It is apparent the revamped Government is committed to raise the effectiveness of the innovation system, and that the opposition also shares this ambition.
The need for this transformation is widely recognised.
Our innovation performance, specifically our ability to transform innovation inputs – education, discovery, invention and creativity – into innovation outputs – products, services and processes of value – is poor.
By global standards of measured innovation efficiency, we are a third world country.
Both market failures and opportunities foregone have led to this poor outcome.
The two dominant market failures are the lack of engagement capital with innovation and the limited commercialisation skills available to the startup marketplace.
This latter shortfall is not a lack of resource but a lack of funding and organisation to make these skills available on a continuing and accountable basis to the market.
The opportunities foregone take the form of a failure to mount collaborative arrangements that produce scale, consistency of practice, wider coverage, development of good practices, and diffusion of knowledge and experience.
So we are committing ourselves to change, a commitment which for its part, Government will carry out through a hopefully, coordinated set of policies, programs and its own practices.
For this change program to be effective, we need to agree what success (or perhaps better stated our Big Hairy Audacious Goal – BHAG.) looks like so we can assess whether the proposed policies, programs and practices will move us towards our goal.
An effective way of articulating our goal is to express it as a set of Decision Arbiters.
In this context, the outcomes required of innovation policy and programs, and therefore the criteria for policy and program design are summarised below.
Sufficient and Continuous Investment Capital Engagement with Innovation
The innovation system must have timely and predictable access to sufficient investment capital to ensure funding availability to New Growth Enterprises (NGEs) of merit, at each stage of start-up, scale up and expansion (that is, a seamless flow of funds from Seed and Series A rounds through to Series B-E rounds and then to the private equity expansion capital and finally to the banking system and listed equity markets).
The allocation of capital needs to be primarily driven by at-risk decisions to ensure it is allocated efficiently.
Sufficient and Accessible Pool of Commercialisation and Venture Expertise
There needs to be an effective, sufficient and coordinated infrastructure of market experienced capabilities, to provide predictable and supportive platforms for NGEs to access investment capital, and to be accountable both for the efficient allocation of this capital and for assisting the NGEs to achieve the investment outcomes.
This Capability Infrastructure needs to provide commercial expertise across development stages and technical domains, and be organised to be available nationally, across capital cities and regional Australia.
Mobilisation of Collaborative Arrangements
The policies and programs must serve to mobilise collaborations, networks and knowledge/experience sharing to ensure the scale of the operations of the system is sufficient to support the development of good practice, provide the diffusion of learning and to provide the platforms for Australian NGEs to sell into and compete in global markets.
Encouragement of an Active Innovation Culture
The policies and programs need to include the mandate to champion the development of an actively supportive innovation culture.
In this context, a fully functioning innovation culture sees as normal behaviour, the disclosure and translation of innovation inputs into outputs, the development of tax and regulations that remove barriers to NGE development, and the development of protocols for NGEs to engage commercially with large enterprises and governments.
Need for Workforce Development
The system should be supported with the development and operation of a national Innovation workforce strategy, including a national innovation intern program.
Need for Agility
The administration of program delivery, in regard to both Investment Funding and especially Capability Infrastructure, needs to be empowered and agile to respond to not only what we see today but also the market opportunities and market failures that emerge.
Need for Program Efficiency and Commitment to Effectiveness
The programs should demonstrate program efficiency and effectiveness. That is, they need to have a low cost of administration, while still being operated with sound governance, and they need to be close-to-market and outcome oriented in their operations.
The decision arbiters above are highly inter-dependent. Therefore, each proposed set of policies and plans should be measured against its impact across the whole of the outcomes above in a timely manner. This is not to require each policy or activity need impact all but to understand the interrelationship of the efforts, ad across the whole, measure the whole.
Together we can achieve this BHAG.
Paul Cheever is Chief Executive Officer and Director of the Australian Institute for Innovation. The AII is a not-for-profit organisation whose mission is to bring practical experience to inform Australian policy and program discussions on the innovation system and innovation investment.