The “black hole” in innovation

5th September, 2017

Australia does a mountain of research, but little of it ends up as innovation that benefits Australia – so how do you take an idea from the lab into the real world?

It was a question asked at the Innovation as Competition conference, held by The Economist, in Sydney last week.

One of the burning issues in Australian innovation is that the amount of research and development (R&D)  being done doesn’t relate to the amount of R&D being commercialised.

“There’s this huge black hole between what is researched, and what is commercialised,” said CEO of Spacetech company Fleet Space Technologies, Flavia Tata Nardini.

She said that, while there was no lack of ideas being generated by Australia’s academic community, linking it to a commercial outcome was a challenge.

“R&D cannot be done for the sake of doing R&D, because R&D has to be done with application and with an end user and impact in mind,” said Nardini. “But it’s not like that, I promise you.”

“All ideas come into the market, but the users don’t want it.”

She compared this to the way R&D was done in the US, where the private sector often partners with academia to drive real-world outcomes.

“Each activity that happens in a university level is financed by an entity from outside – so end users. That means that everything that comes out of innovation is useable,” said Nardini.

READ: Driving innovation in a legacy business

One private company which has partnered with the academic sector is IBM, which has set up a raft of development labs in Australia, but only set up a research lab in Australia after a partnership with the University of Melbourne and the Victorian government.

“Our presence here was driven around a partnership between government, industry, and academia,” said Joanna Batstone, IBM’s Chief Technology Officer for Australia and NZ.

“It’s this interplay between industry and academia that’s very important, because the higher education world in Australia is very strong.”

Relatively few ways of making a decent living means that, sadly, a lot of talented scientists are finding work overseas rather than staying at home and helping drive innovation.

Nardini said she saw the next stage of growth for Fleet Space Technologies playing out overseas, simply because there wasn’t an ecosystem available here to help the company push on.

“The reality is that space is a very complicated topic that needs international cooperation and straddles the line between commercial and defence and security,” she said.

“We create ideas and companies that are able to take over the world and become unicorns…but do we have the system available to keep them here? Can we build satellites here, build rockets here?

“There is that commitment to innovation which is necessary – it’s not about money.”

The question is how you drive the ideas that are originating in Australia and bring them through a system in order to keep the benefits of those ideas in Australia rather than having them benefit another country’s economy.

Can the government be a circuit-breaker?

Normally, the government is loathe to ‘pick winners’ or industries that get special attention and tax breaks.

Finance Minister Mathias Cormann told the conference that it simply wanted to set a generally supportive policy agenda and get out of the way.

“[Our success] is on the basis of opening the Australian economy up to global competition and really letting the market determine what the best opportunities for us are as an open trading economy,” he said.

“I don’t believe it is the role of government to pick individual business opportunities, I believe it is very much the role of the government to put in place the framework in which businesses can thrive.”

However, both Nardini and Batstone said there was a role for government to play as a facilitator.

READ: What does the innovation sector want?

Batstone pointed to the nascent quantum computing industry as one where the involvement of the NSW government had made Australia one of the world’s leaders in the area.

“That’s a great example of government leadership and government investment with academia to drive a focus around investing in a 10-year or 20-year journey for quantum computing,” she said.

“The interesting thing there around this experiment is how to pull industry into the dialogue around quantum.”

Nardini meanwhile said greater government involvement could help solve the disconnect between the research being done in Australia and commercial outcomes.

“The gap in communication [between R&D and the market] needs to be breached, and the government has a role because it has an overview of the activities from all sides” she said.

How we handle R&D today, in terms of policy and parties involved, may have a massive impact on the success of bringing world-beating research out of the lab and into the Australian economy.