Where will Australia's innovation injection come from?

Before returning to Australia last year after 15 years in California, I devoured George Megalogenis’s book, The Australian Moment. Apart from providing a crash refresher on modern Australian political history, I was buoyed by Megalogenis’s thesis that Australians were “brilliant in a bust” and had learnt to “use our brains in a boom”.

I have just read the book again. My optimism has waned, especially about “using our brains”.

“Are we in danger of becoming a great country?” Megalogenis asks. Not if innovation-based industry and entrepreneurship is the trigger for such a leap, as policy makers and business leaders of both established and emerging economies believe.

Back then, Australia’s handling of the post GFC crisis was the envy of the world. And while the mining and resources boom had ushered in unprecedented wealth, Australia showed signs of future planning and ambition in other ways that were attracting global attention. Labor had embarked on its national digital infrastructure project; and a generation of tech-savvy, Australian entrepreneurs were emerging in promising numbers and with some success – despite a lack of local venture capital to support them.

I’ve  participated in the global tech phenomenon from several vantage points over a quarter century: as a journalist, as a venture capital professional in San Francisco and later from the trenches of a Silicon Valley start-up in the dotcom boom and bust craziness. I’ve drunk my fair share of tech-fermented Kool-Aid and I’ve spat a good deal of it out, too. 

I’m still biased toward and excited by, innovation-driven cultures and initiatives, even more so now that I have young kids. Why? It gets down to a basic reality that most of the world’s new jobs will be software, tech and IP-centric. We will either participate in the invention, commercialisation and application of these technologies, or we will be lower-paid worker-slaves to it.

But many Australians wince at woolly words like innovation and vision. It’s a misplaced cynicism.

As Chris Roberts, founder and chief executive of Australia’s global leader in hearing technology company, Cochlear, has said: "Innovation implies successful commercialisation. It is different from invention – which may or may not lead to successful commercialisation. So innovation is necessarily linked to productivity and cost competitiveness."

Despite standouts like Cochlear, ResMed, Atlassian, Freelancer and quite a few others, the Australian innovation moment is yet to happen in force. The Aussie tendency to not take itself too seriously – as Americans can do – has its charm, but too much of a good thing has bred a complacency that sets us back.

Perhaps I’ve been to too many industry forums in Australia like the one recently – the inaugural meeting of another new initiative in the tech sector. This one is to promote and foster technology exports by Australian technology companies and address the $28 billion tech trade deficit.

When the initiative’s organiser, a former chief executive of one of Australia’s biggest tech multinationals, began by asking for volunteers for the group’s “stirring” committee, no hands went up. That was probably because most were unclear about what we would be stirring. Told that it was a self-help group for Australian companies that want to “sell stuff – to foreigners”, the organiser was emphatic that any government outreach or advocacy would be a waste of time.

It’s not that these clubby “we can wing it” forums don’t exist in the US and in many other countries. They do. But they are drowned out by a higher level of nuance and activity. This activity tends to be highly co-ordinated between all elements of an innovation ecosystem – the big ideas people in startups, big businesses, universities and research organisations; the risk capital providers that make the big bets on those ideas; and governments that create the policy levers that can foster success.  

Australia’s innovation instinct is underdeveloped and rates relatively poorly in global rankings. New Zealand beats us every time. Virtually every established, emerging and progressive nation from the US, Israel, China, Brazil, Germany and South East Asian countries are implementing new approaches to making innovation-led entrepreneurialism and industry the key platform for competitive growth: innovation clusters; educating for entrepreneurialism; applying innovation technology and processes to domestic industry and exporting innovation.

Getting in on this brave new world thinking is not about the wholesale replication of any one country model – like creating a Silicon Beach, for instance. And it’s not just about internet startups. It’s also about how we apply new technology and processes to our existing industries to make them more competitive. We need an honest appraisal of what our society and industry does well and what is needed to fill the gaps.

Innovation and industry policy-making is hard. But it should start with an understanding of globally competitive benchmarks and a championing of risk-based endeavour, beyond mining and agriculture. Then it could be geared towards other key components such as access to capital, reducing red tape and educating for future skills in science, technology engineering and math. The NBN should also be a platform for innovation experimentation, but it is mired in the politics of missed deadlines and plumbing problems.  

Outside of Silicon Valley, Israel is a great example of top-down innovation policy and outcomes. A tiny harsh desert country surrounded by hostile neighbours, Israel has made innovation its DNA. It’s a survival instinct to staying alive, relevant and prosperous and it is normalised from the prime minister down through the value chain of the military, industry, entrepreneurs and educators. In just 20 years, Israel has built a globally intimidating tech and life sciences sector. Now the Israelis have found gas (and oil) too. 

Australia’s fragmented tech sector has not sold the innovation imperative well to broader industry or to policy leaders. Many groups are distracted by internal politics or stuck in a 1970s mindset. Our bigger industry groups such as the AIG and BCA often speak of innovation, but are largely disconnected from the start-up sector and tend to see information technology as support services rather than a strategic platform for process transformation and future jobs. 

In the next few weeks of pre-election campaigning, we won’t hear much about innovation futures, especially when the national assumption seems to be about debt reduction and a new era of austerity. Innovation models require ambitious planning and investment and success is unclear. It’s very difficult for any politician to sell that to the average punter. 

Sandy Plunkett is a former associate editor of Business Review Weekly, venture capitalist and has written extensively on digital and tech entrepreneurship issues.