Innovation: practice makes perfect

God bless Dr Arthur Farnworth. If it wasn’t for the good doctor many a bloke would be a rumpled mess, particularly after a long flight or a round of tedious meetings. In 1957 Dr Farnworth of the CSIRO developed the process of producing permanent creases in fabric by adding a special resin to wool fibres to change their chemical structure.

We also nurse soft spots for Lewis Brandt who, at the Ford Motor Company in Geelong, Victoria in 1933, designed the ute, source of joy to macho men and essential accessory for plumbers etc; for Sydney inventor Gordon Withnall, who in 1974 designed the Super Sopper and thus saved countless cricket matches from oblivion; and for Dr David Warren, inventor in 1958 of the first black box flight memory recorder, although we are left waiting for the next innovation in which they make the rest of the aircraft out of the apparently indestructible stuff that goes into the black box.

These Australian inventions are listed with many others on the Federal Department of Education, Science and Training’s National Science and Technology Centre’s Questacon website (PDF 4.52MB).

From the wine cask to the Hills Hoist, from plastic banknotes to the bionic ear, Australian ingenuity is proudly on display, providing testament to our capacity to invent and innovate. Trouble is, lots of other countries produce brilliant devices and create stunning breakthroughs in technology, science and medicine, and many other fields. They may well be better at it too, not out of any innate superiority of intelligence but because their economies and national mindsets are more closely geared to supporting and encouraging innovation and entrepreneurship.

As the Questacon list illustrates, Australians have been good - and still are good - at invention. But as the Lambert Review of Business-University Collaboration (PDF 489KB), conducted in the UK a few years ago, puts it, innovation processes are complex and non-linear. “It is not simply a question of researchers coming up with clever ideas which are passed down a production line to commercial engineers and marketing experts who turn them into winning products.” Instead, great ideas emerge out of all kinds of feedback loops, development activities and sheer chance which, for Lambert, was a reason why it was critical to build dynamic networks between academic researchers and their business counterparts.

We would go further and say that it is critical to facilitate such networks between all kinds of disparate groups and individuals - academics, students, entrepreneurs, business and industry, venture capitalists, men and women, young and old. In other words, Australia needs to build a culture of innovation and enterprise from the ground up, balanced by complimentary efforts from the top down.

As globalisation spreads apace, we must continue our efforts to build a competitive economy geared to innovation and enterprise. Countries such as India, China and Russia - with populations amounting to many millions - have joined the fray. America and Western Europe are still strong, but the new kids on the block are making their presence felt in the global economy.

In the future, as John Chambers, CEO of Cisco Systems, puts it: “The jobs are going to go where the best-educated workforce is with the most competitive infrastructure and environment for creativity and supportive government” (The World Is Flat. The Globalised World in the 21st Century, Thomas L. Friedman).

Put simply, innovation means taking a good idea and bringing it to market, either as products or with new processes and services. The Business Council of Australia (in “New Pathways To Prosperity. A National Innovation Framework for Australia”) has defined it as the application of knowledge to create additional value and wealth.

Entrepreneurship can be defined as recognising an opportunity and marshalling the resources to go after it (Entrepreneurship: Theory. Process, Practice, D. F. Kuratko & R.M. Hodgetts 2004). Taken together, innovation and entrepreneurship form a powerful force, one with the capacity to enrich economic and social life through the creation of meaningful work and prosperity.

In the globalised economy, it is imperative that economies harness entrepreneurship because “whatever can be done will be done - and much faster than you think. The only question is whether it will done by you, or to you” (Friedman).

Australia has done well in recent years in developing policies aimed at encouraging innovation. The Federal Government’s Backing Australia’s Ability - Building our Future through Science and Innovation package commits to $5.3 billion over seven years from 2004-05. This builds on the initial 2001 Backing Australia’s Ability investment of $3 billion over five years to 2005-06. These represent a 10-year, $8.3 billion funding commitment stretching from 2001-02 to 2010-11.

Australia’s business leaders also publicly acknowledge the importance of innovation and have called for the establishment of a National Innovation Framework “built upon a clarification of roles and responsibilities, strong collaboration and strategic action between government, the research sector, business and our schools and universities” (“New Pathways To Prosperity. A National Innovation Framework for Australia”).

This is good and necessary, and it is encouraging to see business leaders and politicians recognising the fundamental importance of innovation and entrepreneurship.

Universities have also become much more “innovation conscious” in recent years and are now recognised as being a crucial part of the national innovation system. Australia’s areas of strength (PDF 564KB) flowing from university research include the medical and health sciences, the biological sciences, atmospheric sciences, astronomy, biotechnology, chemistry, clinical sciences, engineering, immunology, metallurgy and veterinary sciences.

Universities are critical for driving innovation, and we see China, India and Singapore sinking vast sums of money into their own higher education systems. And most readers will be familiar with the vastly important contribution that universities such as Stanford and MIT make to the United States.

So we’re getting a lot of stuff right but we’re still missing something - something so vital that all the good policy in the world will not make a difference. As we noted earlier, Australia needs to build a culture of innovation and enterprise from the ground up, as well as from the top down. Much has been done to bolster the top end, very little at the grass roots. Good policy must be maintained, but we now have to focus on the way we “do” innovation and entrepreneurship - to privilege practice over policy.

For example, to date our education system has been focused on producing people with a “good employee” mentality. This made sense while large bureaucracies and industries provided stable employment in which a person might remain in the same job from leaving school to retirement. Lifetime employment is fast disappearing, forcing students to take more responsibility for their own careers. That means being accountable for making changes, adapting to new roles. They are thirsting to learn new skills and principles.

Our education system must wake up to this demand. Universities have been slow to catch on to the global economic changes. The more pioneering are making available new courses on how to start a business, but these are far from standard particularly the arts and humanities.

Australian educators need to encourage the innovative and the entrepreneurial, helping to breed the enterprising spirit and to teach the skills of starting a business. India is enlivened with the spirit of enterprise, as increasingly is China. These countries pursue new business opportunities with vigour. We have to do the same.

We need to understand the deleterious impact of onshore multinational corporations and take steps to obviate their baleful effect. They are incomplete companies, possessing no development or manufacturing components. They focus on sales, marketing and distribution with the important decisions being taken offshore, perhaps in London, Seattle, or Chicago. They simply localise products manufactured elsewhere.

While this is inevitable in a globalised economy, and acknowledging they provide good jobs for many people, it has to be understood they are a drain on home grown innovation. Young, enthusiastic innovators should be encouraged to set up their own businesses through hubs and networks similar to those in Silicon Valley.

Australians are sophisticated users of IT but we’re not that good at making it or even understanding it. Back in 1985 an OECD Examiners' Report said: “We were struck by what seemed to be a widespread Australian view of technology as in some sense external to national life.” Things haven’t changed much since then.

This matters because if we continue to adopt and adapt other countries’ developments then we condemn ourselves to continuing “branch office” status. We also make less informed decisions about our national laboratories such as CSIRO and DSTO. Such less informed thinking led to the closing down of Telecom research laboratories some years ago, to the detriment of our national research capacity.

Further, we lock ourselves into a vicious circle in which our most talented young scientists and engineers seek employment offshore - thus lessening the likelihood of future invention. If all a bright young technology graduate can look forward to is a career as a spec writer for an on-shore purchasing department, then she or he will head overseas.

Entrepreneurial business success more often than not comes from “listening to the technology”, as Caltech researcher and Silicon Valley legend Carver Mead famously expressed it. In other words, letting the science lead the way.

The problem is, so many of our business leaders are technologically illiterate. Managers of Australian-owned companies in general have a resistance to wanting to know anything about an underlying technology. But there are some systems where it’s important to understand the underlying technology, particularly at the early stage.

Wireless sensor networks are an example. It’s important to know that certain wireless technologies have a long range and others have a short range. Some will only work within a 10 ft radius, others within a building, and others within an entire cell that is kilometres wide. It’s important to know how much power is consumed. If we don’t understand this, our decision making will be adversely affected.

Similarly, managers wanting to make a strategic decision about what technology to adopt in, say, supply chain management very often relegate the decision making to the people who understand the “bits and bytes”. Australian executives often say that there is no need to understand how technology works. However, certain key decisions involve understanding the technology. Letting the science lead the way is standard practice in the US, but countries that we should be on a par with do it too, such as Sweden and Finland, who rank way above us in growth competitiveness - as do Denmark, Taiwan, Singapore, Switzerland, Iceland and Norway (National Innovation Systems: Finland, Sweden & Australia compared, Roos, Fernstrom & Gupta).

Australian business expenditure on R&D as a share of GDP is significantly lower than the OECD average. In 1998-99, for example, our total expenditure on R&D was around $8.8 billion - only 16.5 per cent more than IBM’s expenditure on R&D and engineering.

We also need to get smart when it comes to high-tech or entrepreneurial marketing - a key link in the innovation cycle that ensures brilliant inventions and technological breakthroughs benefit the public.

In Australia we are deficient in the art and skill of high-tech marketing principally because we are a sales channel for the multinationals. This means that the vast majority of product development and product definition, and its associated marketing - matching the right customers with the right product at the right time - takes place in the US or Europe.

Many multi-nationals make it a rule that we in Australia are not even allowed to suggest ideas for new products, and that all products have to be conceived and developed back at headquarters overseas. We finally get in on the act when it comes to lubricating the local sales channels.

These are just some areas in which we fall down in innovation practice. It is up to educators, governments, business people and others to help to change our culture from the bottom up.