Innovation rules

It is no coincidence, for example, that more than 60 per cent of Australian automotive R&D is now spent by specialised component producers designing niche products such as braking systems, fuel tanks, safety systems and steering systems rather than by mainstream car manufacturers.

While there are many implications of these two trends, two points stand out.

First, the shifting nature of innovation suggests that we should stop worrying about our ability to compete in high-tech manufacturing. The old differentiation between low-tech commodities, such as coal, wool, and iron-ore, and high-tech manufactured goods, like automobiles, computers, and mobile phones, is no longer straightforward.

Indeed the role that manufacturing plays in all societies is changing rapidly. Twenty-five years ago, manufactured goods made up only 25 per cent of exports from developing countries - today they constitute 80 per cent. It is time to abandon our old insecurities about Australia’s industrial structure.

Second, and this is especially pertinent to the Australian research community, I believe we should stop concerning ourselves with building scale around Australian innovations.

Size has become something of an end in itself in the Australian research sector - hence the obsession in recent years with “critical mass” and with “priority setting”. Yet in some respects, size is less important now than it has ever been.

One consequence of the open innovation model is that Australian researchers are experiencing growing opportunities to compete globally without possessing massive scale themselves. Indeed, they are now most likely to find comparative advantage simply by joining forces with, or offering niche products to, organisations that already possess the global scale for themselves.

Australian researchers, moreover, will never really be able to compete on size, only ever on the quality of their ideas - and the two are not always correlated.

In the coming century, the most important aspects of national identity will be those which relate to the ability to have ideas, to seize opportunities, to connect with technology, and to do things in new ways. The opportunities are certainly there for Australia. The big question is whether we’ll seize them or whether we will chain ourselves down with a set of beliefs that are no longer relevant.