Innovation in Australia
This is an expansion of an article I wrote in 2020 for Linkedin.
For many years I have been frustrated with the lack of diffusion of research and development in Australia. For example, whilst we has been a world leaders in Field Robotics¹ for more than two decades— on the farm, in the mine, and at the ports — we don’t see this translate to other industries, such as manufacturing, construction or defence. The lack of Innovation Diffusion in Australian has become an issue of Sovereign Capability and hence a topic for the Modern Manufacturing Strategy.²
Another problem for Innovation in Australia is that it is often hidden. This issue was discussed at the Department of Industry’s 2019 Innovation Metrics Review which included the topic of “Hidden Innovation in Mining”.³ This led to an engagement with IP Australia to assist with the paper on Hidden Gems.⁴ It describes a situation where software to automate a mining vehicle is licences to a Multinational, which is then imported back into Australia. The movement of IP is not recorded.
The penny dropped for me when I had dinner with two Oil & Gas executives at the 2019 Sprint Robotics Conference in Perth. We spoke of the role of open innovation in their respective organisations — “Yes our doors are always open — but the IP can never leave.” It reminded me of the lyrics to Hotel California.
As a commodity exporter, our research and development is focussed on maximising the value derived from the delivery of our commodities. Apparently, this type of innovation is called inbound innovation. To help visualize this situation, I created a slide show showing the relationship between the vertical sectors (Mining, Agriculture, Energy etc) and the horizontal enablers (Equipment, Technology and Services). Hence, in this diagram, METS lies at the intersection of mining with the horizontal of ETS.
In 2019 our exports exceeded $330B and were dominated by the commodities of Mining, Energy and Food production. Whilst valuable they employ only a small fraction of Australia’s workforce — Mining is just over 2%, and with the advent of robotics and automation, this number is unlikely to go up. This is true for Energy and Food.
The real employment and growth areas are the products and services that can be exported to global markets. For example, it has been forecast that AgTech will be Australia’s next $100B industry.⁵ But to create such new tech and service industries we have a number of challenges:
Challenge 1: We need to change the direction of innovation from inbound to outbound — Inbound Innovation versus Outbound Innovation
Challenge 2: Allowing innovation to enter global markets whilst keeping it in Australian hands — Sticky Innovation and Innovation Provenance
Challenge 3: Raising the skill level of the Australian workforce in the global growth areas of technology and services.
Challenge 4: Reinvest in new areas of science (create IP) that can leverage demand from domestic operations but at the same time be open to the creation of cross business domain platforms.
In my experience, IP in this situation can be dealt with in three different ways. The inbound IP can be held tightly to maintain a competitive advantage (I recall a certain large mining company that would introduce their slide packs with the image of a large bank vault door). There is IP that is released and licensed — sometime this leads to products that are sold globally, and sometimes it leaves our shores — never to be seen again. And then there is the IP that is created and abandoned. The IP may be useful — but it is not core business.
This last one is perhaps the most pernicious. How many patents are sitting in filling cabinets that could provide value in another market. It requires a change in out thinking — a change in our culture — a change in focus from commodities to innovation⁶ (product). This is referred to as the innovation imperative which is weaved into our views of social license.
[1] Dept Industry Australia’s Artificial Intelligence Action Plan
[2] Dept Industry Defence — National Manufacturing Priority road map
[3] Dept Industry Innovation Metrics Review Workshop Proceedings
[4] IP Australia Hidden Gems — a Patent Analytics Study on Innovation in the Australian Mining Sector
