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innovation

Innovation breathes new life into old business

Featured image above: the Minister of Industry, Innovation and Science delivering his address at the AFR National Innovation Summit 

Innovating isn’t just about creating new businesses – it’s also about transforming the old.

This message formed the crux of the Hon Greg Hunt’s speech at the Australian Financial Review’s 2016 National Innovation Summit as he presented plans for his portfolio as Minister for Industry, Innovation and Science.

“Innovation is about the new firms absolutely, unequivocally…but also the existing firms,” said Hunt, insisting that the latter should be innovating through “new or improved goods or services, new processes or new business models.”

Pointing to Dulux, CSL, Telstra and BlueScope as examples of Australian veterans who are thriving through investments in R&D, the Minister warned that less-savvy business won’t be bailed out.

“We can’t prop up existing, failing services,” he said. “They have to be able to compete.”

The need for speed

According to other leaders at the AFR Innovation Summit, the window of opportunity is closing for some of Australia’s oldest and largest corporations.

Data61 CEO Adrian Turner says he returned to Australia after 18 years in Silicon Valley because he was concerned about Australia’s pace of change. He believes Australian businesses don’t have long to get on board the age of digital and data-led markets.

“We have a five to 10-year window,” says Adrian.

Chairman of the Australian Advanced Manufacturing Council, John Pollaers, pointed out that although the world has moved into the fourth industrial revolution – the merging of the physical and cyber worlds – many companies are still working their way through the second and third industrial revolutions of electrification, automation and IT.

“If we underestimate technology we will fail,” says Pollaers. “If we underestimate the resistance to change and innovation, then we’ll also fail.”

Maile Carnegie believes companies need to stop ‘hand-wringing’ and start taking action.

“Our financial institutions, if we don’t get them moving, are in for a world of hurt,” says the former Google MD, who recently joined ANZ as Group Exec of Digital Banking. “Banking is a massive data play – those industries are getting disrupted.”

“We know what we need to do so we need to move the conversation to doing it…At the end of the day strategy is all about making some choices.”

So how can old businesses achieve innovation?

“Fail fast, fail cheap, pivot,” suggests Suzana Ristevski, Chief Marketing Officer and Head of Strategy & Growth for GE Australia, New Zealand and Papua New Guinea.

With speed and agility considered vital to innovation but difficult in large businesses, CommBank has turned to partnering with startups.

“They have the agility, we have the scale, so it’s a pretty great marriage,” says Tiziana Bianco, head of the CommBank’s Innovation Lab.

Corporate law firm Gilbert and Tobin have also invested in ‘self-disruption’ to avoid becoming obsolete, positioning themselves as a ‘market disruptor’ and increasing their stake in startup LegalVision to 20% at the start of August.

BHP Billiton, who was forced to cut its dividends by 75% in February this year, has moved to a five-point plan (see The big three drivers to job growth).

  1. Hastening production
  2. Accelerating technology competencies
  3. Creating innovation hubs to address innovative solutions to specific challenges
  4. Setting up programs to build from the inside the company
  5. Forging partnerships with unis, CSIRO, and CRCs

When asked at the AFR Innovation Summit what would happen to jobs if they innovated through automation, BHP’s CTO Diane Jurgens said her company is upskilling existing workers; taking them off machinery and teaching them to operate machines from the safety of a control room.

Group CEO & Managing Director of Domino’s, Don Meij, told the summit’s audience that if we don’t take our skills ‘upstream’ in this way, we will simply miss out on the market altogether.

– Elise Roberts

job growth

What are the big three drivers to job growth?

Increased collaboration, stability of policy and acceleration of commercialisation are three main drivers of innovation and job growth that must be addressed to accelerate Australia’s economy in the next 15 years.

The top three drivers were identified at the AFR National Innovation Summit today by Chairs of the boards of Telstra, BHP Billiton and Innovation and Science Australia.

The panel warned that fears around the effects of disruption on jobs must be part of the conversation, and that the effects of digital disruption through automation, and artificial intelligence were inevitable.

This disruption will affect people and jobs whether they are “in Woomera or Sydney”, says Bill Ferris, Chair of the board of Innovation and Science Australia.

“In five years we’ve seen the rise of Uber and Instagram, and the collapse of the mining boom. What is coming towards us will dwarf the change of pace [in disruption] to date,” says Dr Nora Scheinkestel, Chairman of Macquarie Atlas Roads and Director of Telstra Corporation and Stocklands Group.

Policy and R&D tax incentives

Crucial to Australia’s ability to innovate is the stability of policy such as the R&D tax incentive, which aims to encourage private investment in Australian R&D.

Along with Chief Scientist Alan Finkel, Bill Ferris was part of a team that reviewed the incentive for government to evaluate how much investment the incentive has created and the scheme’s effectiveness.

“I agree it is valuable and should be continued,” says Ferris. “Can it be improved? I think so. It’s been a $3 million cheque and the largest there has been. But there is nothing in the scheme that requires collaboration, whether CSIRO or academia.”

Incentivising collaboration is a no-brainer next step, says Ferris.

“I don’t think business is trying as hard as academia. Universities are getting on with business, creating spin-offs like QUT’s Spinifex, and Ian Fraser’s cancer vaccine. It’s very impressive.”

Stability of the R&D investment scheme is key to its success, says Carolyn Hewson AO, Director, BHP Billiton, Stockland Group and Federal Growth Centres Advisory Committee.

Hewsen says BHP Billiton was ‘deeply’ affected as a company by the collapse of the mining boom this year. “Every company is under pressure to innovate.” (See “How big companies can innovate)

“There is a role for government to address the KPIs they set around research funding.

KPIs need to move to speed of commercialisation rather than publication in tier 1 journals.”

“My concern is it is very easy for government with 3-year time horizon to make decisions on funding over a long term investment. Research projects extend out many years. To be subject to be changing regulation of government regulated by short-term political cycle is very worrying.”


How big companies can innovate

– Carolyn Hewson AO, Director of BHP Billiton, Stockland Group and Federal Growth Centres Advisory Committee

  • Hastening production
  • Accelerating technology competencies
  • Innovation hubs working to address innovative solution to specific challenges, eg. automation of trucks and drills
  • Step-up programs to build from the inside of the company
  • Partnerships with universities and CSIRO, CRCs on engineering and remote operations

Collaborate and commercialise for job growth

Ferris is optimistic about Australia’s ability to respond to the challenge to grow jobs by 2030. Agribusiness, aquaculture, cybersecurity, environmental services, renewables, and new materials were all strong potential job growth areas, he says.

“A lot more work needs to be done by business on reaching in. If we can’t commercialise around our inventiveness we won’t create the jobs that we could and that we deserve.”

Scheinkestel says the ecosystem is essential to drive innovation and job growth.

“The big message from Israel is the ecosystem created between business and academia, and in their case the military, where young people are taught strong leadership skills. They commercialise or adapt tech they have been looking at, get the backing of VC, which are supported by consistent policies from government around tax regimes.

“Again in Silicon Valley, you are talking about an ecosystem, a constellation of start-ups with shared resources and again consistency in policies and tax incentives.”

Hewson agrees that work skills are essential to our future and that there is concern about workforce skills in Australia across a number of advanced manufacturing, mining and medical sectors.

“We want to enhance global competitiveness and build on strategic collaboration within these sectors,” she says.

“It’s not just about growth, it’s about survival,” adds Scheinkestel.

Heather Catchpole