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3 things Australia can do to create an innovation economy

Image: Fishburners.

This year’s budget deficit is predicted to be nearly $45.9 billion – with an even worse projection for next year. According to the Deloitte report, “2015-16 looks like it has been written by Stephen King and painted by Edvard Munch.”

Many people say that Australia is “The Lucky Country”, but if we want to continue to be lucky, we need to change our game. If we want economic prosperity, we need to shift our focus from extracting natural resources to mining knowledge resources and growing innovative companies.

There is no silver bullet. If we want Lady Luck to stay by our side, we need to invest in our future and do the following:

1. R&D:

We need to continue investing in research and development at universities and CSIRO to generate new knowledge. The EU has just announced a 30% increase in funding for research and innovation. So should we.

2. Commercialisation:

We need to get much better at turning research into innovations that become products and services that people want, need, and will pay for. Other countries, universities and research labs have figured this out; so must we.

3. Entrepreneur Education:

We have done a good job encouraging more people to start companies, but “starting” is not the end game. Growing companies and creating jobs is what we want. People aren’t born knowing how to drive a car, but millions learn. I have worked with hundreds of CEOs who did not know how to grow their companies, but in a few sessions, they learned. The budget needs to include funds targeted to growing as well as starting companies.

4. Skills and Knowledge:

We need university graduates with the requisite skills and knowledge in science, technology, engineering and math (STEM) to join tech companies in Australia, rather than leave for the USA. And if we can’t educate enough of our own, then we need to recruit people from other countries with the requisite skills and knowledge. Australia needs people with the tech knowledge and skills to grow companies and create jobs. This budget needs to provide more funding for STEM.

5. Management and Leadership:

We need to build bench strength in management and leadership. Too many Australian entrepreneurs try to grow companies by themselves; when they can’t, they give up. Too many family businesses fail to think about succession planning until it’s too late. Australia needs more CEOs who understand how to work with executive teams, boards, mentors and advisors to develop a growth strategy.

6. Capital:

We need pools of capital that entrepreneurs can tap into when they are ready to grow, so they don’t need to go offshore to the USA or Singapore to get funding for their idea. We have more available capital today than a year ago, but with increasing numbers of start-ups, more capital is needed.

The StartupAUS Crossroads 2015 report offers a broad and comprehensive look at the eco-system required to build and support high growth companies in Australia. It details some of the programs and policies other countries are using to turbo-charge economic growth: accelerator and incubator networks, broad-based entrepreneurship education programs, research centres, multi-billion dollar institutes for science and technology, and millions of dollars of seed funds. They understand that the right combination of ideas, talent, knowledge, and money will produce dynamic companies, jobs, and a robust economy – and they are making budget allocations accordingly.

I suggest that three initiatives are crucial to supporting the development of an innovation economy in Australia:

1. Create a National Agency for Innovation Commercialisation

Australia has some of the best academic research in the world. We need to focus on the commercialization of that research. A single, bi-partisan agency tasked with driving the innovation commercialisation agenda would kick-start the economic shift from an extractive economy to an innovation economy.

2. Establish a National Network of Entrepreneurship Centres

Europe, China, NZ and USA have national incubation associations. The US has a National Consortium of Entrepreneurship Centres with over 200 members. We need to link up organizations supporting entrepreneurs and encourage them to collaborate, share resources and learn from each other.

3. Provide more incentives to invest and more avenues to source capital.

Talent and knowledge can only go so far. Healthy plants die without water, and promising companies will die if they can’t get access to capital. We need tax incentives for people to invest, more people willing to invest, and more professional investors and venture capitalists who know how to help CEOs grow successful companies.

It will take courage to shift from an extraction to an innovation economy. But Australia’s future depends on our ability to exploit our knowledge resources, commercialise innovative solutions to the world’s problems, and teach Australians how to start and grow companies. I hope upcoming budget reflects those priorities.

*Jana Matthews is a StartupAUS board member and the ANZ Chair in Business Growth, Professor and Director, Centre for Business Growth at University of South Australia.

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