How Australian innovation is being held back

The findings of Australia’s “innovation audit” will focus on three areas, ISA chairman Bill Ferris reveals.

Mr Ferris said only 30 per cent of Australian researchers were employed by business, to 60 per cent in more successful nation competitors.

A lack of collaboration between academia and business is one of the key issues holding back the nation’s innovation, science and research system, according to Innovation and Science Australia chairman Bill Ferris.

Ahead of the public release of ISA’s audit of Australia’s existing innovation systems that will be provided to federal government next month, Mr Ferris revealed the 20 findings in the audit would focus on three circles of activity: knowledge creation, knowledge transfer and commercialisation.

“Coming up with ideas and new research, we rank really high in world terms. In the creation part of it all, it is a very good story. On the transfer, we are pretty weak in terms of international metrics on that. And in terms of actual outcomes, be they marketplace driven or otherwise, the answer is we are only OK,’’ Mr Ferris told The Australian ahead of the annual Creative Innovation conference starting in Melbourne on Tuesday.

“Where do I finish up? I’d say at a glass half full. And on the preliminary findings on why we are not doing better on transfer and have the premature licensing and sale of intellectual property to others offshore and not developing it locally, much of it relates to lack of collaboration.’’

Mr Ferris, a venture capitalist appointed as ISA chairman by Prime Minister Malcolm Turnbull last year, said only 30 per cent of Australian researchers were employed by business compared to 60 per cent in our more successful nation competitors.

“That means business hasn’t been reaching into universities. But equally they and other research institutions aren’t renowned for reaching out to business. We have had a siloed development of activity,’’ Mr Ferris said.

The government’s innovation agenda announced almost a year ago includes a range of measures including $250 million Biomedical Translation Fund. ISA has also undertaken a review of the $3.2 billion R&D tax incentive program.

Mr Ferris said while many companies were doing incremental innovation, few were engaged in “new radical, step change innovation”.

“We are beginning to see it with the likes of Telstra and the banks like CBA. But we need to see more of them,’’ he said. For example Telstra and CBA will be co-investors with the federal government in a new quantum computing program.

Venture capitalist and business adviser Steve Vamos, who is also a director of Telstra and will speak at today’s forum, said there was already a mindset shift on innovation in big companies, which came back to changing the way managers and staff think.

“We want to control things, we don’t want to make mistakes and we feel the need to know the answer — those things are great when things aren’t changing but they kill you when things are changing,’’ he said.

“Some things in companies can stay the same. Like well-drilled safety and accounting practices. But if you have a control mindset when things are changing, it is death. Instead of being scared of making mistakes, you must be willing to try and fail.’’

Investors keen for short-term returns and capital returns have also been criticised for styling long-term thinking and innovation in companies.

But Mr Vamos questioned to what extent that dynamic was “the problem or the excuse’’.

“That dynamic is a function of expectation and expectation is set by management. If investors get what they expect they are happy. If they don’t get what they expect they are not happy. These changing times put more pressure on boards to set expectations better and then shareholders understand the risks. They are aligned with the outcomes or they choose to opt out,’’ he said.