Innovating innovation – using metrics to unlock our potential

This is an edited version of my Bionics Institute 2023 Innovation Lecture

Innovation has always been the foundation for human development. It fuels our health, our social and economic well-being, and it is imperative for improving our responsible stewardship of beautiful planet’s finite resources.

?Our innovators – scientists, technologists and engineers – are the adventurers, the solution seekers and the imagineers, who dare to ask the most difficult questions and conjure the most incredible solutions. Australia is a breath-takingly creative nation. We produce an astonishing amount of new knowledge.

Australian breakthroughs have taken humanity from the discovery of new microbes, to anti-biotics, and through to combatting anti-microbial resistance. They’ve unlocked the secrets of major disease and created whole new classes of targeted and highly effective therapeutics; they’ve sounded the warning bells and are crafting an ever more sophisticated response to climate change; they’ve pinpointed the origins of the universe and helped us understand how the universe continues to change today, all the while wirelessly connecting the world.

But we’re still held back from our full R&D potential; by a lack of consistent, strategic and concerted investment in translation, application and commercialisation of Australian research, and by a fragmented approach to building the original knowledge itself.

Without considered and consistent investment in the research goldmine that fuels the innovation foundry, we risk losing this precious resource. Schemes like the Medical Research Future Fund (MRFF) work well to support commercialising Australian research, but nationally, investment in knowledge creation and application is slipping.

Australia’s total R&D funding is just 1.8% of our GDP. It sounds like a lot when you consider it in isolation, but the OECD average expenditure on R&D is 2.67% of GDP, and the world leaders like the United States, Germany, and Japan all invest more than 3% of GDP on R&D.

After years of short-term thinking, our Australian R&D sector was slipping into crisis mode long before COVID-19. The pandemic has squeezed research revenue, dried up development pathways, and cracked wide open the workforce and skills fissure. What this means is that Australia is losing some brilliant minds. As our nation continues to take an inconsistent approach to supporting, resourcing, nurturing and connecting research and development, these clever and committed people are choosing not to enter STEM, or they’re leaving research and development, leaving Australia, and leaving us behind.

A bouquet of government reviews are underway, like the Universities Accord, the review of national science priorities, and Australian Research Council Review. These are important efforts to examine how we staff, fund, conduct, innovate and roll-out R&D, and we have a golden opportunity to redesign the R&D sector of the future – if the findings of these reviews are heard, and the recommendations applied.

It's not too late to seize the pandemic-prompted disruption to the sector as an opportunity to grow Australia’s economy in new directions, while addressing our more pressing social and environmental challenges. This is no easy task, but true reform never is.

We need a science, technology and engineering ecosystem built on a research landscape that supports a curiosity-driven approach to creating and applying knowledge. A system that encourages and nurtures a genuine diversity of talent through all stages of a R&D career and understands that this will include some bumps, detours and byways – and does not punish or lock out those who try and fail, and want to try again. A system which recognises that the greatest leaps emerge from bringing different types of people, from different disciplines, together to craft creative solutions to persistent problems – and then gives them the time they need to get on with the job.

As we consider how to tackle the enormous global challenges we face today, it’s an opportunity to lay the foundations for an extraordinary legacy that will continue to build Australian health, wealth, sustainability, and wellbeing for decades to come.

Australia has one of the world’s least differentiated economies – we rank 91st - largely due to the dominance of minerals and agricultural goods in our exports. This is unsustainable.

Australia should decide the skills and capabilities that we need to build, and invest in the research strengths we need to sustain them. Science, engineering, inventiveness, mathematics, entrepreneurialism, and imagination: our true commitment to these is measured by national investment in R&D.

The federal government has a crucial role in catalysing a cultural and mindset shift. It can and must lead by example. The government must address Australia’s decline in R&D expenditure if we are to regain our position as a global science and technology player and ensure our economic prosperity into the future.

Innovation never stands still. If we don’t keep investing, and if we don’t revitalise how research is conducted, valued, translated, applied and measured – if we don’t innovate the innovation system - Australia risks slipping even further behind our OECD peers.

The extraordinary breadth of innovative activities makes the process hard to define, let alone measure. But we have to keep trying.

Innovation metrics are important to measure performance and illuminate areas for improvement; make decisions based on evidence and inform how leadership signals what it values and prioritises; improve culture through a framework of continuous improvement, experimentation and entrepreneurism; and persuade investors to get on board.

Organisations can use innovation metrics to better understand how they compare with their competitors; identify where they are lagging; establish the balance between the need to invest in technology or in training and retaining people. They can identify and build on their strengths; change their supply chains; and, improve their value proposition.

For governments, metrics assist in determining publicly funded research priorities, in identifying education and training needs to support future growth in areas of need, and in designing assistance programs.

Governments who engage genuinely with metrics, and use them as a tool to increase their familiarity with our system and what we’re capable of achieving – can also use this information to help promote the need for and value of innovation – to dispel community concerns, and to encourage laggards to lift their game.

The recent Innovation Metrics Review recognised the breadth of benefits that innovation delivers to society, but focused mainly on the economic impacts of innovation: in particular, productivity, investment, jobs and exports. These are the areas where innovation policy can have the greatest impact on living standards.

The Australian Academy of Technological Sciences and Engineering helped the review assess the health of components of Australia’s innovation system, for which there are either very few or no innovation metrics available and fit for use.

Many existing innovation metrics focus on measuring R&D activities. Historically, this is where a large portion of government innovation policy efforts have been concentrated, both in Australia and internationally. But – and it’s a big but – we identified a problem. A lot of innovation activity and expenditure does not actually involve R&D.

Since these activities are not being adequately measured, the policy levers potentially available to encourage them are not being fully exploited.

The 2022 report on Improving Innovation Indicators found major gaps in the way we capture and analyse innovation data. Its 16 recommendations are pointed at setting up a whole-of-government entity to lead and accurately report on how we genuinely perform in innovation as a nation, based on more sophisticated data than we’ve been using to date.

This entity would also deliver an annual innovation ‘scorecard’ to track progress against other countries, and designed to be used to influence and incentivise productivity in Australia.

?ATSE has identified four key areas where how we measure and report on Australia’s innovation environment needs to get better, if Australia is to make the most of the extraordinary brainpower we’re lucky enough to call our own.

• The entrepreneurship environment, which is highly relevant to innovation associated with new business developments.
• ICT and digital infrastructure, which plays a critical role in many aspects of innovation. Where and how the economy has been most impacted by digitalisation is not well measured.
• Research infrastructure, which addresses and supports Australia’s capacity and capability to undertake technology-reliant innovation
• And there’s also a notable gap in data collection on our science, research, and innovation performance.

Australian R&D statistics are only collected every two years, which leads to a delay of up to four years in the feedback loop for policymaking. Lay that over a three-year political cycle and the ingredients are there for a lot of running on the spot.

On top of this, many statistics collected by the OECD are not available for Australia – this leads us all to rely on potentially misleading international comparisons. Ultimately this means that our policies are not adequately informed by evidence or a deep understanding of what is and isn’t effective for our particular ecosystem.

To develop effective policies that support innovation, we need to start with what we know about ourselves, and that means effective collection and regular reporting of innovation metrics. It will give all the players – government, investors, researchers, industry and other end-users - a richer and higher quality understanding of how Australia is performing, and empower us to make the best decisions to support our thriving future.

A strong innovation eco-system needs leadership that invests in big ideas, sets clear expectations about direction as well as financial backers with a healthy appetite for risk, based on an understanding of how science and technology operate.

Working together, these create an environment that inspires the next generation of innovators and creates opportunities for them to pursue challenging, exciting, and fruitful careers. An environment that builds the best possible foundations for our brightest minds, to let their imaginations fly, to pioneer exciting and sustaining new applied science and technology.