Researchers must innovate and add more value

Joanna Mather’s recent feature article in the Australian Finanical Review "Researchers cry mayday" (March 24, 2009) carries the all too familiar warning that unless the Australian Government increases the shrinking research and development (R&D) budgets, Australia will be left behind the rest of the world.

Instead of expecting constant public bail outs, research organisations need to critically review their own business models and engagement strategies with a view to enhancing their value co-creation and value capture capabilities and impact for the Australian economy. In particular, they need to focus as much on collaboration and commercialisation as they do on technological and scientific research. Even the drover’s dog knows that Australian researchers are good at R&D and poor at capturing value from intellectual property (IP). It is time for Australian research organisations to develop sustainable funding models which bring benefits to industry, the R&D provider and wider society.

This is not to say that progress towards sustainable funding has not been made in organisations such as CSIRO and the leading research universities in recent years. Australian industry has also failed to invest sufficient resources into commercialisation of IP and the development of knowledge based sustainable organisations and industries.

According to the second edition of the IBM -Melbourne Institute Innovation Index of Australian Industry the rate of innovation activity in Australian industry was starting to decline in 2006. The study shows that all the key innovation performance indicators such as R&D intensity, patent intensity, trade mark intensity, design intensity, organisational/managerial innovation and productivity peaked in 2005 and tapered off in 2006 especially in the manufacturing industry.

There is no doubt that in the current global financial and economic crisis, innovation activity has fallen given that it is perceived as high risk and something that can be sacrificed in the short term. At the same time advanced manufacturing industries in Europe and other parts of the world have been continuing their investment in new technologies, skills and solutions to address the most pressing challenges. In this context, Australia has indeed fallen behind the rest of the world and needs to improve the competitiveness of its innovation and commercialisation system.

A proven strategy for aligning the needs, values and priorities of industry and the R&D community is through the Cooperative Research Centre program which has been in existence since the days of the Hawke government. Under the CRC funding models, the Australian government provides funding with industry for high value projects. Research organisations add value by providing rigorous and relevant research and commercialisation input including in-kind support and new research talent through new Masters and PhD programs. Research organisations have the opportunity and are encouraged to commercialise the IP outside the commercialisation field of the industry participant.

In the Advanced Manufacturing CRC industry funding is matched with federal funding for high impact projects. The Advanced Manufacturing CRC funding and governance model allows us to leverage funding from state government sources as well as from the private sector including venture capital. The Advanced Manufacturing CRC also engages with federal government support programs such as Enterprise Connect to help Australian SMEs to become profitable, sustainable and globally competitive using IP and other forms of knowledge and infrastructure that exist in Australia’s innovation system. Just as importantly, the Advanced Manufacturing CRC has the option of working on a project by project basis with third parties, without the need to become members.

Since becoming fully operational in September 2008, the AMCRC has co-invested $5.4 million in innovation for sustainability with a diverse range of industry partners and R&D participants. The Advanced Manufacturing CRC is close to signing off a further $4 million in research projects by the end of this financial year. By 2014 the Advanced Manufacturing CRC will have invested $49 million in high impact projects that can make a big contribution to the advanced manufacturing industry.

Co-investment opportunities are selected on the basis of having confidence in the management of the company, its technology, its capacity to become a dominant player in a niche market and its capacity to commercialise the IP that emerges from the research. The Advanced Manufacturing CRC links business and industry with Australia’s best research teams that bring a systemic and multi-disciplinary approach to solving innovation and commercialisation problems. The ultimate aim is to make a positive and significant contribution to Australia’s economic, social and environmental well-being.

There is no need for researchers and industry to cry mayday as this will not save them. The solution is to start thinking and acting as leading global advanced manufacturing firms and significantly increase their innovation and commercialisation performance.