Aussie innovation: Four cultural changes to support ideas

Yesterday, we highlighted six ideas to kick-start Australian innovation, as outlined by Paul Cheever, CEO of the Australian Institute for Innovation.

The proposals suggested structural changes that could help unleash Aussie ideas on the world.

But what of the cultural barriers that hold back innovative start-ups? Barely a week goes by without a new venture pointing out the conservatism of Australian investors compared with their US counterparts, or the unhealthily negative view we have of ‘failed’ entrepreneurs.

Cheever says: “Across our government, industry and media communities, the level of understanding of, and commitment to, making our innovation commercialisation system a centrepiece of our economy is poor, and consequently we deliver a poor commercialisation culture.”

“We have had only three or four politicians within recent times that have expressed any real commitment to innovation. And regrettably none are able to lead from the front today.”

“We fail persistently to be effective in setting a vision and seeing it come to reality.”

“The worst aspect of our cultural gaps in the innovation commercialisation system is that, in most cases, the effort to address the gaps is actually easily within our means and carries little cost.”

So how can we break down these cultural impediments to innovation?

In his second and final piece on how Australia needs to up its innovation game, Cheever explains how we can get a better mindset to supporting entrepreneurs.

Cultural change 1 – removing barriers

One element of our cultural gap is reflected in our political and bureaucratic lethargy to removing barriers to the innovation commercialisation processes, and to exploiting opportunities for improvement.

The current headline example is the taxation of start-up equity and equity options, although this is only one of many such examples.

It is obvious to even those with only a rudimentary understanding of innovation commercialisation practice that such equity practices are critical in the start-up world to attract and reward the “sweat” that is inevitably needed to drive new growth enterprises (NGEs).

Equally obvious is that this form of compensation within NGEs creates no imposition on the tax base.

To the contrary, the failure to have a vibrant NGE sector certainly will have an adverse impact on our future tax base and the current absence of such a vibrant sector has a marked impact on it today.

Our poor innovation commercialisation culture is evidenced by not recognising, that for most NGEs, this tax barrier could be fixed almost overnight by simply exempting those issues made by any organisation that is eligible for the R&D Tax Incentive rebate.

This requires no new administrative process, is clearly specifically targeted to the appropriate point of relief and could be enacted within weeks if we really wanted to demonstrate a commitment to our NGEs.

Cultural change 2 – recognition of commercialisation outcomes

The inputs component of our innovation system is strong, with discoveries, inventions and innovative visions flowing from the over $8 billion a year allocated to support formal research down to the informal maker/hacker studios and inventors’ backyards.

One of our persistent challenges is to connect these inputs with the pathways that can transform them to innovation outputs.

In the formal research setting, cultural change is required within the university sector to reduce the barriers to this successful transformation.

By its nature, research is most often a semi-serendipitous affair and it would be counterproductive to attempt to seek only outputs of commercial application from our research.

However, where such discoveries and inventions emerge from the research process, our research organisations need to adopt a dual path of advancement and recognition that rewards both the achievement of knowledge but also the achievement of outcomes.

Organisations such as the CSIRO, and many of our leading medical research institutes, embrace this dual path and, as a consequence, consistently deliver a valuable flow of economic, industry and social applied outcomes from their research efforts.