Culture, Capital and Connectivity are the keys to successful innovation

CSIRO has an incubation scheme for its own staff and allows individuals who have made discoveries to retain access to their research support while taking a period of leave without pay. This spin-off type-company has enabled several individuals to progress and commercialise their discoveries. Over the last ten years, CSIRO has spun off some 40 companies, which are now earning in the order of $300 million per annum.

This encourages us to believe that a more broad-based incubator program is worthy of investigation.

The post venture capital phase is where we want to grow the start-up company into an international scale business, or where an existing company needs to invest in R&D to secure new markets, gain a competitive edge within an existing market and to maximise the value of our existing assets. This is where, as I mentioned earlier, Australia needs to lift its game. We need an industry prepared to invest in R&D, both short and long term, and to adopt the outcomes.

A good example of the importance of a comprehensive capital system is the development of Relenza, the flu drug, which had its genesis in work led by Dr Peter Colman of CSIRO. It began with investment in the basic science infrastructure. Peter collaborated with Dr Graeme Laver of the Australian National University during the late 70s and early 1980s to establish the 3D structure of a surface protein on the influenza virus and identified a site on the surface of this protein that did not mutate. This provided a target for a drug against all forms of the virus.

Peter then worked with the fledgling Biota Ltd to raise money through a stockmarket float. These funds plus Government support through grants from the IR&D Board enabled development work to continue. Peter Colman's team entered a collaboration with Chemists from the Victorian College of Pharmacy, led by Dr Mark von Itztein to synthesise a drug that locked onto the target site - again drawing on the nation's scientific infrastructure.

To take the drug to the market required risk capital of some $100 million and the only players that have these funds and the marketing networks necessary to succeed are the major pharmaceutical companies. Biota, with the support of Colman and von Iztein made presentations to six major international companies, which evetually led to a licencing agreement with Glaxo Wellcome and the investment funds for the final stages of development and clinical trials. The drug went on sale last year and manufacturing has begun here in Victoria for the Asian market. This was the first revenue after some 20 years of investment and the drug is now on the way to fulfilling its billion dollar promise.

The success of the flu drug, like the success of CSIRO's work with the minerals industry I mentioned earlier, was underpinned by the close partnership between public researchers, government support through the IR&D scheme, an entrepreneurial start-up company and a large multi-national. It is a vivid example of the various stages of capital investment needed for a major innovation.

The third driver of innovation is CONNECTIVITY.

Our people and Institutions need to interact and make the whole greater than the sum of the individuals. This in itself requires innovation and entrepreneurship. Indeed, while CSIRO is a scientific research organisation, we recognise that innovation is more than just research and technology. Some of our most powerful innovations have been in our organisation and management, such as our sectoral advisory committees which give us an unparalleled network within the Australian industrial and environmental community.

Another good example of innovation in management is a partnership between CSIRO, Ernst & Young and the Public Records Office of Victoria. The continual loss of electronic documents and records is a survival risk for governments and business around the globe. The partnership created VERS, the first complete archive solution for electronic documents.

VERS automatically turns documents used to make decisions into records of those decisions and guarantees, despite any amount of future change to office systems, that all records can be retrieved and displayed exactly as created, forever. The Victorian Government, has now commissioned the team to undertake a $5 Million deployment project to prove the solution within one of its agencies. If successful, it will be extended across all of government, as part of the Victorian Government's objective of implementing world leading IT in its own administration.

The examples of the mining industry, the VERS project and the flu drug show all three drivers of the innovation equation - culture, capital and connectivity. The three drivers are interrelated and combine to enable our creative thinkers, our entrepreneurs, our researchers and our financiers to join forces to turn innovative ideas into practical realities.