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Government can be the risk buffer in Australia’s strive to innovate

Building an innovation ecosystem can take years of government nurturing. Shutterstock

Our lives are surrounded by the ideas and creations of thousands of people. The magic of flight, or computers, or vaccines, inventions and innovations we take for granted, have advanced from one idea to another in a steady stream of interlinked technological evolution.

The story of nanotechnology begins, for example, with the invention of the printing press. Steven Johnson reminds us in “How We Got to Now” that printing created demand for spectacles. Demand for spectacle lenses then led to experimentation with microscopes.

Lenses would not have developed without the co-evolution of our understanding of chemistry and the discovery of the unique quantum mechanical properties of silicon dioxide.

Innovation theorists often emphasise co-evolution because while certain developments may appear in retrospect to be failures, or old technology, they are in fact building blocks to further innovation.

Innovation is the one element enabling Australian manufacturing companies to stay competitive in a globalised economy.

Bluescope Steel is transforming from a traditional steel manufacturer into a designer and producer of state of the art corrosion-resistant products, as well as next generation roofing panels that will produce solar power. A former traditional textiles manufacturer, Textor Technologies, is now supplying state of the art water-absorbent fabrics globally to the baby nappies industry.

So what will it take to have more of this kind of success, especially in the context of the looming automotive exit and the end of the resources boom? What can we learn from others’ success – and from our own?

Building an innovation ecosystem

The federal government’s Industry Innovation and Competitiveness Agenda should help build stronger links between research and business outcomes.

Innovation is said to require what researchers have been calling an “innovation ecosystem” in order to survive. This applies both at a national and a company level – and is not simply a list of good policies or institutional structures, where the more we implement, the more innovation we obtain.

An innovation system has to be coherent to be effective. Many researchers have observed that with, say, four out of the five elements of an effective system, a nation does not achieve 80% of the benefit, but, often, none.

Jonathan West, the Harvard Professor and now repatriated Tasmanian, studied the systems of successful nations. He emphasises the importance of mobilising substantial investment resources and devoting these to inherently risky undertakings, in preference to other potential investments.

West uses the stellar example of the development of Taiwan’s semi-conductor industry from the 1970s - which involved significant government-funded venture capital, dedicated science and industrial parks, tax and R&D incentives and so on.

It was only after 15 years of Taiwanese government absorption of risk and government input of resources that the first private capital entered the industry.

The UK and US experiences – both quite different but both involving significant investments by government in de-risking new ventures – are instructive for Australia.

In the US, the Obama Administration has developed a national Advanced Manufacturing Partnership between what are the three legs of the innovation tripod: government, academia and the private sector. Research priorities are given life, in evolutionary terms, by the close cooperation of a strong advanced manufacturing sector, and by commitment of resources by government.

Commercialisation in collaborative centres in the UK also brings nascent technological advances into being: in the production of cell therapy products, in new processes for offshore renewable energy, in satellite technology, in the manufacture of new transport infrastructure and traffic management technology, in clean energy systems, and in medicines.

Serendipity matters

It is the co-evolution of ideas – the serendipity of research developing alongside its application – that matters here. New ideas often result from applications that were not intended by the original innovator.

This week’s announced “Industry Growth Centres” across five broad sectors will need to focus national resources on where we can win rather than a scattergun approach. We need to undertake a brutal assessment of all of our research capabilities - which institutes are producing what the world wants and needs - and we need the allocation of our ARC grants scrutinised by industry leaders.

We need to look at whether our investment settings encourage venture capital, and if our tax base is globally competitive.

It is in the nation’s interest to build an innovation ecosystem that is rigorously and continually reviewed for effectiveness – so that our globally-relevant research capabilities can come to life.

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