Building Innovative Capability Roy Green, MGSM University of Adelaide, October 14 2008
Dec 21, 2015
NIS review: Why, what and how of innovation
Can public policy translate this to innovative capability and performance at the enterprise level?
TCF review: Policy prototype for capability building
Venturous Australiabuilding strength in innovation
Report and overview
available online at
www.innovation.gov.au/innovationreview
“Ultimately, the purpose of a national innovation system is to transform knowledge and resources into dynamic capabilities at the level of firms and organisations, which are then better placed to contribute to the innovation performance of the economy as a whole”
Business Council of Australia/SKE, New Pathways to Prosperity, 2006
Why innovation
• Innovation drives productivity growth and competitiveness of firms
• Innovation promotes social inclusion through expanded opportunities
• Innovation will contribute to achieving environmental sustainability
What drives innovation
• Innovation might mean new products or processes, or new organisational or business models
• But the key to successful innovation in companies is investment in knowledge and innovative capability
Investment in Knowledge (R&D, Higher Education, Software), % of GDP, 2004
0
1
2
3
4
5
6
7
Australia
Canada
Denmark
Finland
Sweden
“Knowledge creation and diffusion are at the core of economic activity. Knowledge is embodied in people, and it is the quality of the human resources that will determine the success or otherwise of firms and economies in the years ahead.”
Enterprise Strategy Group, Ahead of the Curve, 2004
Share of high and medium high technology industries in manufacturing exports (%)
0
1020
3040
5060
7080
90
Ireland UnitedStates
OECD Finland Australia
%
High-tech industries Medium-high-tech industries
Source: OECD
ICT trade balance (%)
-20
-15
-10
-5
0
5
10
15
20
25
Ireland Finland OECD UnitedStates
Australia
Source: OECD
• EU Lisbon strategy: “the most competitive and dynamic knowledge-based economy in the world by 2010”
• US: “Rising above the Gathering Storm”
• UK: “Race to the Top”
• Canada: “Benchmarking against Global Best”
Broad approach to innovation Non-linear with multiple sources
More than science and technology
Incremental as well as breakthrough
Low tech and high tech industries
Driven by collaboration not silos But…
“The problem is… that the Lisbon strategy has become too broad to be understood as an interconnected narrative. Lisbon is about everything and thus about nothing. Everybody is responsible and thus no one. The end result of the strategy has sometimes been lost. An ambitious and broad reform agenda needs a clear narrative…”
High Level Group, Facing the Challenge, 2004
A key objective of Ire land's national innovation system is to translatenational innovation capacity to the level o f the enterprise and w orkplace .
.
Enterprise-level partnership
Socia l partnership
W orkplace of the future
C lustering and netw orks
Investm ent attraction
Technology transfer
R esearch and education
N ationa l Inn ovatio n System
Findings of the NIS review Australia's innovation system will require:
– greater international engagement
– a more open and collaborative approach
– a substantial increase in investment (private and public)
– a more coherent and strategic ‘whole of government’ approach
Recommendations 1: research• Increase funding for PFRAs and the
university research system (to 93/94 levels)• Full funding of university research• Increase stipend for PhD students• Substantial infrastructure funding - NCRIS
successor• Open access to research and collections
Recommendations 2: business• New innovation support programs – Competitive
Innovation Grants Program, Linkage Voucher Scheme, Knowledge Connections
• Continue existing programs – IIF, PSF and COMET• Single interface for accessing program information
across Australia• Standard program design principles• Innovation Australia to be central delivery agency
for business programs
Recommendations 3: taxation• Replace the system of R&D tax concession with an R&D
Tax Credit• Firms < $50million turnover – 50% credit• Firms > $50million turnover – 40% credit
• Current 125% concession provides an effective benefit of 7.5 c/$• A 40% credit for large firms = 10c /$• A 50% credit for small firms = 20 c/$
• The 175% premium tax concession and the tax offset would be abolished
• Definitions to be tightened
Recommendations 4: governance• Replace PMSEIC with a National Innovation
Council• New Office of Innovation Assessment• New Research Coordination Council• Minister for Innovation to be joint signatory on all
innovation Cabinet proposals• New National Centre for Innovation Research• Framework of principles for innovation
interventions as basis for COAG process
Setting priorities for innovation1. Leveraging Australia’s natural endowments or
competitive strengths2. Identifying areas with Australian solutions to
globally relevant challenges or markets3. Creating scope to transform or reinvent existing
industries and service delivery4. Internationalising Australia’s innovation system
through global integration and supply chains5. Investing in innovation capabilities and
supporting infrastructure at all levels
Workplace of the future (TCF)• new products and services, drawing on sources of
knowledge within and outside the enterprise• new operational processes, including relationships
in global supply chains• new business models within the firm and in the
‘extended enterprise’ of networks and clusters• new approaches to marketing and sales as part of
strategic repositioning• new work organisation, with high performance
work and management systems
Australia’s emerging narrative
• Shift from ‘structural adjustment’ to the development of innovative capability at the level of the firm and workplace
• “In the 21st century, innovation policy is industry policy” – Minister Kim Carr
• But innovation policy is also a leadership and organisation strategy, requiring deep cultural change.