Episode 12 – How to Measure Australia’s Innovation Ecosystem – Podcast Transcript

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[00:00] Joseph: We tended to focus a lot on research and development when we were thinking about innovation, when we were measuring it, and obviously that’s a big part of it, but it’s not the whole picture. And because of we focus so much on that, policy decisions had tended to focus on that area as well. So there was all these other parts adoption technology, diffusion of technology, sort of bit more incremental innovation, so we perhaps weren’t capturing that and as a consequence, the policies to respond to that Workflowing.

[00:40] Intro: Welcome to the Innovation Metrics podcast, where we bring you the latest on innovation management. We provide insights on how to measure innovation, innovation accounting, and managing the uncertain process of developing new, sustainable and profitable business models. You can find links to the main topics covered in this episode and information about the guests and hosts in the show notes or go to our blog on innovationmetrics co. Your host is Aliyah Islette’hi, everybody.

[01:11] Elijah: Today I’m excited to welcome Joseph Brooks on the show. Joseph is a senior reporter at Innovation Oz. He covers technology, policy and business news with a focus on Australia’s innovation ecosystem. Welcome Joseph.

[01:27] Joseph: Thanks for having me, Elijah.

[01:28] Elijah: So today we’re going to COVID the hot topic of the Innovation Metrics Review, recently released by the Australian government or commissioned by the Australian government to improve the way we measure innovation in Australia. And Joseph has been covering this as a journalist and I thought he would be a fantastic guest to provide us with an overview. He’s got some insights into how it came about and who’s been working on it. So that will be our main topic for today.

[02:00] Joseph: Cool, looking forward to it.

[02:03] Elijah: Yeah, nice. Yeah. Joseph, so good to us. A little bit about yourself, a little bit more before we kick off. So how did you come about working for innovation hours?

[02:11] Joseph: Sure. So I joined Innovation about 18 months ago. I was working sort of in business journalism before that and I was just always a very big fan. I was reading Innovation Oz and the opportunity came up to join and yeah, it’s been excellent. It’s an area I think is fascinating. Technology, tech, policy, it’s as broad as you want it to be, but at the end of the day, it’s an area that if we get right as Australia, there’s just huge potential for change and it’s an area we don’t always get right. So it’s important, I think, to report on that and celebrate the successes and learn from the mistakes when we see them.

[02:53] Elijah: And in case you guys wonder about the fantastic quality, sound quality, you get a podcast as well, right?

[02:58] Joseph: Yes, I think everyone started a podcast during Coach we have on our own and it’s handy to have I think now we’re all sort of working from home quite often. It’s nice to have a good mic.

[03:15] Elijah: Okay, so say this upfront as well, everything that we covered that’s relevant, as usual. We’d be highlighting this in the Show Notes. Any links to podcasts and articles, and any other relevant resources you can find in the Show Notes. Cool. So let’s kick off the innovation metrics part, first of all. So who is supposed to make decisions? Who’s intended to make decisions with these metrics or with the outcome of the report? Can you?

[03:43] Joseph: Yeah, so there’s a bit of a history to the report, but it was commissioned by the Australian government with the idea that essentially the idea of how can we improve innovation if we’re not measuring it correctly? So the idea was we would improve our measurements, we would find where we could improve, and that would then inform both policy decisions and an ideally public debate. So it could, I guess, have a better informed debate and lead to better policy outcomes and ultimately be a more innovative and more productive nation.

[04:21] Elijah: Fantastic. So that’s why I would like to drill in. So who exactly within the government, who are we talking about? I have to admit it, I printed it out because I feel bad for the environment and myself, but I’ve printed it out. Hard to imagine many people reading it with passion. And there are distilled parts, obviously, in there, but like, it’s hard to grasp, really, right now for folks are not in government specifically, like, what agencies, what ministers the House is supposed to be digested right now, if it’s happening, that’s another question, but at least the intention behind it. Could you help us there?

[05:05] Joseph: Yeah, sure. It was a review, a lot of work went into it, it took quite a while. And ultimately, though, it ends up with sort of a handful of recommendations. And the recommendations are essentially for Australian government. So the government of the day could look at these recommendations and they were given in sort of an order of priority, so they could essentially draw a line under perhaps how much they wanted to commit to this or how much political will they had to bring it about. So there was a couple of recommendations that sort of the top line ones that you essentially had to start with and then, depending on your appetite, you could go down and do the full list. So we never got an official government response and we may never so we may not know what happens or how this would be led within government. But, yeah, it was there as an opportunity and it’s still there as an opportunity for the new government which released it.

[06:09] Elijah: So who was in government would be a good person to respond.

[06:13] Joseph: Yeah, I think this would likely fall with the Industry and Science Minister Ed Houstick, but I think the recommendations, and we can get into them, essentially call for a sort of a whole of government approach to innovation. So this would likely touch several portfolios and we need the involvement of several ministers. But I would expect it would be sort of driven within Ed Hughesick’s office.

[06:40] Elijah: Fantastic. I think that’s really helpful. It actually also talks about innovation, leadership and leadership in this approach. So has to start somewhere with somebody has to take the beast on, I suppose. So, yeah. Thank you for that. Yeah. Before being too nerdy, maybe it would be great to dig a bit into the history. What do you think? Like, how did this come about? And maybe to put it out there for the listeners. It was supposed to be released quite a while ago, so there’s how would you call it? A bit of a controversy around it or some frustration around the issue as well.

[07:18] Joseph: Yeah, I mean, it wouldn’t be the first government report to sort of be put in a drawer and not see the light of day, but this one definitely took several years, so it was a bit of a relief when it did finally come out in terms of where it began. Australia has sort of been grappling with innovation and how do we be more innovative and be more productive, sort of turn our economy around a bit more from the sort of dig and ship economy that’s served us relatively well over the last couple of decades, at least in terms of growing GDP, that sort of thing. So, yeah, I guess you could probably pinpoint it back to around 2017 when an OECD study or report came out and it put Australia as being dead last, actually, in terms of the collaboration between universities and businesses. And that’s typically understood to be a relatively important piece of innovation. That sort of sparked some, I guess, negative commentary about being the lucky country and we were sort of resting on our laurels a bit and we needed to do more. So innovation and science. Australia, which is within the industry department, they as part of their sort of longterm plans, they recommended this study into innovation metrics to sort of decide to determine whether they were accurate, but also whether they were adequate. So that’s, I guess, what kicked it off. And, yeah, the government accepted that recommendation and set up the review.

[08:53] Elijah: Why did it take so long, you think?

[08:57] Joseph: Yeah, it’s a good question. I don’t know the exact answers. From my understanding, it was handed the review was completed and it was handed to government in sort of around late 2019. And the obvious part of that timeline is, I guess, a couple of months later, we’re all dealing with a pandemic. So we do, I think, need to keep that in mind. But there is probably no clear reason why it wasn’t released earlier and it was ultimately only the change of government that saw it released, I think, late last month.

[09:36] Elijah: Thank you for releasing it, finally. Okay, so one can assume the rest there. So somebody didn’t gain from it or had to lose from it, potentially, or something like that. Yeah.

[09:51] Joseph: Reading through the review. It highlights, I guess it wasn’t damning on Australia by any means. I mean, this is a problem that a lot of countries are sort of grappling with. It did reveal that we were underreporting some areas of innovation and there were sort of flat out gaps in other areas. So I guess it was a bit of a wake up call in that overall question of how do we get better at this if we’re not measuring it? So in terms of that, it exposed that a little bit, but what it proposed was what seems to be pretty reasonable and certainly not a radical new shift. It was essentially to improve how we measure, to fill in those gaps and to introduce an annual sort of reporting and a new entity to sort of drive that. So not something that I think would be politically divisive or anything like that, but perhaps at the time with sort of dealing with a pandemic, it probably just wasn’t top of the list. I would think.

[10:53] Elijah: One could say in a time of change, of extreme change, we don’t need to improve the way we innovate. Okay, yeah, that makes sense. Thank you very much. Kind of reminds me of so it’s kind of probably easier to create a better baseline when you come into office and similarly in the private sector when a new innovation manager is hired or president of innovation or so when you will be good to create a baseline very quickly because otherwise any intervention you bring to the table that is actually successful is therefore also not captured. Definitely depending on the metric. But you have a better chance to actually show a success as well. Does that make sense?

[11:38] Joseph: Yeah, that was kind of the idea. I guess the key recommendation was to establish what they called an innovation scorecard, which would sort of set those baseline metrics. The recommendation was to get started with that straight away and then update it every year, obviously improve the data, improve what we were measuring as we could. But it would immediately give us that baseline, it would give us a comparison to other nations and importantly, it would sort of cut through a lot of that complexity and allow us, I guess, to have more people at least involved in the debate about innovation policy.

[12:15] Elijah: Yeah, no, that’s great. Absolutely. Absolutely. So they recommended for an entity, like a responsible entity to be created there. And that goes back to who should create that entity, you think at least or what would make sense.

[12:29] Joseph: Yeah. So I’ve spoken to people who are involved in the review and they told me that that recommendation was very deliberately left sort of open to the government that would ultimately respond to it. So the entity could be anyone from a person within an existing department to a new office or I guess you could even have a new agency if you really wanted to go for it, I guess, but it was deliberately left up to the government to sort of see how much they wanted to put into it. But again, I think the important thing was just to get moving and have somebody that owned innovation and could sort of drive it at a national level.

[13:13] Elijah: Yeah, fantastic. Do you want to just jump into the recommendations? What should we do right now and what the nice to have later? Would that make sense right now?

[13:26] Joseph: Yeah, sure. We’ve sort of touched on the main ones there. I mentioned they identified some gaps and obviously there was a recommendation to fill those gaps. So there would be changes to the sort of surveys that the Australian Bureau of Statistics conducts to sort of fill in those gaps, determine where businesses were innovative. Because one of the key findings was the review was that we tended to focus a lot on research and development when we were thinking about innovation, when we were measuring it, and obviously that’s a big part of it, but it’s not the whole picture. And because of we’d focus so much on the policy decisions had tended to focus on that area as well. So there was all these other parts adoption of technology, diffusion of technology, sort of bit more incremental innovation, so we perhaps weren’t capturing that and as a consequence, the policies to respond to that weren’t flowing. So there was a whole bunch of things that were recommended to capture that. And then, as I mentioned, with the scorecard, that would sort of bring it all together and we would have that annual report, I guess, on how we were doing. The idea of the scorecard was, as I said, to sort of cut through that complexity. So it would still be based on more sophisticated data and better analysis, but it would be summarized in essentially what was a sort of one page document and that would hopefully improve the debate. Again, it was all built on aligning innovation with productivity and improving living stance. So that was sort of the overarching thing. We wanted all that the review proposed to measure. So it would sort of start with business elements, so it would measure business activities like their R and D spend, their diffusion of technology where they were collaborating with other businesses on innovation and as well as sort of things like what percentage of the new sales was for new innovative business products or services. It would then sort of move a step down to the wider business environment and sort of have an annual measurement on regulatory barriers, venture capital investments, migration, those sort of things which had a direct impact on businesses, but perhaps were beyond an individual businesses control. And then finally it would have measures for what was called the national environment. So how much was Australia investing in education? That the sort of collective investment in R and D, the quality of labor inputs, those sorts of things. So, all in all, I think there’s around 20 or maybe just under 20 of those measures, and they’d fit on one page. We’d have an annual measure of them. We’d also have the trend for the last several years to determine where we’re going up and down. And we’d also have a ranking with comparable nations, typically OECD nations. So, yeah, find out where we were and where we were improving. And that would be updated annually, given to government annually, and that would inform those policies, policy decisions.

[16:37] Elijah: The topic of productivity, I’m not too savvy there, but that seems to be at least pre election. I think I heard that a lot from the now new government. That was a big part of their thesis of how to secure the future standard living standards of Australia.

[16:58] Joseph: Right, yeah. And the review makes, I guess, a similar point. Essentially, we’re sort of heading towards australia has a relatively high proportion of the population, is highly educated, but that sort of has a natural cap. You can only you can educate everyone when there’s no one else left to educate. So in terms of improving the economy, improving prosperity, after that, it becomes about how productive you can be. So whether you can introduce new things or do things better is how you can be more productive. And that is, of course, tied to innovation. So that was, again, one of the key drivers for this review is linking how we measure innovation to productivity and then how to improve things like living standards, for example.

[17:47] Elijah: Yeah, we could go into the scorecard now, but I feel like we might not do that too much.

[17:52] Joseph: Right, yeah, it’s there in the review, if anyone’s really keen.

[17:57] Elijah: Exactly.

[17:58] Joseph: Yeah. It’s very interesting, but you might be getting into the weeds a little bit.

[18:04] Elijah: Thank you for highlighting also the context. Again, for me, this is really helpful. And then I guess academia and research is probably not quite clear on the effectiveness. And as the report also says, not every indicator is perfect, and that’s different, but many of them are quite meaningful. I would agree. Some of them would be really interesting to talk about, specifically the relationship between R&D money spent and the actual output, I think, is one of the big ones.

[18:36] Joseph: Yeah, well, that’s a good point, because the point being we look where it’s easily, not necessarily where it’s useful. And that was sort of what they found when they looked at how we were measuring innovation.

[18:50] Elijah: Don’t let perfect be the enemy of good.

[18:53] Joseph: Yeah, definitely.

[18:56] Elijah: It’s the same for product development, by the way.

[18:59] Joseph: Right.

[19:00] Elijah: It’s quite known to when you coach innovation teams, it’s quite important.

[19:06] Joseph: Yeah, I think we all have a bit of is it analysis paralysis at.

[19:11] Elijah: One point, and I would have never had a podcast, certainly not perfect. So yeah, great look, I’m quite interested in hinted to that as well, before we started to hit the record. But I’m quite interested in how you go after this, how you find out more and how do you get hold of people to talk to? For some folks that may be career sensitive, I don’t know. Right. You don’t know what you’re tapping into there. And how do you go about interviewing people here? How do you find them and also maybe throw it in? I’m happy to do even more, so I might learn from that benefit as well.

[20:05] Joseph: Yeah, I think people would be surprised. Most people are quite happy to talk about things, especially something like this, where people have put a lot of work into it and they want to see it, I guess get the attention that it probably deserves. So in this case, being a government, a government commissioned review, there was no secrets about it. Everyone sort of knew it was happening. And then people were our understanding was people were keen to see it out in the public because, as I mentioned with the scorecard, the big driver of this is to have a better public debate about innovation. So people, understandably, wanted this out, they wanted to talk about it, and they hopefully wanted to see action come from it. So in terms of tracking down people and speaking to them, there was a whole lot of people involved in this. There was sort of steering committees or panels, that sort of thing, that had experts. There was everyone from Dr Finkel and Mr Kelly that I mentioned earlier. There was academics, there was executives from some of Australia’s biggest companies, there was really senior people from within the public service, people from the ABS, that sort of thing. And, yeah, they’re more than happy to talk about it, because I don’t think it’s scandalous or anything like that. It’s people coming together that they all have the shared goal of improving innovation, or at least how it’s measured. So we track down people who are involved. We call them. I spoke to Dr Finkel, I spoke to spoke to some of the senior, I guess, bureaucrats that were involved in it as well. They’re happy to talk and highlight what is pretty important work.

[22:00] Elijah: That’s amazing. That’s very motivating. Yeah.

[22:04] Joseph: Pick up the phone, I guess, is the message. People usually there’s an element of trust with you telling their story or they’re part of the story and you take that very seriously. But, yeah, I think people would be surprised by how open people are to a chat.

[22:24] Elijah: Yeah, fantastic. It’s funny. It reminds me, again about product developments for some reason, because very often you do need insights from other people or people who have done something similar before or who are doing something similar in other geographic markets or so and then very often or you just need feedback or so and like the most magic word is sentenced or sort of can you help me? People are very willing to help, generally speaking.

[22:52] Joseph: Absolutely. Yeah. It’s one of the great things about being a journalist is come home and tell your family that you spoke to Dr. Alan Finkel earlier that day. Chief scientist and sort of one of the most eminent experts in these areas. Yeah, it’s a great part of the job and people are very generous with their time.

[23:19] Elijah: Yes, that’s exciting. That’s really exciting. It’s very exciting to talk to an extra journalist.

[23:28] Joseph: Not everyone thinks that way when they talk to a journalist, but yeah, definitely with you, I would say. It is nice chatting.

[23:36] Elijah: So what I’m wondering now is how many people actually read the findings, or at least the first interactive chapter or the first chapters. What do you think? How many people actually looked into it? To what degree?

[23:51] Joseph: Yeah, look, I can’t say it’s the short answer. I know there were people involved in the report, people following the report, people submitted, people took part in the public consultation. So I know there were people keen to see it out there. And that’s not necessarily a lot of people, but they are, I guess, important people in terms of innovation policy and people in Australia’s innovation ecosystem. So yeah, I think not necessarily a lot of people, but certainly significant people wanted this report out and I’m sure reading it with great interest.

[24:32] Elijah: Okay, so we need a responsible so what we need in order to really kick us off is that responsible entity that the report talks about. So we need to find out how can we make this happen and who can we help making it happen to contribute to this? Right, yeah.

[24:50] Joseph: So the recommendations are given in that priority order, but I think one of the sort of prerequisites would be that entity, and that to sort of drive the annual reporting. And I think they would also have responsibility for research or for coordinating the research, not conducting it. And then all the other recommendations could be added. But those were establishing that entity and doing annual reporting was, I guess, the baseline.

[25:19] Elijah: But it’s fair to conclude that that’s the bottleneck, like, without having that entity, nothing’s going to happen.

[25:25] Joseph: Well, yeah, some experts tell me a lot has happened in the absence of this report, particularly at the state level. States have sort of begun their own ways of measuring or new ways of measuring innovation. But in terms of a national approach, it seems to me at least that this would have to be led from the federal government. And there’s no indication that that’s coming yet. As I said, Industry Minister at Houstick released the report and he said he sort of welcomes the public debate that’s going to come from it. But in terms of a formal government response, I wouldn’t hold my breath, I’ll put it that way.

[26:05] Elijah: Okay, so the formal government response would be necessary in order to create that responsible entity. Okay, cool. Don’t have a government background.

[26:14] Joseph: Thank you for yeah, that’s typically how it happens. I mean, there’s nothing going ahead anyway, but yeah, that would likely, I would imagine, want to propose something and then probably consult again on it, but it remains to be seen.

[26:29] Elijah: I just recall all these chats about the problems with measuring for states and sort of complaining about, oh, yeah, we don’t have a national framework, and so adopting other frameworks or not doing anything, which is really not ideal. Right. So this is really good. So how can this help in states? And even if one of the states adopts this or finds this useful, that’s a good measure, especially in itself of the usefulness. Okay. So we should have some conversations there as well. Okay. Like myself and maybe everybody that listens and can just ask questions. I think that’s a good start. Right. Just like if something’s happening, what’s happening.

[27:15] Joseph: Without yeah, definitely have a read. You don’t have to read the 500 pages, but there’s a very good executive summary and a code check message and take a look at the scorecard. It’s like anything there’s room to improve it, of course, but I think it’s a great platform to start with.

[27:37] Elijah: Yeah. And the scorecard is not very threatening.

[27:40] Joseph: No. A lot of this stuff we’re measuring already anyway. Just collect it and give us an annual measure.

[27:48] Elijah: Yeah. That’s why I qualified twice already. A little bit that it’s not like nothing happening. Some of these data do get definitely I collected interestingly.

[28:00] Joseph: The ABS has gone ahead and started they changed their business survey to do exactly what the metrics would be recommended, which was to collect, I guess, to ask new questions on innovation and to measure in sort of biannual period so that could better compare it to international measures. So they quietly went about and did that of their own accord. They obviously have seen that recommendation. It was a relatively inexpensive one to do. So they were able to do it within their existing budget, and they’ve done that. I think there’s plenty of interest in getting this ball rolling.

[28:42] Elijah: Interesting.

[28:43] Joseph: Yeah. To the ABS credit, they’ve started that themselves.

[28:46] Elijah: Yeah. Thank you, Joseph. Thank you for giving me the incentive to dive into this paper and getting this started, to understand it all and helping us all to make better sense of it. Thank you very much.

[29:00] Joseph: Yeah, no problem, Elijah. And hopefully hopefully we shed a little bit more light on it.

[29:06] Elijah: Thank you, Joseph.

[29:07] Joseph: Any time.

[29:08] Elijah: Yeah.

[29:08] Joseph: Thanks for having me.

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