Forget universities and let entrepreneurs lead Australian innovation

by Steve BaxterI have judged more than 20 start-up weekend events – if you have not been to one I highly recommend it.

Over the course of 54 hours, participants pitch an idea, build a team, road-test the idea with potential customers by getting out of the building and talking to people, change the idea to reflect the reality of things and then pitch it to judges.

As a judge all I look for is validation – how many people (in public) did they speak to? What did they say? And how did they react to that feedback?

Many teams will refuse to believe their own survey results – I recall one example where more than 90 per cent of respondents said they would not use/buy what they were being offered. But the team ignored the feedback and proceeded with their idea because they honestly thought that good customer feedback did not matter.

It is frustrating – the customer is never wrong, a purchase is the only honest answer.

This feels like our federally sponsored and state-supported approach to innovation.

For many years we have been relying on the higher education and research sectors to help pivot our economy to new areas: we have had CRCs (Co-operative Research Centres), commercialisation drives and God knows what else.

At what point do we ask ourselves “is this the right approach?”

Research is needed. We need smart people doing the basic ground-breaking stuff to advance everything. But, in so many cases, we spend more resources and opportunities trying to find a solution we can fit it to.

Skewed perspective

People who want to help and try to get IP from this sector to exploit have very little good to say about the process. But to hear people in the research community – they say it is corporate Australia’s fault for not buying what they are selling.

They need some help understanding validation.

Recently, even Bill Ferris mused that corporate Australia should be forced to co-operate with the research sector through the R&D tax concession – it would be a move the various taxi councils around Australia would be familiar with.

There are reasons that more co-operation doesn’t occur but let’s not try to figure that out and instead force some “really happy” marriage between universities and business – that will end well.

The reality is that if you want a corporate to really wake up and smell the innovation roses you need to threaten its revenue.

Challenger businesses need to take a market, they need to be better, faster, louder, whatever, in order to take market share – this will most likely be an innovation of some description.

If the larger corporate does not react, they will lose their market share and, if left long enough, they will go the way of Borders, Kodak or Nokia and good riddance.

How that organisation reacts to this external aggressive competitive force is up to them. They may use internal resources or external ones, and if the university sector is value for money, easy to work with, timely, commercial etc – they may even go there.

The production of more and more shiny-ware will not get us economic outcomes. Lots of “R” and not enough “D” – as the new chief entrepreneur of Queensland, Mark Sowerby, calls it – is something I agree with.

A new approach

If you think the system we are spending billions on now is working, then I suggest you are in the minority.

If your solution to fix it is to use new money to do almost the same things as before, then I suggest you may not pass the final pitch judging at a start-up weekend – we need to learn from what we have done: if it is not working, admit it and change it.

Let’s fix what is wrong – our lack of entrepreneurs creating new businesses will not be solved by creating more IP to sit on shelves, but by encouraging more entrepreneurs.

We need lots (and lots) of entrepreneurs with amazing technical skills, with exposure to a modern business mindset, inspired by a sector that nurtures them to success. Entrepreneurship is learned by doing not studying.

We have the ESIC (early stage innovation company) construct for the 20 per cent tax offset, let’s use that to do more to help foster an environment to create more new businesses.

I have mentioned before that we can use this to offer more assistance such as higher HECS repayment thresholds for employees, further employee share schemes, immigration reform for inbound tech talent, R&D smoothing (quarterly payments), R&D super charging (more than 45 per cent return) and many other things.

We also need to remove our obsession with picking winners in technology.

Make the winners we pick really technically smart, business-savvy people attacking all manner of problems the globe will consume.

I would love it if all of the next amazing medical breakthroughs happened here but, in terms of jobs, I would also take those that started Pokemon Go, Angry Birds, Instagram, Airbnb etc – are we really that proud?

More importantly, can all of us old folk who set and influence policy really think we can pick the winners for the newer generations?

If we need more businesses, then we need more entrepreneurs. Let’s do things that deliver that – it actually is that simple. Those entrepreneurs will spot opportunity (necessity) and set about servicing that need (invention) – this is the way we need to go.