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Q&A with Macquarie University innovation expert, Dr Lara Moroko
Jim Eggleton
Innovation Intelligence caught up with Dr. Lara Moroko, Adjunct Fellow, Faculty of Business and Economics, Macquarie University, to discuss Australia’s innovation ecosystem, landscape, and capability.
Why should we be thinking of Australia's total innovation capability (e.g. HR, processes and infrastructure) in terms of an “ecosystem”? How does it help in understanding and heightening the country’s innovation output?
My favoured definition of innovation is a new idea, that creates value (for the innovator and the user) and can be executed (see: Kastelle, 2012). When an innovator is part of a healthy ecosystem, access to resources, knowledge and other organisations they need for the successful execution of the idea is both possible and supported. So, having a clear view on the nature of Australia’s ecosystem, it’s generative hubs, weak spots and participants is critical to understanding how output can be improved in general and for specific sectors and regions.
What are some KPIs (MoEs) for judging the "health" of the country’s innovation ecosystem? What are some of the issues associated with collecting data for these KPIs?
Some work has been done by the MIT Lab for Innovation Science and Policy on proxy metrics for judging the health of ecosystems
via innovation and entrepreneurship capacity. Two of their simple measures for ecosystem outputs are number of start-up enterprises established each year, via business registration (E-Cap, an entrepreneurship measure) and number of research publications and patent applications (I-Cap, an innovation measure). Those ecosystems that have high levels of both tend to be productive and thriving. For example, on a global scale, Australia ranks very highly for entrepreneurship (new businesses), but is comparatively poor in terms of patent applications per capita.
While these measures are easy to collect, they are retrospective and don’t shed any light on what should be addressed to improve the connections, vibrancy, velocity or value of the ecosystem. In the Australian example, the metrics don’t help us unpick whether the number of new businesses is high due to an inherently entrepreneurial business culture or the perceived tax advantage of running a small business.
What are some of the things innovation hubs (and think-tanks etc.) need to be doing more of / less of to ensure meaningful contributions to society's needs?
There are three big areas of improvement for most innovation. The first is upskilling prospective and current investors. While a lot of effort is put into upskilling entrepreneurs to secure investment, little or no effort is put into improving and expanding the investor base. This means that in many ecosystems there is a small pool of investors with specific mandates that only serve a subsection of the potential ecosystem, skewing development into areas of investor focus, rather than areas of greatest societal benefit.
The second is the tendency for institutions within the ecosystem to replicate programs, structures and processes that have worked elsewhere. Support appropriate for an ecosystem heavy in fin-tech entrepreneurs may be a bad match for ag-tech or social entrepreneurs, for example. Innovation hubs can improve the positive impact on ecosystem health by firstly understanding the needs of the existing and latent entrepreneurial talent and the unique advantages of the region, rather than assuming what works in Silicon Valley will also work in Sydney, Melbourne or Hobart.
The third is to deliberately collaborate with other institutions to be a positive force for structural change in their local system. Outperforming ecosystems tend to have the benefit of policy initiatives such as favourable tax treatment of R&D spend, flexible planning permissions for concentrated innovation zones, public funding of seed funding for discovery, prototyping, commercialisation and internationalisation, etc. Generating these conditions, locally, is beyond most individual institutions, but can be achieved through the coordinated, collective effort of the ecosystem.
What are some big issues affecting startups' ability to reach their full potential?
The biggest issues I see startups struggle with is lack of deep curiosity about their market and business. While this may seem counter-intuitive given the zeal of most founders, there two manifestations of this common in underperforming startups.
The first is a poor understanding of the market for their product, service or experience, i.e. a lack of “product/market fit”. Many startups flounder when they don’t do the hard yards in iterating their initial idea until it makes sense to an addressable, profitable market.
The second is lack of understanding of how their business should be structured given what the market is willing to pay and the resources they can access. Whether through inexperience, poor advice or lack of mentorship, I see startups with an amazing market offer for a clearly defined customer segment but no idea how to turn an innovation into a viable business.
Both these issues can only be addressed if the founders are willing to be coached and have the intellectual humility to move beyond the early forms of their market offer and business structure.
How important is "cross-pollination" of ideas on innovation, say between government, academia and industry, to our innovation ecosystem reaching it fully potential and why?
There is an emergent understanding of the importance of this “quadruple helix” of government, industry, universities and entrepreneurs/public. These groups interact, combine and recombine for a healthy and growing ecosystem. This seems particularly important when an ecosystem is being deliberately created. In recent research, my colleagues and I mapped the birth of a new ecosystem hub. Government provided a policy change that attracted co-funding with a university and industry partners. The university and industry set strategy and provided training and networking for the entrepreneurs/public. University academics and entrepreneurs/public provided the IP for innovation, which was co-developed, tested and scaled with the university and industry. If you remove any of the strands of the helix, pathways in the ecosystem are broken and individual actors are effectively cut off from the resources and skills they need.
What are some challenges facing innovators in commercialisation of their novel ideas?
Pitfalls in the path to commercialisation and scale are well understood, at the founder and startup level. Getting and acting on the right advice and mentoring, attracting flexible and timely funding, curating an appropriate team with deep skills and the ability to multi-task, plus beating competing innovations to market are just a few of the known challenges. In Australia, the startup ecosystem is well supported through university based and commercial incubators, open networks and supporting entities, such as the Sydney School of Entrepreneurship. However, there are some additional challenges stemming from the structure of our ecosystem. For example, quality and quantity of venture capital is comparatively low (ranked in the bottom quintile of developed ecosystems).
Furthermore, Australian universities have world class researchers in almost every field, yet research-based IP commercialisation – also known as tech transfer – is surprisingly modest. Factors
such as inconsistent support (investment, mentoring and resources) and policies relating to tech transfer have led to no Australian universities being ranked in the top 100 most innovative universities globally and only four universities featuring in the Asia Pacific top 100.
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In 2016 I published a blog article titled Moonshots for Australia: 7 For Now. It’s one of many I have posted on business and innovation in Australia. In that book, I highlighted a number of Industries of the Future among a number of proposed Moonshots. I self-published a book, Innovation in Australia – Creating prosperity for future generations, in 2019, with a follow-up COVID edition in 2020. There is no doubt COVID is causing massive disruption. Prior to COVID, there was little conversation about National Sovereignty or supply chains. Even now, these topics are fading, and we remain preoccupied with productivity and jobs! My motivation for this writing has been the absence of a coherent narrative for Australia’s business future. Over the past six years, little has changed. The Australian ‘psyche’ regarding our political and business systems is programmed to avoid taking a long-term perspective. The short-term nature of Government (3 to 4-year terms), the short-term horizon of the business system (driven by shareholder value), the media culture (infotainment and ‘gotcha’ games), the general Australian population’s cynical perspective and a preoccupation with a lifestyle all create a malaise of strategic thinking and conversation. Ultimately, it leads to a leadership vacuum at all levels. In recent years we have seen the leadership of some of our significant institutions failing to live up to the most basic standards, with Royal Commissions, Inquiries and investigations consuming excessive time and resources. · Catholic Church and other religious bodies · Trade Unions · Banks (and businesses generally, take casinos, for example) · the Australian Defence Force · the Australian cricket teams · our elected representatives and the staff of Parliament House As they say, “A fish rots from the head!” At best, the leadership behaviour in those institutions could be described as unethical and, at worst….just bankrupt! In the last decade, politicians have led us through a game of “leadership by musical chairs” – although, for now, it has stabilised. However, there is still an absence of a coherent narrative about business and wealth creation. It is a challenge. One attempt to provide such a narrative has been the Intergenerational Reports produced by our federal Government every few years since 2002. The shortcomings of the latest Intergenerational Report Each Intergenerational Report examines the long-term sustainability of current government policies and how demographic, technological, and other structural trends may affect the economy and the budget over the next 40 years. The fifth and most recent Intergenerational Report released in 2021 (preceded by Reports in 2002, 2007, 2010 and 2015) provides a narrative about Australia’s future – in essence, it is an extension of the status quo. The Report also highlights three key insights: 1. First, our population is growing slower and ageing faster than expected. 2. The Australian economy will continue to grow, but slower than previously thought. 3. While Australia’s debt is sustainable and low by international standards, the ageing of our population will pressure revenue and expenditure. However, its release came and went with a whimper. The recent Summit on (what was it, Jobs and Skills and productivity?) also seems to have made the difference of a ‘snowflake’ in hell in terms of identifying our long-term challenges and growth industries. Let’s look back to see how we got here and what we can learn. Australia over the last 40 years During Australia’s last period of significant economic reform (the late 1980s and early 1990s), there was a positive attempt at building an inclusive national narrative between Government and business. Multiple documents were published, including: · Australia Reconstructed (1987) – ACTU · Enterprise Bargaining a Better Way of Working (1989) – Business Council of Australia · Innovation in Australia (1991) – Boston Consulting Group · Australia 2010: Creating the Future Australia (1993) – Business Council of Australia · and others. There were workshops, consultations with industry leaders, and conferences across industries to pursue a national microeconomic reform agenda. Remember these concepts? · global competitiveness · benchmarking · best practice · award restructuring and enterprising bargaining · training, management education and multiskilling. This agenda was at the heart of the business conversation. During that time, the Government encouraged high levels of engagement with stakeholders. As a result, I worked with a small group of training professionals to contribute to the debate. Our contribution included events and publications over several years, including What Dawkins, Kelty and Howard All Agree On – Human Resources Strategies for Our Nation (published by the Australian Institute of Training and Development). Unfortunately, these long-term strategic discussions are nowhere near as prevalent among Government and industry today. The 1980s and 1990s were a time of radical change in Australia. It included: · floating the $A · deregulation · award restructuring · lowering/abolishing tariffs · Corporatisation and Commercialisation Ross Garnaut posits that the reforms enabled Australia to lead the developed world in productivity growth – given that it had spent most of the 20th century at the bottom of the developed country league table. However, in his work, The Great Reset, Garnaut says that over the next 20 years, our growth was attributable to the China mining boom, and from there, we settled into “The DOG days” – Australia moved to the back of a slow-moving pack! One unintended consequence of opening our economy to the world is the emasculation of the Australian manufacturing base. The manic pursuit of increased efficiency, lower costs, and shareholder value meant much of the labour-intensive work was outsourced. Manufacturing is now less than 6% of our GDP , less than half of what it was 30 years ago!
