‘Capital I’ Innovation (Part 1)

Recently I read an article on Anthill.com, ‘Innovation: Australia is screwed without it. Really, really screwed. One of the premises the article and its accompanying video put forth was that, while 95% of Australian businesses claim they’re innovative, according to the Australian Bureau of Statistics only 40% actually undertake any form of innovation activity. Hmmmmm. Somebody’s got some ‘splaining to do.

Unsurprisingly, I was a little confused, and I started to wonder, what’s up with Australia and innovation? Now I don’t mean ‘little i’ innovation… I mean ‘Capital I’, game changing, in your face Innovation. We’re not talking ‘lipstick on the bullfrog’ here people. We’re talking a whole new species. Or at least we should be. And we should be talking about it together.

My questioning led me to explore the GE Global Innovation Barometer for 2011 and, globally at least, the facts are quite heartening. For instance,

  • 95% of respondents believe innovation is the main lever for a more competitive national economy.

As encouraging is that the vast majority of respondents believe innovation can improve the lives of their country’s citizens in the next ten years.

  • 74% believe innovation can improve housing quality;
  • 77% believe innovation can improve the quality of education;
  • 82% believe innovation can improve energy security;
  • 87% believe innovation can improve health (care) quality;
  • 88% believe innovation is the best way to create jobs in their country; and
  • 90% believe innovation can improve communications.

All of these illustrate excellent reasons for individuals to buy-in to the necessity for ‘Capital I’ Innovation.

GE Global Innovation Barometer: Positive Perceptions

But what about business? Well, 75% of the global respondents believe:

  • SMEs and individuals can be as innovative as large companies;
  • The greatest 21st Century innovations will bring value to society as a whole, not only to individual consumers or citizens; and
  • The majority of innovation in the next ten years will be driven by a combination of players partnering together.

So what’s the Aussie problem? In a nutshell, only 2% of respondents saw Australia as a leading innovation champion. This is in contrast to the US (67%), Germany (44%), China (35%), and India (12%). I’m reminded of the quintessential line from the classic film Cool Hand Luke, “What we got here is… failure to communicate.”

GE Global Innovation Barometer: Optimism Index Country Ranking Chart

The bottom line that we need to be talking about is that Impactful Innovation in the 21st Century will require incorporating Partnerships who Integrate Solutions which focus on Individuals. However, this takes vision and an ability to factor in risk. And risk or the unwillingness to take it is, as some would see it, Australia’s problem.

The thing is, Australia is a traditional country. Now first let me hasten to note that there are, of course, exceptions to this rule. But, generally speaking, Australia wants to protect what it has rather than taking a risk by betting on something new, something they don’t know. It can be scary to switch to a knowledge based economy.

GE Global Innovation Barometer: Most Negative Perceptions

Peter Riddles, CEO of ViciBio Pty, has recognized this problem for years. Riddles works with governments and economic regions on innovation and strategies for industry growth, and with new ventures and universities in innovation and commercialization. To his mind, “Australia is a commodity and services based economy and is therefore not necessarily geared to be a knowledge based economy.” Agreed.

However, if Australia – in both the private and public sector – doesn’t support its own entrepreneurs endeavoring to launch ‘Capital I’ Innovation, some other country will, and will profit from it. As noted in last week’s blog, there is a multitude of multinational companies drooling to drink at the well of profit that the NBN scheme is likely to provide them. Regrettably, it is likely that only droplets will be left for any local businesses – unless, of course, they come in under the guise of a foreign flag.

All is not lost though; there is still time, and certainly a degree of opportunity, for Australia to lead the way in some form(s) of ‘Capital I’ Innovation. This is particularly true in the realm of health care. I have long said that I believe it is part of the Australian psyche to provide sustainable health care to its citizens, regardless of how rural and/or remote their location.

True, up to this point there has been a reliance upon ‘little i’ innovation but, to date, this has stood them in good stead. Australians took the international ‘Capital I’ Innovations of radio and airplanes, and created the ‘little i’ innovation that became the world renowned Flying Doctors. Huzzah! However, these are laurels that can no longer be rested upon.

Australia must support and cultivate a culture of ‘Capital I’ Innovation and, balanced with its need for security in a traditional economy, it must become a nation which supports and encourages entrepreneurship and a knowledge based economy.

As Peter Riddles noted in our chat this week, “Innovation is what entrepreneurs do.” And with some of its most innovative and entrepreneurial minds finding it easier to do business off the ‘Big Island’ Australia is not only suffering from a ‘brain drain’, but also from a sizable loss of potential profits. When your entrepreneurs know that it makes more sense for them to sell their wares to an American company, and then have the Americans sell it back to Oz – there is a fundamental problem in the plan.

Australia has the brain power to create ‘Capital I’ Innovation. What it needs is the courage capitalize on this. Australian entrepreneurs must be empowered locally to think and act globally. It is then that they will begin to take the lead in ‘Capital I’ Innovation rather than creating yet another iPad application.

One response to “‘Capital I’ Innovation (Part 1)

  1. Con Zymaris

    Well conceived and succinctly stated. I don’t disagree with any
    viewpoints or arguments made.

    It is our country’s oft-repeated productivity lamentation: an addiction
    to what we can dig up, as opposed to what we can make or think. The
    ‘Lucky Country’ often occludes the ‘Clever Country’.

    Innovation is also an incredibly slippery beast. It’s like trying to get
    a handle on a mermaid.

    How to change all this? It’s a whale of a problem.

    Here’s a snippet of something I did for Australian Developer magazine
    about 10 years ago. It too posited a particular solution path, which,
    who knows, may actually be working/have worked.

    So many different things need to be done by so many right-thinking
    people, in order for this idea to take any kind of flight….


    Learning from the Mistakes of History…†

    I recently attended a fascinating day-long symposium on the history of
    computers in Australia. Titled From Pearcey to the PC, it was organised
    by the Pearcey Foundation (http://www.pearcey.org.au) as a forum through
    which those who helped found the computer industry in this country were
    able to recount their stories, share memories and try to capture a
    wonderful history before it’s lost to the ages.

    As I’ve always had a strong interest in the topic, I found much to
    admire in the many women and men who attended and presented on the day.

    While there were many disparate voices heard, there was one recurring
    theme which unified much of the thought expressed; this country has had
    many opportunities to become a recognised software power slip through
    its fingers through want of government support for industry development
    and directed procurement policies or through a widespread lack of
    management and marketing skills amongst our once prominent indigenous
    providers. In fact, we have had an almost complete failure in
    capitalising on plenty of excellent intellectual capital and innovation,
    a failure to grow the local software and Information and Communications
    Technology (ICT) sectors and a final capitulation to foreign
    intellectual property in almost all forms of ICT product and service.

    As an indication, the packaged software market is in many respects a
    lost market. Australian firms compete in very few product lines. You can
    confirm this for yourself by pointing your browser to any of the online
    software supermarkets which sell into the Australian market. You will
    probably find less than a few percent of the listings are Australian in
    origin. The only exception seems to be accounting software. Even this
    morsel of success exists because we don’t share our accounting
    regulations with other countries. I would suggest that if we did, this
    sector too would have been dominated by software imports.

    Perhaps we are holding our own in custom or bespoke development? As
    Gartner is quick to remind us, 95% of global software development occurs
    in this form. I imagine that this is what most of our readership write
    professionally. The answers is no. The Pearcey symposium attendees
    agreed that 20 years ago, there was, proportionally, a much higher level
    of local software development than there is now. This changed when
    management became weary of developing custom or in-house applications
    due to numerous project timeline and cost overruns. They were instead
    entranced by the promises of reduced costs and deployment risks being
    chanted by the new breed of enterprise-class, off-the-shelf business
    software vendors. This has precipitated a major shift in IT roles in
    this country, from having programmers coding innovative solutions which
    meet local requirements, to having consultants and product-specific
    specialists act as deployment vehicles for installing and tweaking
    software written largely overseas.

    Why couldn’t we compete in this enterprise-class software space? The
    Pearcey attendees laid part of the blame on government and corporate
    cultural-cringe in non-procurement of local product. As these were
    high-stakes games, it’s more ‘comfortable’ to purchase such critical
    software from a vendor which is seen to be bigger and more established.
    Bigger mostly means foreign. However, it’s also true that the local
    players often poorly executed on their management and marketing.

    Whatever the reason, the gaggle of Australian contenders has dwindled in
    the past dozen years. We have had some great successes, such as MINCOM
    and Technology One, which are kicking sales goals here and overseas, but
    the overall picture is bleak.

    Australian Computer Society research indicates that our national balance
    of trade figures show an annual $15 billion deficit in ICT. This means
    that every year, we pay that much money more to overseas concerns than
    they pay us for our computer, software telecoms gear and services. This
    is an amazing number for a couple of reasons. Firstly, if you do the
    sums, you will find that this constitutes around two-thirds of our total
    national trade defecit; the computers and software we are all buying are
    helping to send this country broke. The second amazing thing about this
    number is that few are making a big deal about it.

    Our predecessors knew, even in the ’60s and ’70s that ICT had the
    potential to become a serious money earner for this country. They also
    knew that it could become a problematic money drain. They therefore
    established indigenous ICT industry-bodies to lobby government, to
    market Australian product and services firms. These efforts failed for a
    number of reasons which we don’t have time to cover in detail. Is there
    anything we can do differently now to affect a more positice outcome?
    Can we, to paraphrase George Santayana, learn from the lessons of
    history so we are not doomed to repeat its failures?