Board to death: Back to school for our business elite

The computer science professor at a leading Australian university was angry.

Our discussion, during a virtual roundtable called Australia 3.0, was on innovation, entrepreneurship and the critical role STEM (science, technology, engineering and math) education played in fostering both.  

The professor was keen on some myth busting, just not the ones you would imagine.

“I don't think we should overdo the 'innovation mantra',” he exclaimed.

“We need only a tiny fraction of university graduates to do start-up ventures, only one in a million have a chance of making it big that way.

"My job is to make sure they have the skills for a regular job and then encourage those with exceptional talents to innovate.”

More on the “regular job” comment later. But for now, contrast that thinking with the audacious mission of another professor, Macquarie University's David Christian and his Big History project.

Big History is an online and in-class course which synthesises many academic disciplines such as history, biology, cosmology, chemistry, astronomy and geology. It teaches a uniquely inter-connected narrative of life on earth from the Big Bang to the internet era. The interdisciplinary approach encourages critical thinking and gives students the context about how science and the humanities work together.

Bill Gates did an early DVD version of the course in 2008. He liked it so much, he asked to meet with Christian when he was lecturing at San Diego State University. Gates told Christian that he thought Big History should be taught in schools across America. Christian agreed, but said he “didn't know how to do that.” Gates responded that he could help with that. He has been funding Big History since, through his Seattle-based venture firm, BGC3.

It's now a free online course open to all, and the in-class curriculum is taught in 500 American schools and 100 classrooms around Australia. 

Macquarie Uni's Big History Institute is continuing to pioneer Big History at all levels in the education system, from developing primary school courses to international PHD collaborations. Early results show a greater percentage of Big History students go on to do advanced placement courses.

The above two anecdotes highlight the ever widening gap between traditional and new ways of educating and fostering the talent needed for the jobs of the present and future.

In Australia, and elsewhere, there is a dire shortage of students going into the physical and computer sciences and engineering. These skills are the building blocks of innovation in a digital and hyper-connected world. 

“David is a visionary,” said Gates in an email exchange earlier this year. “The education system is experiencing innovation at every turn – from the internet and online courseware to tablets. Big History could be a glimpse of the classroom of the future where the single-subject textbook is challenged by an interdisciplinary approach to learning and teacher-led instruction.”

Exceptional is the new normal

It is fair to be a little sceptical about all things tech and digital. Silicon Valley is fuelled by high levels of hype as well as code.

But business leaders, policy-makers, educators and parents would be foolish not to understand that something far deeper is going on.

A recent Economist Special Report – The Third Great Wave – argues the digital revolution “is opening up a great divide between a skilled and wealthy few and the rest of society.”

While new technologies have always been the trigger for disruption as well as innovation, the net effect was measurable gains in productivity and living standards. The internet and digital technology era has made things far more uncertain. Economists everywhere debate the impact of technology getting smarter – from robotics to 3D printing and driverless cars. Governments meanwhile struggle with the massive displacement of workers.

“In the past, new technologies have usually raised wages by boosting productivity, with the gains being split between skilled and less-skilled workers, and between owners of capital, workers and consumers.

“Now technology is empowering talented individuals as never before and opening up yawning gaps between the earnings of the skilled and the unskilled, capital owners and labour. At the same time it is creating a large pool of underemployed labour that is depressing investment.”

The big losers have been workers without highly specialised skills. This has hit the middle labour market hard. “It's not just the automation of routine tasks that is becoming irresistible. Complex ones are next,” the report said.

This spells trouble for Australian business and policy leaders, who are only now focusing attention on innovation and entrepreneurship as levers for new economic growth. The new normal requires new ways of educating and financing innovators and entrepreneurs.

It also requires creative and forward thinking policy.

Finally some action from Canberra

The release of the long awaited Industry Innovation and Competitive Agenda, announced by the Prime Minister Tony Abbott and Federal Industry Minister, Ian MacFarlane, makes some headway in this regard. It's an attempt to correct some critical gaps.

The government is reversing Labor's 2009 legislation which taxes Employee share options (ESOPs) when they are allocated, rather than when they are exercised. The change, which will take effect next July, is welcome relief for Australian entrepreneurs who want to leverage ESOPs to attract highly skilled employees.

A Commonwealth Science Council will also be established. To be chaired twice a year by the Prime Minister, the Science Council will advise the government on “areas of national strength, current and future capability and on ways to improve connections between government, research organisations, universities and business.” Numerous global rankings measuring a nation's innovation status show Australia to be way below par in terms of industry, academia and research collaboration and in the commercialisation of research.

The government will also invest $12 million to improve the teaching of engineering, science and technology in Australian primary and secondary schools, including $3.5 million to “expose computer coding skills to students.”

But $12 million seems tokenistic when other countries, from the UK to South Korea, are mandating teaching code to primary school kids. And the announcement came on the back of a review of the national education curriculum which reneged on previous plans to teach digital technologies to all students from kindergarten until the fourth year of high school.

“Who's teaching the teachers? We're so far behind in Australia, it's a disgrace,” Matt Barrie, the founder and CEO of ASX-listed tech success story, Freelancer.com, laments. Barrie, who is constantly in need of top tech talent to continue to globally scale his company, says finding suitably skilled graduates from Australian Universities is tough going. He now sources that talent regionally. Barrie has 280 Freelancer techies in the Philippines.

Our business elite need tech schooling

It's not just students and teachers that need to study up. Australia's corporate boardrooms, our small and medium-sized businesses, our policy leaders and bureaucrats have pretty well skipped tech class for the past 20 years.

“Directors and Executives may not need to learn to code,” said Daniel Petre, co-founder of tech venture firm, Air Tree Ventures. “But just as they are expected to understand finance, they absolutely need to have a deep understanding of the impact of a variety of technologies on their businesses – from the internet and cloud services to social media and 3D printing.”

It's a steep learning curve ahead for many. Particularly so for Australia's struggling small and medium-sized businesses, which are often said to be the core of our economy. Many of these businesses are family-owned and straining under high debt levels, claims Stuart Anderson, a principal of Sydney Capital Partners, a boutique corporate advisory firm.

“Their only way to avoid insolvency is to transform and innovate. But the management of many of these companies is near retirement age and typically sub-scale and too focused on shrinking local markets.  They are unfamiliar with best practice innovation techniques, from incremental product development through to disruptive technology-led commercialisation,” he said.

A study by Bill Hovey ad Anthony Jensen from The Centre for Business Transformation at the Macquarie Graduate School of Management (MGSM) found that Australian SMEs underperformed global benchmarks in nearly all of more than 20 operations, performance and people management indices.

Roy Green, Dean of the University of Technology (UTS) Business School agrees mid-market disruption in Australia is only just beginning “There are a few shining transformers in the SME-space who are proving what can be possible. But there are far too few of them for any comfort.”

He cites the emergence of “micro multinationals”, such as precision tool maker, ANCA Technologies, and tech-driven design and integration specialist, Hydrix. These companies are highly specialised and serve global customers. “But we need many more managers who understand how to disrupt and have permission to do so.”