Innovation, the new buzz word

Since new PM Malcolm Turnbull, in his first address to the nation, challenged Australians to embrace change and innovate, everyone seems to be talking about ‘innovation.’

But what does it mean, and why’s it so important?

Technically, ‘innovation’ means ‘new’, as in a new method, a new way of doing something, or a new invention. It’s synonymous with being clever, successful and on the cutting edge. Turnbull, a successful businessman in his own right, has experience in these things. He went from lawyer to investment banker to IT entrepreneur and made multi millions in the process.

Rabbiting on about innovation is not enough, but grasping the challenge, seeing the positive and actually doing some different things, is important. As Albert Einstein reminded us – “we cannot solve our problems with the same thinking we used when we created them.” He also famously said that the definition of ‘madness’ was trying the same thing over and over and expecting a different result.

We have to try new things. You get points for trying. Seriously, you do. Because you learn, and no one will forsake you if you give something new a try. The Finnish company Rovio Entertainment spent 6 years and laboured over 51 failed games before their smash app hit Angry Birds came out in late 2009. Since then, its been downloaded 3 billion times – 3 billion! – plus various spin offs such as multiple versions, merchandise, a TV series, a movie and several theme parks. From an app. From a multiple-failed game developer. In Finland. If that’s not inspiring, I don’t know what is.

Six years on, even Rovio cannot rest and is having to innovate further. They’ve recently laid off a third of their workforce, mirroring staff cuts at Zynga (who make the Facebook game Farmville) and King (Candy Crush). The more successful you get, the more imitators and competitors try to knock you off your pedestal. You knocked others off to get there. That’s how the world works.

Nice though Australia’s resources base is (many countries would kill for this, and, often, do start wars over this stuff), we are not a cheap place to do business, and need to occupy the technological heights if we are to remain competitive and continue living the life we’ve had so good for so long. 23 years of uninterrupted economic growth is under threat. It’s no time to rest on our laurels, or pretend that new things aren’t changing how the world works, fast. As the PM says, we need to embrace technological change “as our friend“.

Consider the following:

• In latest Global innovation rankings, Australia is 17th, no change from our 2014 position. Sweden, Switzerland and the UK occupy the top 3. The US is 5th, Singapore is 7th … Germany and New Zealand sit above Australia
• According to a Deloitte Report (2015) one third of Australian companies face imminent and substantial disruption by digital technology and new business models
• Another report from 2014 suggests 25% of Australian GDP is under attack in next 10 years
• San Francisco-based Uber has taken 9% of Aus taxi industry ($450m of $5bn) from a standing start inside 2 years (~ consider how well entrenched, regulated and supported this industry thought it was pre-2013)
• In the Crossroads’ economic complexity map, Australia ranked 74th in world – we are just too reliant on too few traditional industries. Sweden is one of the most diverse.
• In 2014, $47bn was invested in Australian resources while $1.5bn was invested in tech
• In the last 5 years, Australian startups added 1.5m jobs. Meanwhile, large businesses are culling staff numbers. In the US 80% of new jobs (in a run lasting now 67 consecutive months of net job creation) have come from new/small business.

Consider further…

• Singapore has allocated $14bn over next 5 years for investment in startups/tech
  – funded 15 incubators
  – matching funds 85% to 15%
• Israeli government supports 22 incubators, invests ~ 85% of their budgets
  – has led to 5x private investment in follow on funding
• Meanwhile, our WA government invested $6.9bn in royalties for regions, and $20m into tech startups
• Other States in Australia have a Minister for Innovation, but not WA

We’ve got a way to go to catch up, but perhaps the message will get through. To the innovative belongs the future. It’s always been thus.