As Australia transitions away from a mining investment-lead economy, finding a new comparative advantage is important. Rule of law, geography, language and an open economy are among our strengths. But without a critical mass of technical experts and consumers, it can be hard to develop world-beating technology by ourselves.
One solution, championed by tech startups and accelerators, is to “go global from day one”. Products and services that can be delivered digitally, say an app or an on-line platform, don’t face Australia’s scale problems. Companies like Freelancer hire from across the globe, chasing the talent where it is. Similarly, platforms like Canva benefit from a customer base that spans the globe, achieving economies of scale not available in Australia.
But it’s not just accessing global markets that fosters innovation. Coming up with new ideas or ways of doing things rarely starts with a blank page. Facebook built and improved upon Friendster and Myspace, Google with AltaVista and Yahoo, Paypal on top of the global banking system. Remixing and iterating what has come before is integral to innovation, and to give yourself the best chance of doing so, you need to introduce as many sources as you can.
This is why startups congregate in co-working spaces and the tech industry has been trying to build a hub in Sydney — the more pieces you put together, the more you can potentially create.
Trade can offer a similar service — introducing new ideas and methodologies often dreamed up in countries vastly different to our own. This idea is backed up by Michaela Browning, General Manager of Established Markets at Austrade, who spoke about the the creation of business ecosystems around big deals like Australia’s $50 billion submarine contract with a French defence contractor, DCNS.
“These sorts of contracts also lead to dynamic benefits in terms of whole ecosystems and supply chain. In terms of skill development and sub contrast and capability development in Australia. That is the start of a 40 year marriage,” said Browning, speaking at the French Australia Co-innovation Forum.
Just like the domestic car industry — which spawned countless small businesses who supplied everything from gearboxes to ongoing maintenance, the submarines likely will too. France is too far away for our subs to be maintained and updated offshore, which means DCNS will have to move experts here, and rely on local suppliers. This means building the local skill base and equipping potential suppliers with the intricate details of how the subs work.
All of this is knowledge that Australia doesn’t have, and which through partnerships with universities and other researchers, can be readily built upon. Another French defence contractor speaking at the forum, Thales, provided an example of this knowledge transfer and innovation in action.
“When the sonar transfer of technology began in the mid 80s to the early 90s, the process was very practical. We had French engineers coming to Australia. French program managers, the technical knowledge but also the execution knowledge. we had Australians going to France,” said Chris Jenkins, Thales CEO of Australia and New Zealand.
As Thales built up its local knowledge base, equipping Australians to work on the sonar systems they were supplying for our Collins Class submarines, the local engineers made improvements and modifications. Melding local knowledge and creativity with what had been imported from overseas allowed Thales to build a considerable Australian portfolio. Australian-designed sonars and other military gear, modified or building upon French designs, now accounts for hundreds of millions in export dollars. Trade and the knowledge transfer that accompanied it has allowed Australia to build an ecosystem around an industry that likely would never have been.