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.
Creating innovation hubs to address innovative solutions to specific challenges
Setting up programs to build from the inside the company
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.
Australia faces a challenging period in shifting towards an ‘innovation economy’, with a drive towards greater participation in science and technology; an increased focus on commercialisation success; and partnering research with industry. But how will we get there?
Read the Thought Leadership Series: Australia’s Innovation Future, here. Commentaries will be published throughout the week.
The path forward
There is no doubt that Australian R&D often punches far above its weight for the size of the nation’s population. But for too long Australian invention has stalled at the crucial points in moving research from lab to marketplace. From a nation of thinkers, there has been too little product. Buoyed by the rich resources in the landscape, we have rested on our laurels, riding the sheep’s back or relying on our mineral wealth.
There are notable exceptions. Most Australians, for example, are familiar with the success of the cochlear implant, invented by Professor Graeme Clark and pioneered with a team of surgeons at Melbourne’s Royal Victorian Eye and Ear Hospital. This clever little device is now distributed in over 120 countries and has helped over 320,000 hearing-impaired patients. In the inaugural 2016 Top 25 Science Meets Business R&D spin-off list, this and other less familiar success stories – including companies just starting to make their mark – were noted and celebrated.
In December 2015, the Turnbull government pushed an agenda on innovation – the so-called #ideas boom. The innovation agenda clearly indicates that Australia must move from a resource-based economy to a knowledge-based economy. It highlights the poor track record of research commercialisation, and low rates of collaboration between industry and research organisations. The Organisation for Economic Cooperation and Developmentrates Australia as last or second last on the level of collaboration against other developed nations. So how much further forward does the ideas boom push us, and what more can be done?
The December 2015 agenda throws $1.1 billion towards steps to address stagnation in research commercialisation and business growth in STEM. This includes $200 million industry incentive to work with the CSIRO and Australian universities, and a 20% non-refundable tax offset for early stage investors. There’s also money for Australian businesses looking to relocate overseas, bonuses for universities collaborating and resources allocated towards raising awareness of the importance of STEM in education.
While the money sounds great, transitioning towards a knowledge economy is more than just a fiscal move – it requires a fundamental shift in the notion of what it is to be Australian. The pathway towards this mental reimagining is far from clear, and will involve people in business, education, research and communication industries to change their thinking, develop ideas and set in motion a totally different model of achievement.
In this thought leadership series, those stepping up to deliver on this challenge describe their vision of science, technology, engineering, maths, and medicine – in the way we do the research and in how we benefit from these fields – to describe their first step towards this brave new world. – Heather Catchpole
Read the Thought Leadership Series: Australian Innovation Future, here.
The ubiquity of the term, ‘innovation’ in the Australian political, business and social lexicon risks diffusing its meaning and, worse, its broader uptake in the national interest. Identifying the true meaning and value of innovation requires we significantly rethink the way we approach the generation of ideas and their application into society.
The current transactional approach to innovation in Australia generally eschews direct supports in favour of tax incentives which, unusually in a global context, comprise roughly 90% of government expenditure on innovation. This is like a vending machine approach to innovation, one in which all attention is focused on the end product and little or no concern is directed towards understanding, or better still, enabling and improving the mechanics of its delivery.
If we are to be more expansive and impactful in our approach to innovation then we need to engage it in its fullest sense and not just concern ourselves with input and output triggers. This requires we focus on identifying the factors that both comprise and, more importantly, help create successful innovation ecosystems.
Strengthening literacy in science, technology, engineering and mathematics (STEM) disciplines from a very early age affords us a bedrock on which to build workforce capacity and the intellectual capital necessary to generate and sustain innovation. Existing educational structures will need to adapt and change in a way that both responds to and supports the highly fluid and dynamic features of a thriving innovation ecosystem. Adjusting curriculums or modifying our expectations of graduate attributes, while important exercises, will not get us to where we need to be.
“The development of the skills-base required to drive sustainable innovation will both depend on and necessitate a very deliberate blurring of the borders between business, industry and education.”
According to last year’s ‘New Work Order‘ report by the Foundation for Young Australians, “70% of young Australians currently enter the workforce in jobs that will be radically affected by automation”. Add to this an expected average of 17 job changes for each of these new workers over the course of their working lives and it is clear that career narratives within the mooted ‘Ideas Boom‘ will be conditionally diverse and non-linear.
Disrupted, diverse and adaptive career pathways demand innovative responses from business as well as the education sector. The development of the skills-base required to drive sustainable innovation will both depend on and necessitate a very deliberate blurring of the borders between business, industry and education. The key to making this work is not so much an exercise in imposing demarcations on the role each of these groups perform collectively, rather it is centred upon letting go.
When circumstances conspire, Australia’s public research entities and business can produce remarkable innovations, as is evidenced by world leading inroads in, for example, solar technology, quantum computing and medical research; but we need to rely on more than circumstance and a dwindling linkage and research infrastructure funding pool.
While it is early days, universities and business are – in incubator, accelerator, and shared strategic (precinct) spaces – forming the beginnings of the deliberately diffused collaborative relationships needed to build sustainable innovation ecosystems. Encouragingly, the policy and funding frameworks put forward by the National Innovation and Science Agenda offer much to support this process.
The real determinant of our success in innovation will be the aspirations and behaviours of the emerging generation of workers. Diversity in career experience will be the attractor to study STEM disciplines, not curriculum reform. If we get it right, STEM skills will be seen as essential navigation tools in an as yet unknown adventure through a thriving innovation ecosystem where business, industry and universities coalesce to disrupt, diffuse and diversify in the interest of ideas.
For a country that makes up just 0.3% of the world’s population, Australia packs a heavyweight punch in science – generating 3.9% of the world’s research publications. However taking that research to market has proved a broader challenge.
Fostering the commercialisation of research success and encouraging collaboration between industry and researchers is at the forefront of the government’s renewed focus on scientific innovation, with over $1.1 billion earmarked to kickstart the “ideas boom” as part of the National Innovation and Science Agenda.
Fibrotech develops novel drug candidates to treat fibrosis (tissue scarring) associated with chronic conditions such as heart failure, kidney and pulmonary disease, and arthritis. The company spun out of research by Professor Darren Kelly at the University of Melbourne in 2006, and its principal asset is a molecule, FT011, which helps prevent kidney fibrosis associated with diabetes. In May 2014, in one of Australia’s biggest biotech deals at the time, Fibrotech was acquired by Shire, a Dublin-based pharmaceutical company, for an initial payment of US$75 million. Further payments, based on a series of milestones, will bring the total value of the sale to US$557.5 million, and the deal was awarded Australia’s best early stage venture capital deal in 2014. At the time of the sale, FT011 was in Phase 1b trials for the treatment of renal impairment in diabetics – a market worth US$4 billion annually.
SOLD FOR:acquired by Novartis for US$200 million up-front payment plus milestone payments
Spinifex Pharmaceuticals was launched in 2005 to commercialise chronic pain treatments developed by Professor Maree Smith of The University of Queensland. Pharmaceuticals giant Novartis acquired the company in 2015 for a total of US$725 million, based on the promising results in Phase 1b and Phase 2 clinical trials. Spinifex’s treatment targets nerve receptors on peripheral nerves rather than pain receptors in the brain, making it possible to treat the pain from causes such as shingles, chemotherapy, diabetes and osteoarthritis without central nervous system side-effects such as tiredness and dizziness.
Admedus is a diversified healthcare company with interests in vaccines, regenerative medicine, and the sale and distribution of medical devices and consumables. Currently, the company is developing vaccines for herpes simplex virus and human papillomavirus based on Professor Ian Frazer’s groundbreaking vaccine technology. In the regenerative medicine field, Admedus is the vendor of CardioCel®, an innovative single-ply bio-scaffold that can be used in the treatment of congenital heart deformities and complex heart defects.
For more than 25 years, ResMed has been a pioneer in the treatment of sleep-disordered breathing, obstructive pulmonary disease and other chronic diseases. The company was founded in 1989 after Professor Colin Sullivan and University of Sydney colleagues developed nasal continuous positive airway pressure – the first successful, non-invasive treatment for obstructive sleep apnoea. Today, the company employs more than 4000 people in over 100 countries, delivering treatment to millions of people worldwide.
BioDiem specialises in the development and commercialisation of vaccines and therapies to treat infectious diseases. The Live Attenuated Influenza Virus vaccine technology provides a platform for developing vaccines, including one for both seasonal and pandemic influenza. BioDiem’s subsidiary, Opal Biosciences, is developing BDM-I, a compound that offers a possible avenue for the treatment of infectious diseases that resist all known drugs.
Vaxxas is pioneering a needle-free vaccine delivery system, the Nanopatch, which delivers vaccines to the abundant immunological cells just under the skin’s surface. Preclinical studies have shown that vaccines are effective with as little as one-hundredth of a conventional dose when delivered via a Nanopatch. In 2014, Vaxxas was selected by the World Economic Forum as a Technology Pioneer, based on the potential of Nanopatch to transform global health.
Biotech company Acrux was incorporated in 1998 after researchers at Monash University developed an effective new spray-on drug delivery technology that improved absorption through the skin and nails. In 2010, Acrux struck a US$335 million deal with global pharmaceutical company Eli Lilly for AxironTM, a treatment for testosterone deficiency in men. It was the largest single product licensing agreement in the history of Australian biotechnology.
With a focus on ophthalmology, Opthea’s main product is OPT-302 – a treatment for wet age-related macular degeneration – which is currently in a Phase 1/2a clinical trial. Wet macular degeneration is the leading cause of blindness in the Western world. Opthea was formerly known as Circadian Technologies, acting as a biotechnology investment fund before transitioning to developing drugs in 2008.
Benitec Biopharma’s leading product is DNA-directed RNA interference (ddRNAi) – a platform for silencing unwanted genes as a treatment for a wide range of genetic conditions. ddRNAi has broad applications, and can assist with conditions as diverse as neurological, infectious and autoimmune diseases, as well as cancers. The company’s current focus inludes hepatitis B and C, wet age-related macular degeneration and lung cancer.
Using a wearable electroencephalograph (EEG), SmartCap monitors driver fatigue by measuring changes in brain activity without significant discomfort or inconvenience. It notifies users when they are fatigued and what time of day they’re most at risk. SmartCap was formally EdanSafe, a CRCMining spin-off company.
Founded by the CSIRO in 2007 to commercialise the UltraBattery, Ecoult was acquired by the East Penn Manufacturing Company in 2010. The UltraBattery makes it possible to smooth out the peaks and troughs in renewable power, functioning efficiently in a state of partial charge for extended periods.
Composite materials company Quickstep was founded in 2001 to commercialise their patented manufacturing process. Working with the aerospace, automotive and defence industries, Quickstep supplies advanced carbon fibre composite panels for high technology vehicles. In 2015, the company increased its manufacturing capacity, establishing an automotive production site in Victoria in addition to their aerospace production site in NSW.
The EDV is a nanocell mechanism for delivering drugs and functional nucleic acids and can target tumours without coming into contact with normal cells, greatly reducing toxicity. Above all, the EDV therapeutic stimulates the adaptive immune response, thereby enhancing anti-tumour efficacy. More than 260 patents support the technology, developed entirely by EnGeneIC, giving the company control over its application.
Snap’s FMx is a unique approach to video surveillance that forms cameras into a network based on artificial intelligence that learns relationships between what the cameras can see. It enables advanced real-time tracking and easier compilation of video evidence. Developed at the University of Adelaide’s Australian Centre for Visual Technologies, the system is operational at customer sites in Australia, Europe and North America.
Orthocell develops innovative technologies for treating tendon, cartilage and soft tissue injuries. Its Ortho-ATI™ and Ortho-ACI™ therapies, for damaged tendons and cartilage, use the patient’s cells to assist treatments. Its latest product, CelGro™, is a collagen scaffold for soft tissue and bone regeneration.
As the demand for effective energy storage grows, RedFlow’s zinc-bromide flow batteries are gaining attention. RedFlow has outsourced its manufacturing to North America to keep up with demand, while the company’s research and development continues in Brisbane.
Since 2002, precision engineering company MiniFAB has completed more than 900 projects for customers across the globe. MiniFAB provides a complete design and manufacturing service, and has developed polymer microfluidic and microengineered devices for medical and diagnostic products, environmental monitoring, food packaging and aerospace.
RayGen’s power generation method involves an ultra high efficiency array of photovoltaic cells, which receive focused solar energy from heliostats (mirrors) that track the sun, resulting in high performance at low cost. In December 2014, RayGen and the University of New South Wales (UNSW) collaborated to produce the highest ever efficiency for the conversion of sunlight into electricity. The independently verified result of 40.4% efficiency for the advanced system is a game changer, now rivalling the performance of conventional fossil power generation.
CSL is Australia’s largest biotechnology company, employing over 14,000 people across 30 countries. The company began in 1916, when the Commonwealth Serum Laboratories was founded in Melbourne. It was incorporated in 1991, and listed on the ASX in 1994. Since that time, CSL has acquired established plasma protein maker CSL Behring, and Novartis’ influenza vaccine business, and has become a global leader in the research, manufacture and marketing of biotherapies.
Dyesol Limited (ASX: DYE) is a renewable energy supplier and leader in Perovskite Solar Cell (PSC) technology – 3rd Generation photovoltaic technology. The company’s vision is to create a viable low-cost source of electricity with the potential to disrupt the global energy supply chain and energy balance.
EvoGenix began as a startup in 2001 to commercialise EvoGene™, a powerful method of improving proteins, developed by the CSIRO and the CRC for Diagnostics. It acquired US company Absalus Inc in 2005, then merged with Australian biotechnology company Peptech in 2007, to form Arana Therapeutics. In 2009, Cephalon Inc bought the company for $207 million.
With a vision to create sustainable energy through renewable biofuels, Muradel is a joint venture between the University of Adelaide, Murdoch University and SQC Pty Ltd. Their $10.7 million Demonstration Plant converts algae and biosolids into green crude oil. Muradel has plans for upgrades to enable the sustainable production of up to 125,000 L of crude oil, and to construct a commercial plant capable of supplying over 50 megalitres of biocrude from renewable feedstocks.
iCetana’s ‘iMotionFocus’ technology employs machine learning to determine what is the ‘normal’ activity viewed by each camera in a surveillance system and alerts operators when ‘abnormal’ events occur. This enables fewer operators to monitor more cameras with greater efficiency.
Phylogica is a drug discovery service, and the owner of Phylomer® Libraries, the largest and most structurally diverse suite of natural peptides. It has worked with some of the world’s largest drug companies, including Pfizer and Roche, to uncover drug candidates.
The research compiled by Refraction was judged by a panel comprising of: Dr Peter Riddles, biotechnology expert and director on many start-up enterprises; Dr Anna Lavelle, CEO and Executive Director of AusBiotech; and Tony Peacock, Chief Executive of the Cooperative Research Centres Association. The panel considered the following: total market value, annual turnover, patents awarded and cited, funding and investment, growth year-on-year, social value, overseas expansion and major partnerships.