Key Reform – making the regional innovation policy agenda pay
The ‘buzzword’ of late 2015 – Innovation – has lost a bit of gloss. It’s touted as the next big thing to deliver Australia’s economic growth. For the new Coalition Government, innovation policy will be delivered through the National Innovation and Science Agenda (NISA).
But to what extent does the NISA reflect contemporary thinking around innovation, or does it repeat the policies past? How innovative is Australia’s innovation policy?
The NISA is a step in the right direction. It should also be acknowledged that it has put innovation front and centre in debates surrounding Australia’s economic future. In terms of policy it means innovation is now the goal, not a side-effect. But, there is a substantial gap between the rhetoric and substance of the Agenda.
At its core, NISA is driven by a dogmatic attachment to science and technology through its requirements for the projects it funds to demonstrate greater collaboration between research organisations and industry, and preferencing support for incubator programs linked to universities.
This is not to say science and technology do not have a place in the process of innovation. Science and technology are still necessary for innovation, and are vitally important to regional Australia, but they are no longer enough on their own. In 2016, grounding the NISA within predominantly science and technology based policies, such as the CSIRO innovation fund, as well as the promotion of STEM subjects within universities, reflects the persistence of old, linear models which equate invention with innovation.
Improving the entrepreneurial skills and capabilities of people is vital to creating an “innovation nation”. This cannot be achieved through a focus on STEM alone. In the last 20 years, with the emergence of services industries as the dominant force in global economies, technological innovation has been decoupled from innovation in the broader economy – technological innovation is an enabler, but not the main driver.
Equally important, for regional Australia in particular, is that the scale of investment is unlikely to lead to substantial change in the way innovation works in the national economy. The investment in regional innovation programs is highly unlikely to produce the innovation dividend expected, because the amount of investment in each area will be limited. We can’t tightly target our innovation investment to the things that will definitely work because we don’t know what they are. Instead the challenge for innovation policy is to lift the level of activity overall, and there just isn’t enough in the NISA to achieve this.
The Incubator Support Program, for example, is presented as a key regional initiative. While incubators themselves are important to regional innovation ecosystems, the majority of existing incubators are located in Australia’s major cities, and funding for new incubators is limited to Commonwealth contributions of up to $200,000 each. Moreover, funding for new incubators under the NISA is only available to projects with an explicit connection to universities or large firms with Research and Development (R&D) capabilities – thereby excluding regions without these capabilities, and reinforcing the reliance in the Agenda on ‘old school’ R&D.
The NISA also emphasises the National Stronger Regions Fund as a complementary scheme for promoting innovation, but this invests in a mix of infrastructure projects that have no clear connection to the innovation system in regions. Unless the new fund guidelines change approach, it’s hard not to see this link as anything more than policy gap filler.
The Innovation Connections initiative, similarly, is likely to have restricted application in regions. The initiative aims to drive new industry-led collaborations between researchers and small to medium enterprise (SMEs), yet its funding guidelines require applicants to have a minimum annual operating cost of $750,000, as well as providing services to one or more of only five designated high growth sectors (advanced manufacturing, food and agribusiness, medical tech/pharmaceuticals, mining or oil/gas/energy resources)[i].
These restrictions limit the potential of smaller businesses to innovate while also creating disincentives for firms to innovate if they are not in one of the sectors identified as having the ‘right’ national growth potential. These restrictions would also exclude the internet marketing and specialist service businesses that won the Regional Online Heroes competition run by the RAI and Google in 2015.
For innovation policy to be truly effective it must work to promote the capacities of all regions and industries with a focus on significantly lifting the level of innovative activity.
Jason Roberts’ recently coined the concept of ‘surface area of luck’[SN1]. This refers to the idea in start-up culture that if you’re doing something that generates value, the more that people know about it and talk about it, the more chance there is for serendipitous moments to occur.
The same concept holds for innovation policy. The more the policy works to promote a much greater level of connections, collaboration and flexibility to empower businesses, the more likely innovation will occur. If policymakers believe they can tightly target only the innovations with potential based on ‘old school’ notions of what works, the policy will fail to make an impact.
While the NISA represents a necessary first step, its ability to increase regional Australian businesses’ surface area of luck is hampered by its limited funding as well as an attachment to old models of innovation. In comparison, Canada’s recently announced innovation agenda is twice the scale of the Australian Government’s NISA[ii].
Overall, it remains to be seen whether Australia’s current innovation push will be able to be particularly innovative or effective in achieving its lofty goals. The RAI hopes the new government will reconsider some of the limitations and lift the investment over time so that this important agenda can have an impact for regions and for the nation as a whole.
The Regional Australia Institute’s (RAI) latest work with Bendigo and Adelaide Bank highlights there is more to innovation than smart guys in white coats. It reveals a new way of measuring innovation focused on Business Dynamo, a measure that puts regional Australia firmly in the spotlight. Read [In]Sight Innovation – Spreading the Ideas Boom to learn more about regional Australia’s vibrant and dynamic entrepreneurial communities.