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Research is useless, innovation is gold

It’s not what you know, it’s what you do with it. Gold image from

Most agree that it’s worth knowing more about the world and everything in it. Research, in that sense, is intrinsically valuable.

But for pragmatic governments, intrinsic scientific or scholarly worth is useless, what they value is its contribution to society.

Some research fields, like health and medical research, have direct benefits. They can, as the Liberal Party states in its policy document on medical research, lift national productivity, improve quality of life and boost life expectancy.

But this can happen only when research is applied, for example, in stimulating innovation. Innovation is understood broadly as the implementation of a new or significantly improved product, process or method.

Innovation thus involves a complex interplay of several factors and the progress of individual countries is hard to evaluate (although the Australian Bureau of Statistics has several useful data collections).

While comparing countries is difficult, a very good attempt is made by the global innovation index, which was launched by the prominent French graduate business school INSEAD in 2007 and has been published annually since.

At the top of this index this year are countries such as Switzerland, Sweden, the UK and the US. Australia has been ranked consistently at about 19 out of 142 countries and economies over the last five years. In the latest results, Australia was behind Canada (11), New Zealand (17) and South Korea (18).

The index is strikingly stable. Countries are consistently in the top 10 or top 25, and while they move within those groups, they rarely move between them.

But if we delve into the data we can understand a bit more about Australia’s strengths and weaknesses in turning research into innovation. For example, we compare well in areas like human capital and research, infrastructure and market sophistication.

But our knowledge and technology ranking is much lower. This is partly due to Australia’s small manufacturing sector, modest number of domestic patents, and modest exports of high tech and creative goods.

To improve Australia’s innovation system, we often see calls to increase the amount of applied research and get universities closer to business. This is consistent with the conventional, although now increasingly superseded understanding of innovation as proceeding from scientific research to development and then to application in production.

But this linear “supply chain” model of innovation would not necessarily improve Australia’s innovation system, which is evolving and complex with multiple contributions and connections.

An idea that is increasingly popular with governments and policy makers is innovation hubs. These hubs are essentially knowledge-intensive business clusters that are centres of wealth creation and link the local economy to the global economy.

Many posit a positive correlation between the strength of these clusters and national prosperity. Hubs do this both by generating more new ideas and converting more of them into successful businesses.

But Australia is ranked 34 for its state of cluster development, well below its overall ranking.

The Australian Government has a recent and modest program to develop industry innovation precincts which are led by industry to help businesses and researchers collaborate and foster innovation.

Two precincts have been established so far. The food industry innovation precinct is based in Melbourne and will be networked nationally. The manufacturing precinct is based at Monash University’s Clayton campus and has a hub in Adelaide to focus nationally on manufacturing for the defence industry.

The program has limitations, but is a good start and has the potential to develop important sites of business development and innovation.

As the index notes, the development paths of innovation hubs vary by country, and by industry. But almost every successful innovation hub involves the participation of big enterprises as hub champions. Some champions are private enterprises, but others are state owned enterprises.

The authors of this index note that:

Nascent innovation hubs often fail to close the gap between [research and development] and commercialisation. There are a number of reasons for this failure, including the difficulties of attracting partners and investments in projects with high technical risk and long developmental time frames; the loss of grant funding as project scope expands beyond academic research; the lack of critical end market insight or access; and the lack of entrepreneurial culture within the research community.

But along with these, another crucial element is patience. Innovation of this kind needs public and private collaborations to be sustained for up to 15 years or more. And so, they require long term investments from government, academic and corporate anchors.

While Australian government support for programs can be fickle, some like the Cooperative Research Centresprogram have won longstanding support. A sustained commitment will be needed if Australia’s industry innovation system is to succeed.

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