ‘missing middle’ as the big pathway to achieve that, because Australia does have a shrinking band of middle band of businesses that aren’t growing. The proportion of medium sized businesses in the manufacturing sector has declined by close to 40% in the last 14 years, so improving our capacity to be resilient, to thrive, grow the Australian economy, this is going to require an industry structure with greater numbers of commercially sustainable, medium-sized businesses. Growing those businesses will be critical to the transformation of our manufacturing capabilities. Building strategic business capabilities will be critical for businesses to recognise and exploit market opportunities. The capabilities we need to build are those that can support our businesses to develop a mindset, that is broader than operational processes and technical efficiency aspects. One that supports a more forward looking, internationally-focused mindset that develops and sustains competitive advantage; based on one of the key things we will all need to focus on longer term: value adding. The report highlights the importance of strengthening management capabilities to develop innovative business models and form productive research partnerships.

CB: That was Minister Husic speaking about the double IISA report. And this got described, Faisal, as the ‘missing middle’. So there seems to be a bit of a ‘chicken and egg’ problem emerging here, in that. on the one hand, you know, the scaling up side of things or the scaling up challenge really needs to be met by a series of mid-sized companies, which seem to be inherently missing based on the report that that Minister Husic launched. So, now we find ourselves, we’re missing the middle locally but we’re all seeking more scale up. Was there a conversation or conversations on the day, just recognising there might be a bit of a ‘chicken and egg’ situation here?

FY: Absolutely. I think, the conversation that I had with multiple stakeholders during that meeting was Australia does not have a start up problem anymore. We have solved that problem. What we have now, right now, is a scale up problem. So, we have got multiples of start ups, reaching a certain line, like a, we can just say the starting line or a finishing line of some sort. But then, when it comes to the hockey stick of innovation and scaling up, is just, the support isn’t just there. And it’s not by, like lack of will or lack of interest, it’s just people doesn’t know what sort of expertise are out there or what sort of experience is required to scale up.

CB: Now let’s hear a little of what Chief Scientist, Doctor Kathy Foley, said about the ‘missing middle’.

Kathy Foley: So, we have the ‘missing middle’, the low number of medium-sized businesses. And you would have seen the Tech Council of Australia identified this as well. And this means that the scaling of innovation and realisation of commercial benefits either fails or is taken offshore. And so, Australia has a scale up problem, not a start up problem. And the thing is, that management experience to run risky and innovative enterprises is low and has basically atrophied due to the domestic industry environment.

CB: That was Cathy Foley closing on the issue of domestic skills challenges. What I found interesting, and this is a thread I found from those speakers on the panels that were from industry, and specifically calling out, Matthew Wilson from Penten, Sophia Hamblin Wang from MCi, and Glenn Keys from Aspen. All three of them, at one point or another, came into this issue of demand, of market demand, because you need someone to who’s prepared to buy the product. You’ve been through the start up phase, which is great. You’ve created the product, you’ve done maybe a little bit of testing, But now you need buyers and so that demand side for markets, if that, if that’s not local, that’s got to be global. And if it’s global, that requires some other sets of skills rather than just more grants.

FY: I think also Professor Emeritus Roy Green, his name is, he also mentioned about, we have just almost too much policies, too much innovation policies. And sometimes Australia just runs for the shiniest object. It’s like, almost like a squirrel, like, ‘Oh, shiny there, shiny there’. Like, we are trying to do almost too many things all at one go. And it’s sometimes we’re just losing our focus. So instead of having a market pool or market demand, it’s almost a technology push because the technology is very shiny.

CB: Yeah. So, so and of course, traditionally technology push is the realm of the researcher. And because we’re fantastic at discovery and invention and getting the research done, it’s almost a natural state of being. But the point you make around policy, and I do recall Roy talking about the journey from 1993 to ‘95 to ‘97 and then the rolling sort of chaos of policy that ensued, the chasing of the shiny thing. Someone, and I think it might have been Andrew Parfitt, talked about watching kids’ football, and how you see the ball, and everyone runs to the ball, and they all run around the ball rather than a professional football team. And for those listening in, in a place other than Australia or the United States, that will be with a round ball on a rectangular pitch, they hold their positions, and their wingers stay out, and everyone plays their role, and they all know how to defend properly. So, it was interesting that that bright, shiny thing is in fact, looking at an under 12s junior football match where everyone just hangs around the ball. Right.

FY: That is, that is in fact, exactly what I alsofelt is the case.

CB: Cathy also talked to this issue of ‘Vegemiting’. And so, whilst one, one mental image that we’ve got is, you know, running around chasing a ball and everyone’s chasing the same ball. Tthe other phenomena which Cathy pointed to, is that we ‘Vegemite’ the economy and we just thinly spread all of the resources we have across every possible corner of the piece of toast. For those in other parts of the world, that’s known as ‘Marmite’. And that phenomena is not tenable. And I gather, Faisal, there was a bit of a theme around, I wouldn’t go so far as to say, picking winners, but there was certainly a theme I sense from some of the panelists about, let’s start choosing some things where we can, where we have comparative advantage, where we can get competitive advantage. And that’s a concept I think that Australia’s been very reluctant to embrace, which goes back to Cathy Foley’s notion of the ‘Vegemite’.

Cathy Foley: People have probably heard me talk about ‘Vegemite’ economics in Australia, which we specialise in, which is we spread things thin across the country. And what I’m seeing though, is a desire to say, what do we, what are our true comparative advantages? And can we turn them into competitive advantages so that we can build our exports? Because that’s really what we have to do. Our market in Australia is too small and that’s why our businesses stay small.

CB: So again, any sense in the room on the day, Faisal, that we really do need to take comparative advantage and turn it into competitive advantage? Or was that perhaps seen as a little bit contrary, given the market-based policies that governments of all persuasions in Australia have really pursued for the last 25 years?

FY: We suffer from FOMO, ‘fear of missing out’. So, we want to do everything and anything, and just spreading our resources very thin across a small market. There was also a call from one of the members of our table about that. Do we need to re-evaluate our grant system? Whether or not the grant system in Australia is creating too much competition, that is making people forget that to succeed in innovation, you need to collaborate more, just not compete, compete, compete.

CB: The notion of hyper competition in the Australian innovation system, I think, is a very good observation. And, I think we see this with the success rates in grants, and the success rate in some of the industry support programs. People, I think, do have a tendency, very much anecdotal observations on my part, but people do have a tendency to protect their IP fiercely and not want to share and collaborate, for fear of loss of a, or losing their fair share, if you like. The fear of losing part of it overwhelms the possibility of creating a larger pie for everyone to share. So, I think, I think that’s very much a phenomena. Uh, I and I think, and I think to some extent that got picked up by some of the panelists as well. I want to just jump across to this notion, the market and actually solving a problem. And Leanna Read approached this around, you’ve got to find a problem to solve. And, there was there was a few others who spoke. And I think, I think particularly, Glenn Keys, who from an Aspen perspective, is solving problems in, in what he can, you know, what he described as relatively high-risk environments when you heard some of the countries he referred to. And I think that they, that some of the countries that they operate in that he referred to. So, I think meeting the market problem or finding the problem. Are we actually finding problems that need solving? Was that something that bubbled through the conversation?

FY: The conversation always in the room and also from the speakers, were that, we have to come up with a solution that will address a market’s need or solve a market’s problem. We cannot just go and build the technology that may have a lot of value to us or for a particular researcher, but then nobody in the market will want it.

CB: So, let’s hear a little more of Doctor Leanna Read’s thoughts.

Leanna Read: So, you’ve got to find a problem. You got to say what that problem is. It might be solving salinity in the River Murray or whatever. But you find a problem and then you say to yourself, ‘How do I bring the people together that I need to address that problem?’

FY: Talking about Leanna. Leanna, I’m pretty sure she was from the, Carina Biotech.

CB: She was, yeah.

FY: So, she shared a very interesting story that they actually, before doing the research done, they actually applied for IP and and they slowly build their IP portfolio. And that lead to the successful Carina Biotech. And they ended up raising $20 million in equity investments and clinical trials. So, they almost had thatidea that we will build our program over the years, instead of just going and trying to solve a particular problem, which may appear, uh, a big at the time, but I think they just realised that, ‘We have got other bigger fish to fry here’. So, I think that’s an interesting way to look at it.

CB: It’s interesting that, you know, Liana described that they filed first and then chased. And it’s almost the reverse of the tech push model, because you could perhaps explain away what the difference as, the research community will chip away at a problem, make good progress, gather up their data, and then having solved a particular problem in the lab or made a discovery, go out and try and find a problem to solve. What I gathered that Liana was describing was, ‘We’ve identified the problem we’re going to solve. We’re going to put together a provisional filing that explains how we’re going to do it, and now we’re going to do it. And we will just keep filing things as we go along, as we keep discovering more, and we’ll jettison parts of the filing that are no longer relevant because we they haven’t worked out for us.’ And that is market pull. And yet, through both of those processes, one might end in a patent and the other one actually started with a patent. So, I think that notion of the patent at the end or the patent at the beginning. It’s just an interesting inflection point around whether we’re tech push or market pull. The other theme that just bubbled around in the background a few times from my listening to the panel discussions, Faisal, and indeed, it’s something that we’ve spoken about on the podcast is around ‘time’.

FY: Yes.

CB: We spoke to Alison Haitz about clock speeds, and we did another podcast around time. And as you’ve heard me say, and perhaps a few of the listeners have heard me say, time is the one non-renewable resource that we have.

FY: Often, we see in this country. We get caught up so much of with the show and the theatre around it, that we always forget that there might be someone with a similar technology that may not be as good as what we have, but still serves the market, will be taken quickly by an industry or a country overseas, and then they will build their IP position. And off they went to be a successful entity. It’s all comes to time. So, the timing and execution of the idea is so important when it comes to an innovation.

CB: So, I think, that the issue of speed came up a couple of times. So, the issue of speed came up. Phil Morle introduced that in panel five, and then, Glenn Keys reinforced it towards the end of his remarks where speed, speed is a real issue. And, not only is there the competitive tension that’s out there where others will move quickly. But I also think that, if time is not valued, particularly in a broad-brush stroke, if it’s not valued by the tech transfer community on the sell side. And what I mean by that, is the tech transfer community amongst the research organisations, it really does, I think damage, ultimately it damages, the prospects and the relationships with the buy side, which is the private sector, because the private sector puts an enormous amount of value on time. Glenn Keys has a few more reflections on this.

Glenn Keyes: Speed is a real issue, right? I think very often, you know, I was on a call the other day with two different government organisations, and we were talking about getting together for a roundtable. And I sort of thought, ‘I won’t say before Christmas because they’ll probably think it’s too soon’. So, I said, ‘Could we do it by the end of February?’ and they went ‘Phew, that seems very ambitious’. So, so then they said, ‘Could we do it in March?’ And I went, ‘The beginning of March?’ So, we agreed to do it in the first quarter. And I was just poking my eyes out with a stick, right? There’s the concept of speed.

CB: If these start ups are born without some sense of urgency, and that sense of urgency, I think has to be born from the founding institutions, then no one’s going to ever get in a hurry. And the private sector, the buyers, the demand side, will either lose patience or they’ll find another way to solve their problem. And then you end up with a stranded asset.

FY: On that note, about time. Julia Spicer said something very, very interesting. And, I think we can relate it to the whole timing concept, is that ideas without action are delusion. And innovation without a problem is also delusional. Right. So, so time is critical because we, and we always see that, that the private industries are on a very shorter time frame and they will want to execute, they will want to execute. So, they’re like, ‘Okay, you have a great idea. Let’s just go and take some actions and let’s just go on with it’. However, when we come to the machinery of the government or certain massive, big organisations, the bureaucracy slows down the process. And instead of something taking three months, it takes six months if we are lucky; it might take a year. By the time we have gone and fixed a clause in the NDA, somebody, some start up from Silicon Valley or some start up from India, have already taken primary position in the market, and we are still discussing whether a course is important. So, you know, sometimes we just gotta think that, ‘Okay, we have a great idea. We need to execute it. Let’s take a decisive decision and let’s just go on with it’.

CB: But this, there’s a cultural element, in all of this, I think, Faisal, which again seemed to weave its way through the conversations that I listened to after the event. And again, Glenn Keyes, I think, really gave a quite interesting example of the cultural difference between Australia and a lot of other jurisdictions. And he described, if I recall, about going to Tradeshows and how there was a bunch of other countries all on the front foot, and the Australians sitting amongst themselves trying to figure out how not to disclose their IP to each other. And, you know, just this very defensive approach or cultural position. And again, this, this perhaps has something to do with the granting system and not wanting to leak your IP to keep competitive advantage. There’s probably a whole host of reasons, but there’s a cultural thread in all of this, around this defensive position. It’s almost the fear of loss trumps the prospect of gain through opportunity.

FY: So, Glenn said that in Australia, we have a ‘Tall Poppy Syndrome’. We want us to do well, but not too well. And our media is ruthless for making a mistake. In overseas, we celebrate mistakes, we learn from mistakes. And I have also heard it from multiple innovation leaders that I have come across in my life that we, if we fail or if we fall, we need to fall forward and we need to learn from our mistakes instead of getting completely trashed about it. Or like, we just, the innovators, you have to understand, at the end of the day, the innovators are also people like us. They are dreamers. The researchers have a lot of KPIs to manage, and they’re all trying to contribute to the society and the innovation sector. And if we just go and completely slaughter them, how are we expecting them to be a serial entrepreneur or a serial thinker? So, we need to accept failure. We need to embrace failure. And we need to learn from it.

CB: I think that that’s an extraordinary challenge. Not so much for the people in the room, but for all the people outside the room, and we think about the risk settings of a lot of our institutions, a lot of our research organisations, and indeed, some of the, I would contend, at least some of the well-established major corporations who are in operational efficiency mode, who don’t need to take on risk because the pressures that they’re under perhaps don’t have them in that risk-taking mindset to create new products and services. They are well-established and operational efficiency’s their driver. That ‘missing middle’, where that risk gets taken, particularly in scale up, that’s the challenge. And so, we sort of come back around the ‘chicken and egg’, even as we weave the culture conversation through the National Innovation Policy Forum, we come back to the ‘missing middle’, which seems at least based on Minister Husic’s comments and the report that he announced. And most of the elements we’re talking about seems to be, you know, the contemporary innovation system challenge, is how to find the middle in order to drive the scale up.

FY: We must invent a way to mitigate risks. What we have seenin our day-to-day encounter with multiple private companies and universities, is that we have a certain number of assumptions that we make, and we then go on about saying, ‘Okay, if this happens, how do we negate that?’ So, we always have a strategy to mitigate risks. But we also completely understand that we cannot be a successful venture if we don’t take risks. So, we just have to say, ‘Okay, there is a chance that we are going to fail’ – but still go for it.

CB: And, you know, I think very well put, Faisal. And I think, that notion of mitigating risk, in contrast to avoiding risk, is one of those cultural settings that we need to step away and have a bit of a think about. So, we’ve talked a little bit about risk, and I think that’s something that will be on most participants minds coming out of the Innovation Policy Forum. The last thing I’d like to touch with you on today, Faisal, as we pull together our wrap up from the forum, is this idea of collaboration. And we’ve touched on Glenn Keyes picture of, you know, the Australian stand, all avoiding each other, not wanting to say anything. And, Sally Ann Williams made, I think, quite an impassioned point at the end of her time on stage, around the need to make the ‘we’ greater than the ‘me’ and to actually be prepared to start collaborating. Cathy Foley spoke about this issue as well. Elanor Huntington spoke about this issue. Here’s Sally-Ann Williams with her thoughts.

Sally Ann Williams: We need to actually put ‘we’ is greater than ‘me’. And what I mean by that, is if we’re going to actually achieve anything, it needs to be collectively. It cannot be a win that only one organisation, one university, one institute, one industry body, one growth centre, or one person, wins, right? We actually have to have a greater vision than that. And when you actually, this saying that we say really loosely, ‘A rising tide floats all boats’; well, it absolutely does. So, how are we actually creating that environment where we are collectively coming together with a greater aspiration on things, and we’re actually persisting towards that, because in persisting towards that individually, our own organisations, our own agendas, our own institutions, our own companies, our own businesses, will actually prosper and grow.

CB: Sally Ann Williams with her plea for greater collaboration within the system.

FY: Well, see, Cameron, and we had many yarns about this thing between us and between multiple stakeholders. Collaboration comes from a place of trust and relationship. And our table during that, during the conference, we basically said over and over again, you cannot collaborate with someone if you don’t have a relationship with them. And to have a relationship with someone, you need to build trust, okay? So yeah, we just have to make sure that we first start talking to each other. We build some trust in the system, and then the collaboration will come in. Because the minute everybody puts a grant application for one single grant, and everybody is fighting over it. Then comes the competition, then comes the mistrust and the relationship goes through the window. So how can we build an innovation system where there is no trust, no relationship, and no coherency? I think that’s the key question.

CB: Yeah. And you know, I think to go back to Sally Ann’s point, the ‘we’ greater than the ‘me’. There was a couple of references to the well, there’s the national innovation system and there’s six state innovation systems. And then there’s goodness know how many incubators, accelerators. You know, a few regional councils have got some things going. How much, how many layers, how much complexity, can we tolerate for a population of 28 million? Which is, not large by global standards, but on a landmass, basically the size of the continental United States. You know, how far and which really, comes back to that ‘Vegemiting’ concept that Cathy mentioned in her remarks.

FY: Also, Cameron, I would like to add here something, two critical things,which Catherine Livingstone actually said. And she said that the need for shared language in Australia, right now, is vital. Like policymaking is very confusing, as you just mentioned, about state, federal, and individual organisations’ policy. We need to have a shared language. And Catherine also mentioned something which got me thinking, two days after the event, about chaos theory. That order can come from chaotic interaction. We cannot be afraid to go and have a conversation with someone because we don’t know down the track what that interaction will hold value-wise.

CB: Some thoughts on who innovate and the complexities from Catherine Livingstone.

Catherine Livingstone: And an innovation system is not some theoretical construct. It’s people who innovate. It’s not institutions. It’s not governments. Iit’s not business. It’s the people inside them who innovate. So, it’s all about people and social networks, which are complex and are random.

CB: Faisal, it’s been great getting your take on what unfolded through the National Innovation Policy Forum and been terrific getting a few of your insights from being there on the day. And hopefully, our listeners will get a sense of how you felt it went, woven in amongst all of the different comments from some of the panel members as they’ve been heard today. And we’re certainly looking forward to being a party to next year’s National Innovation Policy Forum. Faisal, thanks for joining us today.

FY: Thank you, Cameron, for having us. It was great to have this conversation.

CB: Thanks very much and thanks to all of our listeners. We look forward to catching you all again next time on Tech Transfer Talk. And some final thoughts from Glenn Keys around risk.

Glenn Keys: One of the things we do badly, we as business – not we as government, is risk. I think we look at risk badly. I think we categorise risk immediately into two categories. We say, ‘All risk is bad. We should never do that. Walk away from that. There’s an element of risk in that. Do not touch that’. And I’ll go to why we do that in a moment. And that’s bad, because you miss great business opportunities that other jurisdictions are willing to take a run at. And so, we should sit down and think about where do we sit at that end of scale. Then there’s the guys who are worse, and they sit at this end of the scale, and they go, ‘Risk. I laugh at risk. I walked through a minefield once and didn’t explode. I can do it again’. And they are a danger to themselves; to their shareholders; to their customers; to their staff; all of those things.

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