Australia’s innovation agenda: A stocktake

By Dr Terry Cutler |

This is the text of a recent speech given by Dr Terry Cutler, who in 2008 chaired the Australian Government’s review of the National Innovation System, culminating in the report Venturous Australia. Dr Cutler goes beyond that report in this post to outline areas he sees as requiring attention if Australia is to move innovation to the heart centre of its economy.

Theme

In 2008 I tended to title presentations on innovation: “The unfinished business of innovation”. And here I will certainly talk about some of the unfinished business I see within an Australian context.

In 2009, however, I began to change tack and talked about the “never finished business of innovation”. This is an important message because the business of innovation is never, never, finished. There is no “final solution” or resolution. Innovation, like understanding, is a journey, a process of change, and not a destination. There needs to be continuing discussion and re-examination as circumstances change, as our understanding of the innovation challenge depends, or as new opportunities emerge.

By the end of this paper you would be right to conclude that I think we are not on top of the innovation challenge.

The context for this stocktake

The context for what I am going to say is shaped by the experience of chairing the Expert Panel that produced the report, Venturous Australia, in 2008. This and over reviews fed into the Australian Government’s White Paper on Innovation, Powering Ideas, tabled in conjunction with the national Budget in May 2009. Useful developments both, but with quite a lot of unfinished business.

Now it is high risk for to ask an enthusiast to talk about their favourite topic. When one is passionate about a subject it is easy to come across as a missionary and to start preaching (hopefully to the converted). But the one saving grace with a sermon is that it usually starts off with the recital of some good text which is sometimes good enough to mull over while the preacher drones on. To try and cover all bases, here I will offer not one but two texts.

2 Texts

My first text is taken from the words of an Italian migrant to the United States as he told his son why he had to work his way through college and could not be allowed to just follow in his father’s footsteps: “if nothing changes, nothing changes”. If nothing changes, nothing changes. Innovation is about being a change agent.

My second text comes from the Yiddish saying which Primo Levi used as the title for his 1982 novel, If not now, When? If we don’t innovate now, when will we?

What’s normal?

We often say we live in exceptional times, but what’s normal? The state of the world in the year 2007, 1990, or 1900? The problem with defining a reference point with respect to economic and climate sustainability or industry competitiveness is a perfect and disturbing example of Heisenberg’s Uncertainty Principle from quantum physics, which goes something like this:

“If you know where you are,

then you don’t know how fast you are going;

If you know how fast you are going,

then you don’t know where you are”!

Heisenberg’s principle is, of course, one of the reasons we all struggle so much to find useful benchmarks around innovation.

During 2008 and into 2009 the language about responses to the ‘Global Financial Crisis’ was one of recovery: how do we reboot the machine? But the question should have been whether we could, let alone would want to, go back to where we were before the crisis. Australia, at least, had not been experiencing a golden age of productivity, competitiveness and innovation when we started our review of Australia’s innovation system in early 2008.

The context of my take on innovation

Before going further, let us make sure we are all singing from the same innovation hymn sheet, or at least let me make sure you know what hymn sheet I am using when I talk about innovation.

Most definitions of innovation are some variation of the theme that it is about good ideas or knowledge being put to work in a way that creates value.

This straightforward definition disguises a rather more involved and iterative process involving three functions. The first function is more of an essential precondition for innovation and this is the function of knowledge generation and development – the creation of a pool of ideas and creative possibilities from which innovators can draw. This, of itself is not innovation. The second and key function is that of deployment, which is the application of that knowledge or those ideas within a real world setting, the activity of the entrepreneur or change agent. The third function is diffusion, the dissemination and sustained take up of the innovative application within markets or communities: this final test for innovation is what actually changes things.

There is an ever present danger of imbalance in public policy or the practice of innovation in the workforce, and that is the risk of focusing on some bits of the innovation challenge at the expense of others. This is why it is important to talk about an innovation system – the process wherein the different aspects of this innovation system interact. This is why it is important we are covering all the bases.

Taking the example of monetary systems helps to explain the importance of dealing with innovation as a system. Financial systems function because in the first instance we have stocks of financial assets, denominated as bank notes. Banks notes sitting in a vault have no value in themselves. Money acquires and creates value when it is in circulation, and it is no coincidence that we talk of currency. It is the same with innovation. We have stocks of ideas, knowledge, talent and skills and so forth, but it is the flows of information and the linkages between people and institutions, the custodians of these stocks, that energises and fuels innovation and innovative outcomes.

We concluded during the review of Australia’s innovation system in 2008 that the basic problem and challenge is that Australia does not have an innovation system. Australia has commendable stocks of innovative capability, but lacks the optimal flows, linkages, and relationships between parties that would leverage these assets. One commentator described the situation as being like a donut: there is a hole in the middle – where the missing centre represents the lack of a shared agenda or playing field in which governments, industry and firms, academia and researchers can come together for collective action around shared purposes. Hence the challenge of trying to deal with the missing links.

Dr Terry Cutler - time to take stock of Australia's innovation agenda

The triple bottom line of a robust innovation ecosystem

My final point about the context for thinking about innovation is that, for any country, innovation policy and programmes have a triple bottom line:

(i) industry innovation, and market changes to increase productivity and improve competitiveness;

(ii) innovations and changes in public policies and service delivery around the production of public goods; and

(iii) innovations and changes to address societal and environmental aspirations and challenges through the mobilisation of both private and public sector capabilities around these challenges.

Thus the pursuit of innovation involves change processes within a societal or community context. It is about promoting purposeful and meaningful change within this complex system. This engages both the private and public sectors, and how they work together.

Is Venturous Australia overtaken by events?

The scene set, let me now turn to the question of where we currently stand in the never finished business of the innovation challenge I have described. I am often asked whether our 2008 Venturous Australia report has been overtaken by events. (One contributor has even called for a review of the review). To the contrary, I believe the key thrusts behind our recommendations are robust and even more important today than ever.

The thinking behind our report was based on 10 framework principles, as follows:

10 Framework Principles

Framework Principles

The market place is the crucible for innovation. The firm and the entrepreneur must be at the heart of innovation
People and talent are what make it happen
Access to knowledge and information flows is what connects and energises the players within the innovation system
Innovation policy needs to address systemic points of failure – a broader notion than market failure
A small country economy faces the challenge of accessing and leveraging the 98% of knowledge not invented locally – global integration is a necessity
Innovation policy calls for a ‘whole of government’ and ‘whole of enterprise’ perspective and coordination
National priorities for innovation should focus on distinctive strengths and challenges
There needs to be clarity about the role of players
We need to invest in research about innovation (the right sort of research) to support informed policy development
Within a global economy, innovation systems must internationalise – we must act within the interplay of regional, sectoral, national and global dynamics

Unfinished business from Venturous Australia

Looking back to the 2008 innovation review I find little cause to resile from the main thrusts of our report. Many of our recommendations could possibly have had a sharper edge and the story line could, as always, be improved with re-telling. I am sure each member of the Review Panel has a personal list of regrets at omissions or under-emphasis. My own personal regrets include the lack of adequate attention to and discussion of such matters as:

The distinctive and different roles of different players within an innovation system, the understanding of which is important to identifying complementarities, the alignment of interests, and the scope for collaborations;

The importance of research conducted outside the universities and public research agencies, most particularly in hospital based and clinical research but also more generally in areas of and opportunities for “embedded practice” and learning in “living laboratories”;

The related issue of the role of innovation precincts and innovation hubs where we move beyond mere co-location to active co-investment, collaboration, interdependency and the spaces for serendipity;

The role and importance of social networks and “public forums” – the “soft” innovation infrastructure;

Attention to community innovation and social entrepreneurship as part of a larger agenda;

Endangered skill areas like mathematics, statistics and taxonomy;

The role of the creative arts and the humanities within the innovation system and in cross or transdisciplinary fields of enquiry and problem solving; and

Discussion about the ‘fractal nature’ of innovation systems and the rich tapestry of “systems of systems” and their interplay, especially at a local and regional level.

Let’s add these to the agenda of unfinished business.

The 2009 White Paper, Powering Ideas, responds to multiple reviews and inputs

The White Paper and the Australian Federal 2009 Budget incorporated some important measures in response to the recommendations in Venturous Australia. There are six headline elements:

The changes to the R&D Tax concession, introducing a direct tax credit for R&D undertaken and making this credit refundable for businesses not yet in profit;
The commercialisation funding initiative – and the new Commercialisation Australia Board, reinstating the type of support provided by Commercial Ready and the COMET scheme, albeit on a smaller scale;
The new investment in “super science” around funding for marine studies and climate change, space research and astronomy, and emerging industries especially those enabled by biotechnology and nanotechnology;
The investment in R&D to produce climate change solutions and the creation of a new R&D agency Renewables Australia;
A commitment to move towards the full funding of research carried out in universities (that is, funding the indirect costs of research that have hitherto been met through cross subsidies, mainly from international student fees); and
The strong commitment to fixing one of the missing platforms for innovation in Australia, broadband, through the National Broadband Network initiative.

In parallel the Government has been implementing its commitment to Enterprise Connect as a national platform of extension services for small business. As part of this initiative it has also established sectoral Innovation Councils. Taken together, these measures represent significant investments in strengthening innovation capability in Australia. The strategic objectives are clear; the challenge as in other areas of government will lie in the effectiveness of implementation and whether good programme design and delivery principles, as set out in Venturous Australia, are applied systematically.

More unfinished business

There are some areas which do not, in my view, receive the attention or prominence they deserve in the Government’s response or where the forward action path is not yet entirely clear.

1. The core need for any innovation agenda to be market facing, revolving around the promotion of entrepreneurial firms or agents. “Powering ideas” is always a good thing, but ideas only take on value when they are put to work in real life situations. We need to keep the spotlight on fostering entrepreneurial firms and innovative workplaces. It is important we do not slide back into a supply-side, technology-push linear model of innovation. Market or societal demand remains the biggest and best driver of innovation.

2. The missing piece of the skills agenda: on the job training, workplace innovation and “whole of life” learning. We need business schools and professional service firms to focus more on management education for the practice of innovation on the ground; we need to reverse the decline in employer investment in training, and we need to make “life long” learning the norm. In the USA the Obama Administration is talking about personal “life long learning accounts” and we need to be exploring the same thing here.

3. The holy grail of a “whole of government” or transectoral framework for innovation policy and leadership. Where is the “central brain” that coordinates and leverages the innovation dividends from across the many silos of government each with their own focus, investment, support programmes and agendas? The government has chosen the path of strengthening existing mechanisms rather than re-thinking or re-inventing the machinery of government. The danger is that instead of increased rationalisation of disparate activity and stronger policy coordination around priorities and crosscutting issues there might be further fragmentation of programmes and responsibilities.

4. A spotlight on innovation in the public sector, including innovation dividends from government procurement. The White Paper does not pick up the concrete options canvassed during the 2008 Review.

5. National information policies and information flows. Who takes responsibility for thinking about these issues? This is an area where there needs to be a “big picture” approach, and strong leadership. Knowledge and information is what powers ideas; information flows are the nervous system of innovation. The challenge here is about ensuring that regimes designed to support innovation do not end up as barriers. We need an action agenda for access to Public Sector Information and publically funded research, information, and national collections. While the White Paper talks about an Information Commissioner, the role and charter is not spelled out and it is not clear who takes real custody of a national information strategy.

Innovation was rather overshadowed on Budget night, 2009, and remains so.

Nonetheless, the Budget measures are an important first tranche against a longer-term statement of commitment, priorities and directions set out in the White Paper. But, and however, the word innovation occurred merely five times in the Treasurer’s 2009 Budget Speech, and strangely it is not part of an overall narrative about the position Australia is in. Indeed, my one criticism of the Budget speech, as a literary work, is that it did not provide a narrative, a story line. It talked about recession and the “momentous challenges” of the economic downturn, but does not pause to reflect and elaborate on the actual nature of these challenges so that we could frame our understanding of the appropriateness and scope of the necessary responses.

My biggest disappointment is that there was no echo, in the Budget speech or the accompanying commentary, of the point made strongly three years ago in pre-election statements that innovation is and must be a central plank of economic policy. Innovation, then, was rightly seen as the glue linking competitiveness, productivity and national economic diversification beyond undue reliance on volatile resources booms. We need to reinstate this crucial connection as we talk about life after a global recession.

Learning from the past.

Within this context there are important lessons to be drawn from a better understanding of the productivity boom in the 1990s. Over the period 1992-2004 Australia achieved strong aggregate productivity growth. On closer examination, however, we find the sources of productivity gains in Australia were highly concentrated in agriculture and just three service industries: wholesale trade, communications and finance[1].

During the 2008 innovation review we noted three findings about the productivity performance in the 1990s that are pertinent to any narrative about competitiveness and productivity today. The first is that Australia’s aggregate performance owes much to sustained productivity gains in agriculture, driven off a highly developed sectoral innovation system based on statutory producer levies, matched by the Commonwealth, and well developed field extension services for technology diffusion. We have been slow to consider the applicability of these models in other sectors, although there are some parallels in the mining sector, and the current Enterprise Connect initiative is an important step in broadening the base of extension services and improving the absorptive capacity of industry. This reminds us that the diffusion and take up of technology and new ideas is an integral and defining aspect of any concept of innovation and to productivity outcomes.

The underlying drivers of services productivity in the 1990s.

Additionally, the review panel noted two important insights about the forces at play in service industry markets.

First, Australia was enjoying the fruits of its first “education revolution” of the 1970s: the entry into the workforce of a new cohort of bright young things, including an influx of women graduates into the workforce, and these bright young things were increasingly IT literate and technology savvy. There is a salutary reminder here that there is a generational lag for benefits to accrue from an education revolution and that changing skills and attitudes within the workforce make a difference.

Second, most of the productivity growth in services was enabled by the deployment of ICT platforms which supported innovative changes to business models and business processes. This highlights the crucial importance of enabling the adoption and adaptation of technology platforms in a small country economy where 98% of the world’s innovation and technology is not invented here. It also reminds us that innovation, like knowledge, is cumulative: innovation builds on innovation.

The important follow on question, of course, is why we have not seen comparable productivity gains in so many other sectors of the economy. Not enough critical attention has been applied to this question and to the scope for productivity gains and innovation in the large service industries dominated by government, and including health, education, justice, and community services.

But innovation is a two edged sword

Noting the share of productivity gains arising from the finance sector reminds us, and this is my further point, that productivity gains may not prove sustainable in the long run, and that innovation is not morally neutral.

Innovation is not morally neutral

The global recession should have been a wake up call. In our enthusiasm we tend to forget that innovation is not morally neutral: it can lead to bad outcomes as well as good. Let us never forget that it was dazzlingly innovative financial instruments that eventually undermined the global financial system. This breakdown is now threatening to hollow out the crucial innovation pipeline of technology start-ups as these start-ups find it increasingly difficult to find equity capital for growth or survival.

And let us also remind ourselves that we would not be debating emission trading schemes and global warming if it were not for 200 years of breakneck technological change and innovation. Accelerating technological change has changed the way we live, and dramatically lengthened our life spans. But on the other side of the ledger has been the collateral damage to our planet and the prospects for sustainability and resilience.

Long run change and paradigm shifts.

Every now and again we need to step back and look at the bigger picture. Research and science, broadly defined in its original sense as the domain of knowledge, arguably is going through its greatest transformation in 200 years. 200 years ago we saw the beginnings of the teaching and research knowledge paradigm we know today. This was driven by:

the development of discrete and specialised knowledge disciplines, with their own faculties within universities and their own highly specific and usually narrow communication channels through published scholarly journals. This development marked a professionalisation of the trade in knowledge and a shift from the era of the polymath ‘academician’ as part of a broadly-based learned community like the Royal Society or university Colleges; and

the associated emergence of global peer review as the basis for establishing standing and status within a discipline.

Last century people like C.P. Snow famously spoke of the emergence of two cultures, with a growing gulf between physical scientists and the literary intellectuals of the humanities. Scientific method evolved into a rigorous linear model of hypothesis formation and testing.

Today a number of factors challenge old paradigms and create pressures for finding new ways of doing things; these include:

The growing focus on life sciences and the built and natural environments as policy and research domains affecting society fundamentally (in place of the prior emphasis on natural and material sciences and manufacturing industries). These newer domains involve different approaches to research methods and practice;

The emergence of a digital, networked information and communications infrastructure (dubbed cyberinfrastructure by the National Science Foundation in the US) which changes the dynamics of market capitalism and introduces new dimensions into the business of “doing” science and research manifested in the discussions around eResearch and eScience;

The emergence of “open source” and open innovation models of collaboration and collective action;

The seemingly exponential growth of knowledge, and its underlying information and data pools[2], which call for new approaches to information management and for working within increasingly complex knowledge “landscapes” or ecosystems; and

The growing prominence and criticality of complex “wicked problems” which are not amenable to traditional and linear problem solving approaches (whether scientific method or traditional regulation). There is an increasing recognition that responding to complex societal problems like climate change, population health, future energy resources, global food security – to name but a few of the challenges – requires new levels of transdisciplinary, transectoral and transnational effort. In this context we move from a scientific model of evidence based policy, in which there is a right or a wrong answer, to a value-based policy model in which there are either good solutions or less good solutions. The touchstone becomes the good rather than the right.

I am not sure that either the Green or White papers on innovation adequately addressed these global trends or examined whether our current innovation programmes and funding models might actually be acting as barriers to addressing them.

The challenge of large scale innovation

Thus the big piece of unfinished business – or rather business we have scarcely started – is how we act as global innovators to address the large scale innovation needed to tackle transnational and societal challenges beyond the reach or remit of standalone national innovation strategies or the “micro-innovation” at a firm or industry level. Last year I joined a group of innovation advocates from eleven countries which met to canvas the formation of an i20 Group – an innovation 20 to mirror the G20 Group – to address the failure of current institutional frameworks adequately to address the custody and the mobilisation of large scale, collective efforts around “innovation for society”. This group has committed to work together to promote and advocate a global agenda.

One extreme example of a transnational, large-scale challenge which has no natural owner or custodian is geo-engineering as a fall back, desperate response to global warming[3]. (Actually this could more accurately be called geo-re-engineering). It remains to be seen whether, after the failure of the Copenhagen meeting on climate change, we can rise to the challenge of co-ordinating an effective multilateral consensus and commitments to action. The question now is what is the fallback position.

Two questions to keep asking

Finally, I believe there are two key questions we need to keep at the forefront. First, what is the characterisation of an innovator? Would we recognise an innovator if we fell over one? The second important question is: what would a well-functioning innovation system look like? This question of what a well functioning innovation system would look like is, surprisingly, seldom posed and addressed. As a consequence we even more seldom go on to ask what might be systemic points of failure within an innovation system.

How can we identify an innovator?

Innovators and innovation leaders are aware, globally connected, collaborative networkers, good learners, focussed and resilient.

Aware

In any dynamic environment or marketplace, leaders need to constantly reassess the state of play. The people who get ahead of the game find opportunities where others see nothing, or convert problems into opportunity.

Collaborate and network

Few innovators go it alone. We know from numerous studies that most innovation is driven by working closely with customers and suppliers, and keeping a weather eye on emerging technologies. As a country or firm the challenge is how to access and assess the 98% of innovation and technology that is developed by someone else and somewhere else. How do we do this? This is about being linked in: network, network, and collaborate needs to be our mantra. This is about internationalising all our thinking and being globally connected.

Learn and adapt

We need to learn from hindsight, foresight, and insight[4]. We need the skills to identify how we can be smart users of technologies and resources. We often talk about innovation only in terms of the big breakthroughs. These are important. But we also need more focus on innovative workplaces and how we create an industry culture where creative problem solving and continuous improvement is the norm. An innovative firm will be one that invests in its people and their skills – and lets them loose on the innovation challenge.

Focus around innovation priorities

The market economy is based on the specialisation of effort. No country or company can do everything, but the challenge is always one of just how to focus and prioritise effort. No one can be good at everything.

In a speech immediately prior to the release of Venturous Australia I suggested that there were three ways of looking at priorities with respect to innovation:

Making innovation itself a national priority. Interestingly, the narrative about this perspective appears strongest in the emerging economies like Brazil, China and India, or in other resource based economies which are seeking through innovation to diversify their economies, such as Norway or Chile.

Identify priority action areas to strengthen our innovation capability and performance. This appears to be the focus of the discussion of priorities in Powering Ideas. This leads to an outline of priorities which might otherwise be described as a statement of objectives or goals for innovation policy in Australia[5].

Establishing national priority areas in which to focus our innovation effort and investment. This was the focus in Venturous Australia.

Criteria for determining priorities

During the 2008 innovation review many of us spent a lot of time thinking about national innovation priorities. The report sets out some criteria for determining priorities and these also seem to make sense for taking stock at both a firm or national level.

Start from leveraging natural endowments or core assets and build on strengths. (It’s surprising how often we overlook some of our core assets or forget what has created our underlying strengths).
Look to areas where there might be a distinctively Australian or local advantage in developing solutions to globally relevant challenges or markets.
Identify opportunities where emerging technologies or innovative approaches can transform and reinvent existing industries and business models.
Address the 2% innovation challenge of how to work effectively within the wider industry and innovation ecosystem. This is also about internationalising our efforts and integrating within global supply chains.
Invest in supporting capabilities and talent, including things such as broadband, education, or endangered skills like taxonomy, mathematics and statistics.

What would a well-functioning innovation system look like?

Surprisingly perhaps, few public inquiries or studies have openly raised and addressed this second question of what a well-performing innovation system might actually look like[6]. It is useful to keep going back to basics, and reminding ourselves that five core functions with any innovation system are:

the identification of opportunities and choices;
creating capabilities;
managing risk and uncertainty;
building and maintaining supporting infrastructures; and
mobilising resources

On the other hand there appear to be at least seven major potential points of systemic failure within a national innovation system. (This is a very different notion to market failure). These points of failure will lead to less than ideal outcomes.

Core functions of an innovation system

Potential points of failure within an innovation system

Addressing opportunities and choices (including options around emerging markets)
Structural ‘lock in’ and inability to change track (yesterday’s success formula is no guarantee against tomorrow’s challenge)
Building national capabilities
Skill and capability gaps and learning problems (not picking up market signals)
Managing risk and the capacity to deal with uncertainty
Inadequate institutional evolution and responsiveness (players pulling in different directions)
Trade-offs between diversification and specialisation (how many eggs; how many baskets?)
Ensuring the supply of infrastructure
Inadequate infrastructure provision
Mobilising resources around challenges or opportunities
Inadequate linkages and networks – blocked information flows and missed connections
Imbalanced innovation investment portfolio (skewed, or some bases not covered well)

Innovation the problem and the solution

We need to keep revisiting the questions I have emphasised: What characterises an effective innovator, and what would a well-functioning innovation look like? Regularly revisiting and reviewing our working answers to both these questions is necessary to keep the innovation agenda alive and relevant. The business of innovation is never finished. In closing, there are some really important points I would not like to see lost.

Innovation, like knowledge itself, is additive, cumulative and combinatorial. We often obscure this important reality when we worship the frontier, “go West young man” caricature of an ingenious, risk it all, brash entrepreneur playing a lone game. Innovation, particularly with technology, builds on itself.

Innovations systems, the way we describe various environments for innovation, are by nature fractional – systems of systems. We need to take various vantage points to appreciate this ecology. Local, sectoral, or global. There is a spectrum from small and localised in origin to innovation challenges which require large-scale collaboration.

Innovation is not a level playing field. The 2% challenge for smaller countries and small players is a stark reminder of this.

Innovation has a social life, and it is essentially a team game. But it is a team game we play with one arm tied behind our backs. Too often we don’t have teams, just collections of clones within a particular discipline or profession. Disciplinarity comes from Adam Smith’s iron law of the specialisation of labour and knowledge. We know more and more about less and less. This is of course necessary and inevitable, as we try to advance knowledge. But we need to develop offsetting skills and capabilities to stand back and look at a bigger picture, to explore and see connections and relationships across the artificial boundaries we create. We need to find ways to bring together transdiciplinary teams of people who can actually work together on big or ill-defined challenges. This will involve re-examining the way we organise ourselves, and how we develop a common language to communicate about what we are trying to do. Innovating thrives with diversity and hybrid vigour.

Innovation occurs in unlikely places, but these are places we have largely conditioned ourselves not to go. Again this is the curse of Adam Smith and the specialisation of activities and how we go about them. Most of us are loathe to leave the comfort zones of our hard won expertise or recognition and to venture into unfamiliar territories. We need to learn to move out of the comfort of our silos.

When we peel away all the self-important twaddle we can rediscover a very liberating if frightening insight. In essence the innovator is a change agent, an agent for change. As that son of an Italian migrant keeps reminding us, “if nothing changes, nothing changes”.

This is also why, in practice, true innovators threaten a lot of people: people who don’t want to see things changed, or have too great a stake in the status quo.

But an innovator is a special breed of change agent. The innovator is a natural organiser who can marshal capabilities and talents around an opportunity. That is what my preferred role model for an innovator is an impresario, someone who puts the show on the road. And this analogy is a useful reminder that no showman stays in the business unless they attract an audience. In the final analysis someone – and hopefully lots of people – need to value what you have to offer. Otherwise we have just whiled away our time with some interesting experiment.

This brings me to the final note. Innovation – as distinct from contributing activities like research and speculation – best thrives when it is firmly grounded in the real world of people, their aspirations and what they want and need to do.

Discoveries and creative insights may be accidental and serendipitous, but their translation into innovation is always a purposeful and deliberate process. Because innovation is a purposeful activity it is also political. It will be shaped by our values and by our community priorities. It can lead to good and bad changes, depending on your point of view. And, if we are not mindful, it can lead to unintended and unwanted consequences. This is a good reason why we all, as citizens, consumers, and producers, need to take the business of innovation seriously.

And if we don’t innovate now, when will we?

[1] A. Hughes and V. Grinevich, (2007), The Contribution of Services and Other Sectors to Australian Productivity Growth 1980-2004, Australian Business Foundation and Centre for Business Research Cambridge, UK, 2007. The picture is not dissimilar in the US.

[2] In 2010 the Economist talked about a “data deluge”.

[3] See Graeme Wood, “Moving heaven and earth”, in The Atlantic, Vol. 304, No.1, August 2009, p. 70ff.

[4] I owe this wonderful phrase to Dr Mashelkar.

[5] The White Paper’s National Innovation Priorities:

High Quality Research. Public research funding supports high-quality research that addresses national challenges and opens up new opportunities.
Strong Skills Base. Australia has a strong base of skilled researchers to support the national research effort in both the public and private sectors.
Develop Industries of the Future. The innovation system fosters industries of the future, securing value from the commercialisation of Australian research and development.
Effectively disseminate new technologies, processes & ideas. More effective dissemination of new technologies, processes, and ideas increases innovation across the economy, with a particular focus on small and medium-sized enterprises.
Encourage a culture of collaboration across sectors. The innovation system encourages a culture of collaboration within the research sector and between researchers and industry.
Increase international collaboration. Australian researchers and businesses are involved in more international collaborations on research and development.
Engage the public and community sectors. The public and community sectors work with others in the innovation system to improve policy development and service delivery

[6] One exception is Keith Smith, who begins to tackle this question in his article, “Innovation as a Systemic Phenomenon: Rethinking the Role of Policy”, Enterprise and Management Studies, Vol. 1, 2000

Dr Terry Cutler

Dr Terry Cutler is an industry consultant and strategy advisor. Terry Cutler has authored numerous influential reports and papers on the Digital Economy and innovation.

During 2008 he chaired the Australian Government’s Review of the National Innovation System which culminated in the Report, Venturous Australia.

He currently holds the following appointments:

Deputy Chairman, Commonwealth Scientific and Industrial Research
Organisation (CSIRO) 2002 -; Chairman, Board Commercial Committee
Director Multimedia University, Malaysia
Chairman Advisory Board, Centre of Excellence for Creative Industries and Innovation
Chairman Pharmacy Australia Centre of Excellence (PACE), Brisbane
Director Chunky Move, Melbourne
Member Australian Biological Resources Study Advisory Committee
Director National Health Call Centre Network Ltd

He has served on numerous other boards, including both industry and cultural agencies.

Terry Cutler is a Fellow of the Australian Academy of Technological Sciences and Engineering, the Australian Institute of Management, and the Australian Institute of Public Administration. In 2002 he was awarded an honorary doctorate by Queensland University of Technology and in 2003 was awarded Australia’s Centenary Medal.

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