This week it’s all been about ‘innovation’. It is simply not possible to overestimate the importance of the Australian National Innovation and Science Agenda.
It’s a big, big step in the right direction. Everyone agrees that our country must transform to deliver growth, jobs and prosperity.
But how does the “Ideas Boom” create economic growth? How does research lead to innovation and business success? How do big companies facing tepid growth at best and disruption at worst, play a role?
Innovation terminology is clumsy. Some of the common words to around innovation are used interchangeably and sometimes the meanings get confused because of fuzzy definitions.
Let’s talk about entrepreneurship. The process that catalyses innovation. It’s not the same thing. Entrepreneurship relies on the behaviours, attitudes, expectations, the community, the rewards, the risks and the social bargain between people that make the difference between developing a serious career as an entrepreneur or a foolhardy distraction from a sober and sensible job.
I want to suggest a way to simplify the language and make the steps to success easier to understand and communicate. I have one simple vision. Australia should aim to become a “centre of excellence” for Entrepreneurship by 2020.
Let’s explore 4 simple principles.
- Innovation is not the same as Entrepreneurship.
- Entrepreneurship catalyzes Innovation,
- Entrepreneurship is a profession & is practised better in some places.
- Entrepreneurship ecosystems have their own Hardware & Software
Innovation is not the same as Entrepreneurship
Innovation has been studied, debated and measured possibly more than any other single element in management science. Why? Because it is essential to the process of growth and wealth creation for any economy. It is an ongoing process and a way of working, not an ideology. It is time to move from innovation as an ideology to innovation as a process that depends on entrepreneurship in order to produce economic outcomes.
Entrepreneurship catalyzes Innovation
Entrepreneurship delivers movement. Its’s about action because – action changes things. The entrepreneur is biased toward action and manages risk better, moving than waiting for permission. She doesn’t wait for an innovation to appear. The empowered, opportunistic and motivated, entrepreneur will combine old elements with new ones, apply them to changes in economics or demand, or take advantage of timing or circumstance and make something happen.
Without entrepreneurship, all the inputs into an ecosystem, the “hardware” alone, just leave you with an “inert” environment that does not translate into economic impact to deliver economic growth. It’s a little like walking into a wonderful kitchen with Nigella Lawson who has all the ingredients for a cake but she is too scared to bring it together.
Entrepreneurship is a profession and practised better in some places
Entrepreneurship is practised better in some places than others and the best places regard entrepreneurship as a profession. We need to work on making being a serial entrepreneur a viable and sensible career option.
Entrepreneurship has its own form of management science. It is specialised and very particular depending in the vertical. (for example Mass, Niche, B2C, B2B, growth hacking, network effect, scaling, etc) Demand for capital and talent is global. People and money will go where they are best treated.
Australia needs to attract back its own entrepreneurs who have left for another country and are globally networked, experienced, may have previously failed but have access to resources. We need to equip them to tell their story to Australian investors who will value this scar tissue in the right light.
We need entrepreneurs who have worked in big companies and small ones, public and private ones, international and local ones, have visibility but don’t need to be the centre of attention. We need people who can follow as well as lead. We need people who will happily move through a revolving door between government, academic and research institutions and business.
People who understand the principle of reciprocity, demonstrate EQ and well as IQ, authentically lives within her ethics, maintains long personal relationships of trust and can communicate powerfully.
The entrepreneur who can fill the gaps in their own experience with others who can help, is more likely to succeed. We need entrepreneurs who know how to hire or partner with people but let everyone else get the lion’s share of the credit.
Being an entrepreneur means working though the delays, frustrations and challenges that inevitably come with starting or accelerating something new. It means you need to respond to ambiguity with unrelenting focus, respond to complexity with decisiveness, be able to reflexively move between work styles, that demand granular detail some days and big picture on others.
What do Isreal, China, Singapore, Boston, London, the Bay Area, New York and others do better as “innovation ecosystems”, outperforming others on every measure of economic value creation? Both their hardware and software settings are fit for purpose.
Entrepreneurship ecosystems have both hardware and software elements
Firstly the hardware. This relates to the institutions or things you can see, and the “Rules & Tools” from government that are applied to them. That means the tax breaks, the universities, the visa laws, the employee share options, government grants, VC’s, incubators, research funding, IP regulations, trade agreements and all the rest.
And then there is the ecosystem Software. This relates to the programming operating systems and the “Behavioral & Attitudinal” elements that are applied to them. (This means the behaviors, attitudes, expectations, the community, the rewards, the risks and the “social bargain” between people who fail and then use that experience as IP in their next business venture.)
This is a community that blends audacious behavior with humility, greed with generosity, compete vigorously yet collaborate & give their time generously. People who know that nothing meaningful ever succeeded on ‘Plan A’, who don’t personalise failure, and who never give up but know when it’s time to pivot.)
How is Australia going so far?
OECD ranks Australia 10th for innovation inputs but 81st in the world for innovation efficiency and bottom of the OECD for collaboration between business and research. Australia is also lowest in the world for digital and tech experienced Ph.D.’s and STEM graduates on company boards
Just for comparison, let’s look at some other places:
Boston has roughly 20 per cent of graduates of MIT in Boston started their own businesses in the last ten years. The aggregate value of the sales generated by just these young MIT Alumni businesses alone totals over two trillion US dollars or equivalent to all the sales from the world’s 9th largest economy, India.
Israel, per capita, has the largest number of start-up companies in the world and it is ranked number two in the world for venture capital funds behind the U.S. It has more NASDAQ listed companies than any country, besides U.S. & China.
It is the world’s 3rd highest rate of entrepreneurship – the highest rate among women and among people over 55.
Then there is a long, long list of the best in the world and the good. When it comes to commercialisation outcomes, Australia is 81st in the OECD.
The Federal Government has now sent a clear signal. The National Innovation and Science Statement (NISA) is a wide-ranging, powerful, sophisticated, nuanced set of measures that are designed to confront so many the challenges that have confronted, confounded and frustrated Australian commercialisation.
It’s a mix of funding and tax and regulatory reforms targeting four main areas:
- Talent & Skills
- Culture, Startups & Capital
- Collaboration & Commercialisation, and
- Government as an Exemplar
The NISA is a great step. The importance of it cannot be overstated.
Now let’s get entrepreneurship right.
Tony Surtees is an entrepreneur, investor and advisor to government. His most recent company is a co-founder at Australian presentation engagement specialist Zeetings. Tony is also VP of the local Stanford alumni association, Stanford Australia and is on the global advisory board of Advance, the professional network for Australian expatriates.