Reflections

I'd like to be able to leave you with a warm and invigorated overall impression as an outcome of the Ausinnovate 2008 forum at CeBIT. But I can't. Instead, I'm left feeling a touch troubled, and disheartened with the trajectory of innovation activities in Australia when we compare it internationally. Let me explain why.

The primary engine rooms for innovation in Australia lies in SMEs, with microbusiness (self employed) accounting for 39% of businesses, followed soon after by SMEs (1-5 employees) (25%), according to one of the presenters, Karsten Schultz. In his appraisal of the overall innovation landscape (based in part as an ex-CRC researcher in Australia, now Program Director for SAP Research Centre in Brisbane) the main vehicles for innovation (CRCs, ARC initatives and R&D incentives) trail behind broader initiatives being pursued internationally. CRCs are characteristically Complex and Opaque (which accords with my experience of looking at how to best engage with them), with bureau-bloat (my words, not his) and a bias towards returning funds back to Academia, with industry relevant KPIs absent. ARCs suffer from similar shackles by being academia lead, with marginal industry connects and performance indicators. The bias is inherently towards larger scale industries, which ignores the bulk of where business innovation occurs - at microbusiness and SME level. Trouble is, everyone in that level is working too hard in the business of growing their business, the structural barriers to partnering are too high in terms of cost impact to the SME and opportunity costs of participation. Participation of SME's in industry focused research with academia appears unlikely while academic institutions focus on where the money is, and pursue the loose change of large firms. Perhaps this will change with renewed focus on adequate funding for these institutions, but the change will take some time to happen. For academia, their focus is likely to be diffused given the difficulty of engaging with a crowd (of SMEs) rather than smaller groups. But it needs to happen. Now.

 Jason Calacanus (ex Sequoia Capital) had some gems to share, drawing on Dinosaur imagery as he distinguished between the efforts of the 'good' (i.e. just good, but largely mediocre) Dinosaur archetypes (or larger agencies, industries) that would achieve incremental improvements whilst trying to mimic or acquire the efforts of the 'brilliant' Raptor archteypes as they move through the voids between dinosaur feet, trying to stay ahead of the game (indeed, changing the game), returning value to their VCs (the most expensive form of capital available, making loan sharks look positively modest). Whilst his pitch was seductive to many of the dinosaurs in the room, his focus on the twenty somethings as the darling child of VC focus ignores the profile your average SME, who are also unlikely to want to heed Jasons urgings to relocate to the USA, as they (like myself) are most likely growing families whilst balancing growing their business. You need family near you when trying to do both. I found his message consistently eroded by his propensity to 'stargaze', and watch himself on the big screen, more than his audience reaction. 

Balancing this was the perspective offered by Dr Sridhar Vembu, founder and CEO of ZOHO. My thanks go to Sridhar, for being a voice of reason and champion of humility whilst still doing outstanding work, showing that you can indeed make money by targeting the 'boring' niches, staying lean(agile) and keeping egos in check within firms. Others in the room would do well to heed the latter. Bouquets also go to Prof. Richard Lester for his snapshot of the anatomy of productivity and call to arms in renewing and accelerating our focus on the work required in Energy Innovation. The magnitude of work required is likely to equal that consumed by the digital economy @$1.5trillion a year over the last 15 years. No small feat. Whilst some heads in the room were seen to nod at this, little enduring focus on this key issue was evident in the wrap-up. My final bouquet to Prof. Mark Dodgson, who was able to rekindle the connection between play and innovation outcomes, relating the story of the PMs recent delight on meeting a Chief Happiness Officer at the recent DAVOS forum.  It seems Einstein had it right when he recognised play as the highest form of research. I feel hopeful that with Mark advising Mr Rudd through the Innovation Leadership forum, we're in better hands than if other presenters through the day were in his role. 

Would I go to another CeBIT Innovation session? I'd need to be significantly persuaded that there was a better value proposition to the SME sector. For now, it felt more like a chance to worship at the altar of the current Innovate-orati. I'll continue to watch, and wait... whilst I get on with stoking my own innovation engine rooms, hopeful that there might be more movement away from the current sludgy mess created by dinosaurs driving steam engines, moving at a mooching pace rather than powering ahead on all engines. Innovation infrastructure in Australia right now is more like an old Fergie tractor, sputtering along with occasional misfires, and badly in need of complete replacement. Bring on the change.