Australia is too risk-averse and its government too uncommitted for its innovation plans to actually work
Malcolm Turnbull’s Prime Ministership began on September 15, 2015, and he quickly made it clear upon doing so that his cabinet’s focus would be on fostering the development of a more – and please excuse the buzzwords – “agile, innovative and creative” Australia.
Shortly thereafter, Turnbull announced the National Innovation and Science agenda (NISA), which was established to help Australians ‘embrace new ideas in innovation and science, and harness new sources of growth to deliver the next age of economic prosperity in Australia’.
As is to be expected when it comes to matters of politics, it didn’t take long for people to question the Turnbull experiment.
While the electorate has every right to and should be encouraged to question government policies and performance, these questions should be educated and substantiated, otherwise they become both damaging and dangerous.
Jeremy Liddle questioned whether the government’s innovation agenda is simply a $1.1b cash splash for votes, which may have some merit, while others have simply gone on to brandish the Turnbull experiment a failure.
It’s at this point that I’d like to remind you that it’s been less than 6 months since NISA was announced.
Regardless of whether the government’s innovation agenda is a genuine effort to support the country’s future prosperity or a vote grabbing campaign, effectively fostering innovation at a national level does not happen overnight, especially not in Australia.
1. Australia’s conservative culture
One commentator referred to Australia’s deeply risk-averse business community, dominated by rent-seeking oligopolists who influence policy makers, as a key reason behind why the country will never become the next Silicon Valley.
Innovation is supported by taking lots of small bets, embracing and celebrating smart failures that come with these bets and iterating towards a successful formula, which flies in the face of a conservative ‘avoid failure and looking stupid at all costs’ mentality. As PayPal, Tesla and Space-X founder Elon Musk says, “if things are not failing, you’re not innovating enough.”
2. Australia, the “nanny state”
Former Australian F1 driver Mark Webber said in a 2010 interview that Australia is “a great country, but we’ve got to be responsible for our actions and it’s certainly a bloody nanny state when it comes to what we can do” in response to being impounded by police for doing burnouts in Melbourne days before the city’s instalment of the F1 Grand Prix. But perhaps there was more to these comments than mere frustration.
Australia’s conservative nature is perhaps best exemplified the heavy hitting hand of the law which in some jurisdictions has resulted in the shutting down of an 11-year old girl’s lemonade stand for not having a permit. Changing business regulation to support behaviours underlying innovation, such as speed and failure, will take time – especially when parliamentary proceedings are often akin to a professional slanging match with no resolution in sight.
3. Disruptive innovation can take years
Disruptive innovation, before it became a buzzword, was defined by Clayton Christensen in 1995 as “an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances.”
Christensen found that disruptive innovation at its inception is commercialised in an insignificant or non-existent market, and can take years to hit the mainstream, not simply the nine months that Turnbull has been in power.
You can’t blame the public for not being attuned to these things – many venture capitalists, whose primary job it is to invest in disruptive innovation, often miss the mark too.
David Chesky, co-founder and CEO of Airbnb, published several rejection letters from venture capitalists during the company’s early days, in which they cited small market size as the reason. Airbnb is today worth more than US$25b – more than the respective market cap of the Starwood, Hilton and Marriott.
Creating an environment to support innovation is one thing – reaping the rewards is another.
Patience is a virtue
If Manchester United pulled the plug on Sir Alex Ferguson after he went six seasons without delivering the English title, they never would have enjoyed the subsequent 13 titles, four FA Cups and two European Cups that the now-legendary manager delivered to Old Trafford.
Likewise, if Brian Chesky had pulled the plug on Airbnb after receiving those rejection letters from several venture capitalists, I never would have used the platform while traveling through the south of France earlier this month (I’ve made 23 bookings on Airbnb in the past 3 years).
As Matthew May points out in Winning the Brain Game, one of the seven fatal flaws of thinking is leaping to conclusions. We can’t afford to do so when the future of Australia’s economic prosperity is at stake.
Planting seeds is one thing…
Given that Australia has had eight Prime Ministers in the past 25 years (one every three years on average), it is more than likely that any government planting the seeds for innovation is unlikely to be in power when those seeds bear fruit.
A resilient startup ecosystem
Despite the conservatism and regulatory burden, Australia’s startup and innovation ecosystems have been punching above their weight in recent years.
Just some names to come out of this island nation include Campaign Monitor, Canva, Atlassian, Freelancer, OzForex, Shoes of Prey, Deliveroo, DesignCrowd, 99Designs, Airtasker, Expert360, Envato, Vinomofo and The Iconic, not to mention the old guard behemoths such as Seek, CarSales and REA.
Alongside them is an impressive community of coworking spaces, educators, incubators and accelerators, angel investors and a fast growing venture capital ecosystem that will do its best to ensure the rapid rise of Australian innovation isn’t stifled.
Government too slow to respond
Perhaps the most important factor inhibiting the government’s ability to spur innovation might be speed, or the lack thereof.
According to Alex Tapscott, author of the Blockchain Revolution, the government often lacks the know how to respond in a fast changing world. “Important shifts are revealing the limits of government in an age of accelerating innovation. For example, the 2008 financial crisis showed how the speed and complexity of the global economic system renders traditional centralized rule-making and enforcement increasingly ineffective.”
He goes on to say that that businesses, academia, NGOs and other non-state stakeholders have gained the ability to play an important role in global cooperative and governance efforts.
As Otto Schermer points out in Leading From The Future, “meeting the challenges of this century requires updating our economic logic and operating system from an obsolete ‘ego-system’ focused entirely on the well-being of oneself to an ‘eco-system’ awareness that emphasises the well-being of the whole, so what we need is perhaps is greater co-operation and engagement between these different players.”
As with corporate innovation, where senior leaders are moving to a role that is all about supporting bottom-up ideas, the government should do its best to foster a regulatory and financial environment that best supports innovation. It can hardly be expected to deliver a silver bullet solution, and as such should be assessed on its ability to deliver the former, not the latter.
This article originally appeared at Tech in Asia.