ARE WE REALLY A NATION OF INNOVATORS?

3 things we need to do now to get there.

We Australians are a jovial and hard working bunch, with a good cluster of brain cells per capita. We therefore think we are really smart and innovative, but on the world stage we are prawns swimming in a sea of whales.

As a nation we take pride in our inventions. From the lawn mower and electric drill to Wi-Fi networking and ear implants, we are capable of creative thought, however we are not so good at fully monetising our innovations within our shores. Most of our inventions and their inventors end up overseas, where commercialisation is so much easier.

Why is that?

According to Bill Ferris AC, Chair, Innovation and Science Australia (ABC Radio 7/5/2018) we are spending about 1% of GDP on R&D compared to China, US and Israel who are spending up to 4 times as much.

This means that access to capital is so much easier overseas than at home (providing you have a truly innovative idea). The “investor psyche” is also an important factor. Where major successes provide great returns which fosters a risk-taking, “have a go” culture for investment in new projects. Realising that some will succeed big while others will fail, but the returns from the successful projects, far outweighs the failed projects, creating a wealth building cycle.

In Australia, our investors largely demand a proven idea, a ready made product that generates revenue before injecting capital. Whereas overseas, especially in the US, investors are happy to fund really good ideas which are pre-revenue.         

Why is this a problem?

It’s a HUGE problem, because:

1. we nurture the people who create wonderful things that change the world, but as a nation we don’t get the benefit because these ideas are commercialised overseas. We don’t get the revenue, we don’t get the employment growth and the multiplier benefits from all these activities,
2. we lose our best talent overseas, who rarely come back,
3. we are not building future industry for our kids.

However, we feel good and celebrate the creators place of nurture. We are prawns where as other nations who attract our talent become huge whales.     

What should we do to make Australia a leading innovation nation?

1. The government needs to set the mantra. “Innovate and commercialise in Australia.” (Prime Minister @MalcolmTurnbull, you need to drive this)
2. The government needs to continue R&D, ESIC and I would argue provide greater incentives for the private sector to invest in innovation and commercialisation. (Treasurer @ScottMorrison, need your help here)
3. The government needs to fund the private sector to a greater extent. Yes, the academia and the research organisations are important (they do a great job) but the private sector offers alternate perspectives which are just as important.

While I am not advocating for government to drive and manage our elevation to a leading innovation nation, I am advocating the need to stimulate our collective journey. To inspire our corporate leaders to invest in risky startups and continue investing through onshore commercialisation.

Let’s grow our tax incentives for corporates to invest in risky startups, lets fund commercial and research / universities partnerships rather than just the one side. Let’s invest our public funds wisely into truly advancing Australia Fair[ly] into whale territory, taking our rightful place among leading innovation nations and securing a future for our kids.     

Alex Gelman

Partner, National Head Technology Advisory

Grant Thornton Australia