This is a rather timely discussion, as I had the chance to discuss innovation policy, ecosystems and the domestic politics that have influenced the last three decades of innovation in Australia with Dr John Howard, founder of the Acton Institute for Policy Research and Innovation. The timeliness is due to his recent publication Thinking in Public: Australia’s Missing Innovation Policy—Will it Ever Be Found? that is now available at Amazon (Paperback) and for the Kindle version.
We start our conversation around John’s entry into the innovation policy world, which started with an ARC project commissioned on university – business relationships from near the turn of the century. John then embarked on his PhD on the triple helix model which prompted in John’s mind the broader question of “how does it actually work?” A key report that emerged from our conversation with a report commissioned by (the then) Department of Industry, Science and Resources on the The Emerging Business of Knowledge Transfer, which is an early artefact in the recognition of the role of Technology Transfer in the innovation system.
We then explore theories of innovation and how the concept of linear flow where inputs are the focus rather than outcomes or impact has been the dominant paradigm. John reflects on how EU ecosystems have evolved but not translated to our local system concluding that while we like simple solutions, innovation is complex and exists in complex adaptive systems, however systems theory is bringing new insights. We then reflect on domestic industry policy settings, looking back to Senator John Button in the 1990’s and how industry policy did not appear to connect to or evolve with innovation policy.
John then gave a working example of the Danish windfarm ecosystem and the policy and systems, where we explore the complementary concepts of value pools and supply chains and the need to coordinate ‘across silos’ to get outcomes, otherwise you get a lot of inputs. I suggested that the currency of announceables may in part be driving part of the malaise in innovation system coordination. John broadened that challenge across federal, state and local government administrations, approaching similar problems with different strategies with limited alignment around implementation – an area that he and Mark Dodgson have frequently commented upon.
We briefly explored the concept of risk in the domestic innovation system. John pointed to the growth in integrity agencies over recent years in the public and private sectors. While we have previously touched in risk in the podcast, for example with Anne Marie Perret, Jane O’Dwyer (and hopefully with Greg Harper in the coming months), John brought a broader lens to this issue as we concluded that the ‘threat of consequence will naturally drive risk appetite down’.
We close out the discussion discussing a range of examples that evidence that innovation ecosystems and technology transfer are working in Australia, despite some of the headlines that may be around. We reflect on the emergence of medical innovation ecosystem in Melbourne, the rural development corporations across Australian agroforestry industries and reflect on the benefits of stable policy, funding and bipartisan multi-government support. In reflecting on these successful examples, we touched on the importance of new methods and approaches and the importance of timing, and the challenges of being too early with innovations.
This was a conversation reviewing the policy and political foundations of the innovation ecosystem and tied together a lot of themes that we have been exploring over the journey around risk, value pools and how to celebrate our successes.
Transcript
CB: Hello everyone, and welcome to Tech Transfer Talk. My name is Cameron Begley, Managing Director of Spiegare. Joining me today is an extraordinary mind in the world of the Australian innovation policy system and indeed, innovation generally. John Howard has been involved in innovation reviews and innovation strategy, participating in the innovation process for many decades. Sorry to date you there a little bit, John, but, um, in that role, he’s currently the Executive Director of the Acton Institute for Policy Research Innovation, from which a recent book has sprung, which I highly recommend to everyone called Thinking in Public: Australia’s Missing Innovation Policy. And I’m hoping to spend some time talking with John about the contents of that book and a little of his journey. John, hello.
JH: Hi, Cameron.
CB: Great to have you. First of all, congratulations on what is, I think, a substantial body of work on innovation policy. It’s fantastic that you’ve got it published. Well done.
JH: Thank you.
CB: I was delighted to read the forewords by some significant names in the innovation system, some of whom have beaten you onto the podcast, some of whom are yet to come. But nonetheless, I’m really keen, though, to start, John, on how this all began. How did you find yourself in the universe of innovation, policy development and strategy?
JH: I’ve been involved in public policy in one form or another, basically throughout my career. But innovation policy or science research innovation policy was sparked when we were commissioned by, I say, we, my colleague Mark Matthews. We were commissioned by the Australian Research Council to look at a project on university business relationships, and we wrote that and it was published by the ARC. And that sort of set the tone, I guess, for the interest in it. And I subsequently started at a PhD and finished it on the triple helix concept, and which basically reflected this innate curiosity I have. So, that there was a lot of material and academic articles, discussions about the concept, and I’d go along to conferences and I’d be asking myself, ‘Well, how does it actually happen?’ We talk about this. We put up diagrams and models, but I was much more interested in how it actually works. Anyway, that was the subject of the PhD, and it wasn’t published as a document, but bits and pieces of it ended up in the public domain. Quite a lot of it in reports we did for government. And because of that piece of work, it led into other projects. And we did the 2003 review of the Cooperative Research Centres program. Then following that, I was asked to do a piece of work for the Department of Education and Science and Training, as it was then called.
CB: As it was then known.
JH: It ended up being called the ‘emerging business of knowledge transfer’. That led us into…and we were also commissioned to work in the area of research commercialisation, and rising out of the ARC project and the PhD. And the PhD was supervised by Ron Johnson from Sydney Uni, and we started work on research commercialisation. We were funded to do a study of best practices in university research commercialisation. It’s still around. A lot of these publications, if they’re not in the public domain, are actually on the Institute website. One thing led to another, but I was also helped along this journey with my partner, who was once was the foundation Executive Director of the Australian Venture Capital Association. And we had many discussions over many years, and it’s still, still continues about research commercialisation and how it intersects with science research innovation policy.
CB: I suspect there is quite the body of work that you haven’t mentioned there. And there’s a couple of things I’d like to just pick up on the journey there. I think the conversations you must have had with Anne, who, your partner, who of course, I met in my time at CSIRO and was the sort of bridge for us to connect more meaningfully. They would have been fascinating conversations because AVCAL or the Australian Venture Capital Association, which, just and this is a gross simplification, is the consumer of technology transfer and knowledge commercialisation. Whereas the university sector, the research community, are in fact the generator of those activities. So, that would have been a very interesting conversation around, in simplistic terms, both sides of the transaction, and how that was working or not.
JH: It was. Well, Anne was at Coopers and Lybrand as it was then, was commissioned to do an economic impact study of venture capital, basically adapting a methodology that had been used internationally. And despite the flaws in the methodology, it actually did raise awareness of venture capital as an asset class.
CB: Yeah.
JH: And the government was very happy with it. And it was useful and important, not for the not so much for the rigour of the analysis, but the fact that it raised awareness of the asset class.
CB: If indeed there is some causation, let’s even call it correlation, between that Coopers and Lybrand report and raising the role or the knowledge of venture capital as an asset class, that in itself is a success. And certainly the role of venture is a whole other podcast conversation, I suspect, John. Where I would like to dive back to is you raise the question that you were being asked around, how does tech transfer and knowledge transfer work? And I would put it to you that therein lies the nub of why this podcast exists, why you and I have conversations. Why, in fact, to an extent, perhaps not the whole extent, why some chapters of the book that you’ve just recently released exist? How does it actually work from your perspective? How does this work? And you’ve been witnessing this and participating in this for some time.
JH: I mean, that’s where we move into a quandary. One of the pieces in the book talks about theories of innovation, and that’s very much addressing how knowledge transfer moves between the academia, between business and between government research agencies. And, of course, we have a lot of the conversations quite often start with this linear flow concept. The idea is you pour money in one end for R&D…
CB: Turn the handle.
JH: Yeah, that’s right. And magic happens. You get innovation coming out the other end. That raises another topic which we might get back to later, but about how we tend to see innovation policy in terms of inputs, not outcomes. I will come back to that later…
CB: We will.
JH: The other issue is when you think about these theories of innovation, if you like, the national innovation systems approach is very popular or very current in Europe, and it hasn’t really translated as much into Australian innovation policy as we would have liked in the 1990s, when there was a huge amount of work done by people like Jane Marceau and Narelle Kennedy’s group and Heather Ridout at Australian Chamber of Commerce and Industry. For various reasons governments, haven’t been all that committed to national innovation systems thinking, and we still see it these days in the way in which the Productivity Commission likes things. Then you’ve got other theories of, you know, you’ve got start up theories, if you like, and you’ve got consumer-led theories and so on. I settled on writing about five, but there are others. So, it’s like a lot of these issues, and I guess that’s why I’m interested; there’s curiosity about how does it actually happen. And as much as we’d like to have simple solutions, they’re often very complex. And the nature of systems is complexity. And we’re dealing with complex adaptive systems.
CB: Yep.
JH: And systems theory is offering new and additional insights these days.
CB: Yeah, I’m very interested. There’s so much to talk about there, John. And I’d just like to go back to the 1990s momentarily, and hopefully most of the listeners were actually on the planet at that time. In the 1990s, there was a large push for industry policy in this country. I think it was Senator Button who really set the scene around a positive policy outlook for industry. And then, if I’ve got the carbon dating right here, John, at the same time, the Europeans were building their national innovation systems theory and practice, and somehow we had a positive industry policy setting but without the commensurate innovation policy setting to support it. What happened in that time that got us off the innovation track and sort of set us on that different trajectory to the Europeans who have a arguably a more sophisticated or perhaps more politely integrated approach to this?
JH: And this is where you get interesting policy intersections. The 1990s was very much about microeconomic reform, and the pressure was being placed on a highly protected manufacturing industry to adjust. And the Button plan was addressed around that. But many would suggest that the rate at which that structural adjustment occurred was probably too quick for the industry to make the necessary adjustments and have put in place the policy frameworks. I’ve been reading about, over just over the last few days, reading about the adjustments that were made in the Ruhr Valley and also in the north of England and in Pittsburgh. You know, the way in which positive policies were put in place around actually, like about innovation ecosystems, which we can’t get back to in a moment as well. But there was a lot of policy conclusion. There was in the, in the 1990s, remember, it was the time of new public management and market solutions to industrial problems. So, there was a view back then, and still is, which comes from neoclassical economics and neoliberal thinking, that it was the market was the best allocator of resources, not notwithstanding how much we talk about market failure, when in fact people like Mark Donaldson talk about systems failure and a lot of the failures to get traction, if you like a systems failures, not market failures.
CB: Yeah. So, but we’ve reached a different point now where I get the sense from, even setting aside the current context of US politics, I think even under the previous administration, there was a propensity for sovereign interest. The Europeans have a propensity for sovereign interest. I think China almost has that concept nailed down really strongly in terms of sovereign interest. Australia is on the sovereign interest bandwagon, if I dare call it that. I would contend, and this is looking through my experience of bio-based economy, which I’ve been closest to over the years. John, I would contend Australia in the last remains the last country hanging on to free market theory. Every other country I’ve come across to some extent has industry policy, which aligns with sovereign interest, and we seem to be the last ones hanging on for free trade above all else. Am I being too simplistic or just too narrow in my view? Being too harsh, maybe, on governments of the past ten years?
JH: I think that you’re probably right in that perception, but others would agree with you, like Roy Green, that we’ve been hanging on to this way of thinking even in the last few days. Future Made in Australia at the initiative has been described as protectionism. It comes back to a comment which I started to make earlier, is that we tend to approach innovation policy through inputs. How much public expenditure, how much subsidies are we going to give to startups, how much we’re going to spend in education and so on? And we don’t really think about the outcomes. And the issue here is that the outcomes are really determined by the way in which all of those activities are actually coordinated and come together in coalitions. It’s interesting when you think about it, that Denmark developed leadership in windmills, not just simply by investing in the technology but by, having coordinating the whole infrastructure that goes around it. I wrote a piece which is in the book about ‘tilting at windmills’. When you think about how a windmill is actually made, there’s thousands of components, and there’s bits of it which we’re quite good at…
CB: Yes.
JH: …but we need to think of the ecosystem that actually creates it, rather than thinking of, oh, one big subsidy to make it, to make a windmill. So, the arguments and the discussions have got to be more complex.
CB: I do like that, both metaphorically and literally, that ‘tilting at windmills’. It is that systems piece that’s really important. And just a concept that we’ve spoken to in our universe is around, we contrast supply chains and value pools. What we’ve found is that supply chains and the Danish windmill examples are terrific examples of snapping together a whole set of different components and creating a product. I mean, you could argue, well, that’s where Lego is, so, that just is on brand. But what we’ve found is that in order for innovation and technology transfer to be successful, it’s actually beyond the supply chain. It actually requires value to accrue in some way. Not necessarily financial value, by the way, but value has to accrue to all of the actors in the system. And, you know, we’re talking about systems. If you get a breakdown in value share in the system, that is where tech transfer starts to stagger. And more often than not, on our observation, doesn’t get there. Because we can think quite linearly about tech transfer, sometimes very short lines, i.e. who is my license going to good. The deal is done, my work is done, I’m off to the next transaction. But we do need to think in those systems and pools, I think. And that’s where the Danes have got it right with the windmills. And to go back to the input output piece, if you just focus on the input, you’re never going to see the complexity that lies downstream of it.
JH: I think that’s absolutely right. And what the Danes did, they just didn’t simply fund wind research. They coordinated, um, energy policy, industrial development policy, environmental regulation, export financing, grid infrastructure, and across multiple agencies over multiple years.
CB: Yeah.
JH: And what we’ve discovered and written about it, it’s towards the end of the book ,is how we operate in silos, and coordination is got to be the critical problem in our innovation ecosystem. And whether we’re talking about a national innovation ecosystem, a national innovation system, or 9 or 10 innovation ecosystems dotted around the country. But it’s actually getting all of those components coordinated to actually create an outcome.
CB: Yeah.
JH: And you won’t get an outcome unless you do that. You’ll just get lots and lots of inputs, which is a question arising about, you know, the R&D tax concession-that’s an input worth, you know, over $3 billion. But we’re uncertain about where the R&D that’s created or the R&D outputs are created, and how they end up as an innovation. An innovation is quite simply to me, it is about change and hopefully change for the better.
CB: It struck me, as you were talking about government ministers and they can make an announcement. They can say ‘We are spending this much on’ and they can stand in front of the camera. They can cut a ribbon. They say, ‘This is what we’re doing. Isn’t this terrific? Here is our investment’. The trick with innovation of all kinds, whether it’s research-based or practice change or adaptation or adoption of things, is that the time that the announcement is made and the input is made, is normally some distance chronologically from when the outcome and impact arise. And as politics is in the currency of announceables…
JH: Yeah.
CB: …announceables that are, I’ll say, controllable because the Minister of the day can choose when to say or not to say something. So, has a slight distortion emerged because of the need for a stream of announceables? That it’s easier to announce the input and claim the input, rather than sit with the awkward moment of uncertainty of that output or impact turning up. And heaven forbid, it was the other side of government that invested in that impact. They made that decision 15 years ago, and I couldn’t possibly claim credit for that. That would mean that that gives the other side a win. Am I being a bit harsh?
JH: No, I don’t think so. But I guess what I’d want to make is when we’re thinking about innovation announcements, we’re not dealing with just the Commonwealth government. We’re dealing with six state governments or territory governments, eight of them, if you like, and then it actually drops down even further. You know, we’ve got 500 local governments in this country. And, but city governments are quite important. Sydney and Melbourne city councils. And they have their innovation policies and strategies as well. And. I come back to my earlier point, none of this is coordinated. So, you’ve got different administrations approaching similar problems with different strategies. The result is that you’ve got very large amounts of money being involved here. But again, I’ll come back to my point, it’s not coordinated in any way. There are Commonwealth State Ministerial Councils, there are processes through national cabinet, but there isn’t one for innovation, as I understand it. Ministers can, Commonwealth or state ministers can make announcements, and that doesn’t necessarily take into account all the other ducks that have to line up, to make, to make it implementable.
CB: Indeed.
JH: And the other issue that with that it’s very easy to come up with strategy. Send people away and come up with a nice glossy and lots of pictures and and fine print, but the implementation is quite often missing. That’s the hard hit. So, we have these, and Mark Dodson’s commented on it and so have I, that you have these reviews and inquiries and you submit it to government, and governments are expected to pick up the ball and go ahead and implement it. Despite the fact that it hasn’t, doesn’t necessarily have all the policy levers that it needs to pull or push at some stage. The implementation machinery isn’t there. When we’re dealing with an Australian Westminster type of government, implementation is complicated by individual authorities and ministers. So, you’ve got, you know, eight, fourteen, but probably five significant ministers, all making, all with the authority to make their own decisions under the executive power that they have. Our system differs from the American or the Korean or presidential systems, where executive power is actually, you know, vested in a president. Here in Australia we’ve got executive power widely distributed across the system. So, it makes the implementation particularly challenging and difficult. And that’s why I write about conceptual vagueness.
CB: Yes, that’s right. Whilst we’re on complexity and the distribution of executive power, what I sense is missing in the Australian innovation system, I’ll limit my remarks to Australia now, is the risk appetite. And I get the sense from government and I think, to a large extent the private sector, that we either avoid risk in absolute terms or just try and maintain a focus on operational excellence. So, we don’t need to take too much risk other than continuing to do what we’re doing. So, when it comes to government, I really think that there’s a risk aversion there. And as a consequence, when dealing with complexity, you go small, whereas you don’t step into the risk and the complexity and say, like, ‘We’ve got to manage this for better outcome’. We tend to play smaller and avoid it. And then, ‘Oh, well, it is what it is’, and we move on because we’re not trying to beat the laws of thermodynamics here, John, we’re trying to deal with human behaviour.
JH: And it’s also institutional behaviour. Because what’s happened over the last, in my short lifetime, is we’ve seen a massive growth in what’s called the integrity agencies. So, ministers and public servants are continuously under scrutiny, um, from Senate Estimates committees, from Auditors General, uh, and a whole range of other bodies that are interested in accountability and public servants are really concerned about having to appear before a Senate Estimates committee.
CB: Indeed.
JH: In the corporate world, there’s also other issues. You know, the uh, and I dug into it in one of the papers in the book about how prudential regulations that come from the APRA and other regulatory bodies work against banks taking risks. Also auditors who have a view about risks and boards. And I think you spoke about…
CB: Yeah, it’s an issue we’re picking up on at the moment too. Around boards. Greg Harper and I are gathering our thoughts on boards and risk and risk appetite and innovation governance. And Ann-Marie Perrett, who you may know, one of my colleagues here in Canberra, she and I talked about governance, particularly for newer ventures where you’ve got to manage risk and money and personalities, would be a polite way to put it.
JH: Yeah.
CB: So we have talked about the governance piece and I find it fascinating, John, how you’ve brought in the prudential regulation from a corporate side and the Senate Estimates and oversight and National Audit Office and things from a government side and those, I hadn’t thought about this previously, which is a testament to why I need to read the whole book. It’s the overlays or undercurrents, depending on which way you want to put it which, with the threat of…I’ll call it threat, with the threat of consequence from those sorts of governing or overseeing organisations, it will naturally drive risk appetite down. Even if there are things that look really prospective that they make sense strategically. There’s a market, there’s a technology that solves it. Those forces might actually be driving risk appetite out of the boards and cabinet rooms of the country.
JH: I think that’s fair comment, but it’s to my mind, it’s really unfortunate how that’s developed.
CB: Is there a pathway to correct the cultural trajectory around risk and policy? Because continuing on this pathway, with all the best ambitions of a Future Made in Australia and the Australian Economic Accelerator and the industry growth programs with RDTI (Research and Development Tax Incentive) that we mentioned earlier. All of that will come to little unless there is a tolerance for managed and constructively taken risk. How do we pull the nose up on the plane here to make sure that the promise of these policies that the current government has enacted, can actually lead to something positive?
JH: Yeah, I guess, um, I started to answer that or address that in one of the insights which isn’t in the book. It’ll be probably in another one. It’s how we tend to look at public policy through a political lens, and that requires, I guess, some change in thinking on both sides. The political leaders who make announcements in political terms, important announcements, that there’s a habit or a practice of putting a political spin on it. And then you’ve got journalists on the other side who want to put a political spin on it. If we’re interested in good public policy, we have to play in that space, which is an intellectual, a thought process rather than a political process where the eye is continually on the voter. The present government’s got a fantastic opportunity to actually to drive these policy discussions. And I think, you know, something like the strategic examination of R&D is part of that process. And it’s…
CB: You anticipated my question, John, well done, well done. Better known as SERD (Strategic Examination of Research and Development) for those that are listening. S…E…R…D… by the way, not something one takes the root of. But, what are your thoughts on SERD? So, I mean, given, as you’ve rightly identified, John, we have a government now that, I think we can confidently say we’ll have this term and the next one, I’m not a numbers person, but it seems a long way back for the opposition in a single go. So, let’s just say they’re going to get two terms. Where do you think SERD might take us and what are your hopes for post-SERD?
JH: I think the process has been, you know, exceptionally robust. Open participation, public consultation processes have these obvious strengths, but there are downsides. The cathedral or the bazaar type of analogies. Those sort of processes are not a substitute for excellence in public policy, if you like, within government. So, the two processes intersect. I have no real feel for what will come out of this SERD process. I hope, though, that it can actually think in terms of outcomes, going back to my point earlier. That we can actually think about outcomes and how you achieve outcomes through the coordination of those inputs that I was referring to, and address the complexity we have built into our administrative system.
CB: I do want to ask you a little bit about tech transfer in all of this. We touched earlier on the fundamental question of how it actually works. And I’m interested in perhaps some of your reflections on how you’ve seen tech transfer working effectively or not effectively in the system over the journey, and perhaps any changes? Now that Coopers and Lybrand report seems like an interesting place to start that thinking. Because it sounds I’m going to assume here, John, that that was the first time someone articulated the concept of knowledge or technology transfer in the Australian innovation system. How have you seen it unfolding since that time? Good and bad.
JH: I think I’ll start by saying it’s very easy to make sweeping, general sweeping generalisations that…
CB: We do it all the time here, John, so don’t hold back.
JH: As I think I’ve said, I’m having a closer look at innovation ecosystems, and you start digging into it. And the evidence is there that knowledge transfer, tech transfer is actually working. And you can’t have a look at what’s happened at Geelong and the innovations and the knowledge transfer, if you like, that have happened there. It’s an incredibly impressive ecosystem in terms of what they’ve been doing and the way they’ve integrated the industry into the university. And we see it in Newcastle and we see it, also in Wollongong. In the capital cities it’s a bit harder. But we need to think about our university sector doing different things. To say, make a sweeping generalisation that research commercialisation is terrible, doesn’t really fit the reality…
CB: No, I wouldn’t. I would never have said that, by the way.
JH: But many others have…
CB: Oh, indeed, indeed. I think that the broad lamentations are unfounded. Clearly, the tech transfer community can do better, because to say otherwise would be a nonsense. Of course, there are things that can be done better, but I don’t think we’re anywhere near as bad as a community of practices, as is alleged in some circles, I think.
JH: I think this comes back to narratives. I’m a firm believer in narrative and storytelling as part of a public policy discipline or approach. So, we’ve come a long, long way over the last 20-odd years in that direction. I think we should be celebrating those…
CB: …I couldn’t agree more.
JH: Those achievements.
CB: There’s a lot of good stuff that’s going on. And I think it’s interesting, John, your point about the communication piece, we’ve allowed as a community of practice, of which I would consider myself a member, would possibly not’ve been able to grab a hold of this narrative as well as we should have. Because, you do, you know, if you listen to the general vibe, it’s, ‘Oh, you know, we’re dreadful at tech transfer and we’re dreadful at commercialisation’ and so on and so forth. Yet there are many good examples out there, not only of transactions but of systems that do this well.
JH: Yeah, I think you’re right. And in agreeing with you, I’d also say let’s not forget the medical clinical sciences sector.
CB: Indeed.
JH: Parkville is a fantastic example of knowledge transfer and translation, and in setting, and setting that up with, being led by David Pennington and John Brumby, setting up that system where they actually got the medical research institutes to communicate with the universities. It was a major achievement, and it was an interesting sort of evolution that involved each party sort of moving, existing in their silos, you know, the medical research institutes for scientists, the hospitals were full of clinicians, different ways of thinking, different mindsets. But they’re able to get, Bio21 as it started, was able to get them together and they started sharing data and son. But having said that, if, we’ve got fantastic institutions in Australian medical research, you know, the Walter and Eliza Hall and that whole suite of them…
CB: Yeah, yeah, absolutely.
JH: Down Royal Parade, and they’re globally recognised . The message there, and I’ve said it in other places is that, we’ve been doing that for a long time. We’ve had the National Health and Medical Research Council and its predecessors have been doing that since the early 1920s, when the Medical Research Council was set up, and they’ve invested continuously. Probably not enough these days, as many would argue, but I think it’s something which we’ve done very well for a relatively small country. And it’s not just Melbourne now, it’s also Brisbane is a global biotech hub and Sydney sort of moving along.
CB: There is certainly something to be said for continuous, stable policy, stable operating system around the investment needed to drive an ecosystem along, whether it’s the medical ecosystem which you’ve just referred to. I would contend the Rural Development Corporation system is an equally successful system. We’ve had 30 years of stability and that’s generated a lot of investment, which has in turn led to a number of outcomes, inventions, sustained genetic gain and a whole bunch of crops. So, there is certainly a lot of merit and stability, which I guess at times feels like it’s the antithesis of what’s going on because of a little bit of chopping and changing around direction and policy things being rebranded. So, maybe our strengths are best demonstrated where we’ve had long sustained funding blocks, and I’ll call it bipartisan support, but perhaps it just has kept going because success breeds success.
JH: It’s a very good point. You’re right. The RDCs have been around since John Kerin gave them stability in the 90s. But that’s another example of how knowledge transfer actually happens. We said in that report we did in 2005 about the business of knowledge transfer. Yeah, you can transfer knowledge and it’s embodied in gadgets…things you can drop on your foot as you can say. It also comes through in professional practices or new methods. And I think your point about the RDCs is exactly that. It’s actually manifested in new approaches around genetics, in crops and better understanding of soils. A whole raft of innovations, if you like, which, they don’t necessarily have a monetary value attached to them directly, but you can think about the value that’s been created. And yeah, ABS (Australian Bureau of Statistics) does a lot of work on this. Obviously the value that’s been created through those processes.
CB: It’s a really interesting example of the concept of the value pool where value flows out, not necessarily in a direct financial return sense, but value accrues over time through knowledge and systems and practices which flywheels other things along and improves, heaven forbid, innovation, improving productivity. There’s a thought.
JH: That rubs up against some barriers. So, if you’re going to introduce a technology, you need a whole ecosystem around you and support it. So, that’s why we’re not getting a strong take-up of technology. You can’t simply go to a business and say, ‘Look, here’s a new financial system that’s going to solve all your problems’. What the business needs to do is to make a whole lot of other investments to make that technology work. And I don’t think that’s, when we think about absorptive capacity or these concepts, we don’t really address that from a business person’s point-of-view about what needs to be done.
CB: I think absorptive capacity is a very interesting and important concept in all of this, as is the notion of timing. Many a time have I seen things arrive too early. We all know the stories of things arriving too late. I think we can all understand that, second or last or whatever it happens to be. But I think the notion of being too early is underappreciated. And there is an interesting set of factors that go into ‘We’ve got it, but we’re too early. What do we do? How do we keep the faith? Do we publish? How do you incubate something until the time is right?’ And of course, you don’t know how long that time is going to be. So, I was chatting with a colleague of mine in the private sector recently, who spoke of the fact that they have a handful of things they focus on and the other things aren’t dormant, they’re not on the shelf, they have a ‘watch and act brief’ because they’ve recognised that timing changes and the external environment changes. And so. they don’t want to, they don’t want to lose sight of things, so they don’t shelve things. They just put it on a ‘watch and act’ list, which I know might be semantics in some respects, but I think it was quite a powerful way of thinking about bad opportunity rather than, you know, ‘Yes, we’ve got the ones we’re focused on, but we’re all we’re always open to, to change’. And change is inevitable when it comes to this space.
JH: Oh, absolutely. And that’s what sort of upsets me a lot about when we think about. Innovation is change, but the terminology can be used in all sorts of different ways, like job losses or or revolution. I mean, there’s a fantastic book on innovation concept which goes back 500 years. Rajesh (Rajesh GK) is very good on that, that knowledge. It’s used in multiple ways and different interpretations. But I guess innovation is being something that’s happening or been happening for a long, long time.
[CB: John, as we draw things to a close, we’ve touched on SERD. An extraordinary volume of knowledge has just been published by your good self, of which I know a lot of people contributed. I was fortunate enough to be an author of one of those papers. What’s next, John? You know, what are you seeing with the government that we now have, the system settings that are emerging? What do you see over the next, let’s say, 6 to 12 months? Productivity review, the Roundtable. What happens over the next 6 to 12 months from your perspective around innovation ecosystems, and to be on point, it’s connection with the productivity conversation Australia?
JH: I think you’ve touched on a couple of things which are of great interest to me. I guess we’re all interested in the productivity discussion and discourse. It’s interesting how that’s going to play out and where the low hanging fruit is, to use that terrible expression, and where the big major changes are. I can’t see a sort of significant change which was driven by microeconomic reform. That agenda, which went on until Prime Minister Howard sort of said we had enough for a while. And again, whether those changes will be, if you like, root and branch, use the expression that came out of the consensus document, that higher education document, or whether they’re going to be incremental.
CB: So, somewhere amongst some will power and some speed, some thought about ecosystems and the constitutional arrangements which really need us to align Commonwealth, state and, as you say, even local city councils when it comes to innovation, that is quite the mountain to climb over the next little while. And I sense what you’re hoping for, John, is some tentative steps in that direction over the next 12 months.
JH: I am. And that’s what’s, on the ecosystems thinking, that’s what we were seeing in the US under the Biden administration, but that, it was getting a lot of attention. And I think when we’re looking at innovation, we have to see it at the ecosystem level. Um, I think that’s got implications for how we approach a national innovation policy. Ones, ones, it’s a problem with one size fitting all for the whole, whole of Australia. So, governments and governments should be thinking in that ecosystem framework and how it can actually work.
CB: Yeah. Lessons to be learned from, uh, not only the United States, I expect, from a number of the ecosystems that you’ve reviewed and compared over the journey, John.
JH: Well, I’m currently looking at 15 of them around the world and trying to make sense of it, and it’s really quite enlightening. I’m just not sure how I’m all going to get it. At the moment it’s about 370 pages, but, so, uh, but making sense of it. I think we can learn a lot, not by copying Silicon Valley, which is disastrous, but by thinking in public, to use the expression, about what we can do.
CB: Yeah, certainly it’s not about cloning or replicating. It’s about picking the best pieces of these systems. And certainly at 340 pages in the book I have sitting on my desk today, 370 pages will make a more than compelling volume two, I imagine, John.
JH: I hope so.
CB: Yeah, no, I’m confident it will. So, with that, John, this has been a terrific conversation and I’m very appreciative not only of your time, but very appreciative of just the extraordinary amount of intellectual horsepower you bring to this innovation policy space. It’s dear to my heart as a tech transfer practitioner, but frankly, I’ve got a vested interest in it for myself and my family because we need innovation to keep driving things through the system. And to that extent, you know, the words that you put together and the thought you put into this will hopefully make sure more of that happens in the future. John, thanks so much for your time.
JH: Thanks, Cameron. Absolute pleasure.