MICROSOFT: Australia has a lot to learn from startup powerhouse Massachusetts


There’s a lot Australia could learn from the startup story of Massachusetts, according to a report released by Microsoft, which says collaboration between government and the private sector is vital.

Microsoft’s “Accelerating Australia’s innovation ecosystem” compared Australia to the US state, which has a population of 6.7 million and GDP of $AU632 billion. New South Wales, by comparison, has nearly one million more people and a GDP of $AU487 billion.

One of the big differences, according to Microsoft, is that the technology sector employs more than 19% of all Massachusetts workers – more than 630,000. Technology workers earn an average of $AU166,000 and indirectly create 418,700 more jobs, generating $AU219 billion in economic activity. NSW, by comparison, has just 160,000 IT workers.

The US software company is clear about the direction Australia should pursue, arguing:

Australian decision makers need to create – or continue to build on – areas that foster connectivity within the innovation ecosystem.

These might be formal innovation precincts or simply a greater concentration of innovation economy–related individuals located within existing urban centres.

In other words, innovation hubs work.

Microsoft says Massachusetts faces challenges comparable to Australia’s lack of scale and distance from foreign markets. Boston, especially, faces aging infrastructure and relatively slow internet. While Massachusetts-based companies have a large home market, they can also be lured to other states very easily. A perfect example is Facebook, which started off in a Harvard dorm, but has since grown up in California.

To meet these challenges governments in Massachusetts have enacted a number of policies aimed at collaborating with the private sector – the creation of an innovation hub, the world’s largest accelerator – MassChallenge, and a civic innovation incubator.

“The Boston area’s ‘secret sauce’ is a mix of a shared sense of purpose and a culture of collaboration” the Microsoft report says.

The Boston Innovation District was created in 2010, and covers 1,000 acres. It includes both workspaces and housing, and the city estimates 200 new companies, responsible for 5,000 jobs, have been generated in the district. A dedicated building, District Hall, offers free desk space, low-cost meeting and presentation rooms, and events for startups.

Microsoft argues Australia should “create innovation- heavy districts, especially within cities and by making appropriate spaces available within publicly and privately owned facilities, encouraging collaboration between all elements of Australia’s innovation ecosystem”.

But the Australian Technology Park, cited in the report as a developing innovation precinct, was recently sold to create a business park with the Commonwealth Bank as the anchor tenant.

Adelaide, however, has announced it will create a technology precinct on the old Mitsubish Motors manufacturing facility to “attract start-ups, venture capitalists and academics”.

“Promoting innovation is an ongoing process,” said Kyam Maher, South Australian minister for manfuacturing and innovation, who visited Massachusetts.

“It’s more than just tech start-ups making apps for mobile phones. You need an intersection between entrepreneurs, academia and business to get things to grow.”

The South Australian government is also in talks with the MassChallenge accelerator. Founded in the Boston Innovation District in 2010, it was given space for free inside the development. It has since fostered more than 800 startups, which have gone on to raise $1.1 billion in funding and created 6,500 jobs. The accelerator also attracts companies from outside the United States.

A civic innovation incubator, called MONUM, runs experimental programs designed to improve public services, collaborating with entrepreneurs and academics along the way. Also started in 2010, it has launched an app for citizens to report graffiti and potholes, an app for parents to track school buses, and a Christmas tree that citizens could control via twitter. Co-founder Nigel Jacob says the department works to attract technologists, engage the community, and reduce the stigma of failure within the public sector.

The report concludes that Australia has a lot of the pieces already in place to follow Boston, as the recent developments in Adelaide attest.

The key now is to make the right connections between them.

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