One On One – Dr Charlie Day

AMT: Tell us about Innovation and Science Australia (ISA) and its objectives.

Charlie Day: ISA is a board which comprises up to 15 senior leaders from across the innovation, science and research system. It’s chaired by Bill Ferris, who is the father of venture capital in this country, the deputy chair is Alan Finkel, the Chief Scientist, and we have a range of people from across the science and innovation system. It was set up as part of the “ideas boom” back in late 2015 with the intent of providing independent advice to the whole of government about making the Australian innovation system work better.

Our job really is to provide advice to government about innovation policy and how those innovation policies can make the system work a bit better. We also have a role as advocates for the system; there’s a lot of good news stories, great examples of innovation that we like to celebrate around the country. And we also have a role overseeing some of the key government support programs like the Cooperative Research Centres (CRC) Programme, the Entrepreneurs’ Programme, venture capital programs and so forth. There’s a range of programs we have an oversight responsibility for, but our primary job is really to provide advice to government to make the system work better.

AMT: What sort of activities does the ISA engage in, in meeting these objectives?

CD: To date, our provision of advice to government has come primarily if you like in large-scale format. So earlier this year we published our report ‘Australia 2030 – Prosperity through Innovation’, which was a long-term roadmap for the Australian innovation system, and outlined in a comprehensive fashion the policies we felt the Government needed to focus on to make the innovation system work better. That was something we spent over a year pulling together; it followed on from a Performance Review of the Innovation, Science and Research System that we released the prior year.

So up till now we’ve generally done these large-scale reports. Looking now and into the future, we’re tending to work with the Government on specific issues. For example, we’re working with the Department of Home Affairs on visas and talent availability to make sure Australian firms can access the specialised talent that they need, with the Department of Health on rolling out the large-scale project in genomics, but also in supporting the Medical Research Future Fund and the Biomedical Translation Fund, and similar initiatives. And we’re also working with the Department of Industry on the reforms to the Research & Develepment (R&D) Tax Incentive and other programs that support business investment in innovation.

AMT: Where does Australia sit in terms of innovation compared to its international competitors.

CD: It’s a slightly tricky question to answer because an innovation system is a reasonably complex beast. It really arises from the interaction or intersection of the education system, of the public research sector but also private research activities, and business innovation more broadly. And of course government is a key player in the innovation system. So there are lots of different parts of the system, and when you look across different countries around the world, Australia is strong in some parts, but weaker in others.

If you look at one of the metrics that people like to look at, at a macro level, it’s called the Global Innovation Index which is put out by the World Intellectual Property Organization. That was released in July and it ranked us as 20th in the world in terms of our innovation system. Perhaps a little more relevantly, it ranked us 19th out of 47 high-income countries. So if we think about the high-income countries, Australia sits somewhere in the bottom half of the second quartile. So we’re not a leader, but we’re not a laggard, we’re somewhere in the middle. And as I say, that aggregate number conceals a bit of variation across the system; there are areas where we’re really good, and areas where we’re not so good.

AMT: What would you say are our strengths, and where do we need to work on improving?

CD: Well like I said we published a review in early 2017, which looked at the performance of the Australian innovation system. And that broadly agreed with what the Global Innovation Index finds, which is that on creating new ideas, Australians are pretty inventive. Our researchers generate publications that are very high-quality and our universities rank very highly for the quality both on the research and the teaching that they do, and that underpins the development of a very large export industry in higher education, which is one of Australia’s largest export industries. So in the generation of new ideas and the university system that surrounds it, we perform really well.

Where we don’t perform so well is in patenting those ideas and transferring them into products and services and then scaling them up into global businesses that are competing on the world stage. On metrics like the high-growth businesses and the amount of venture capital and the rate of new-to-the-world innovation, they’re some of the metrics where Australia ranks much more poorly.

AMT: Focusing on the manufacturing sector specifically, one big issue often is weaknesses in the way industry collaborates with academia and research organisations. What could be done to boost that?

CD: Yes, certainly that is an area where Australia on many metrics doesn’t perform particularly well. Although having said that, that is one area where I think our metrics might not be telling us the full picture, because as I travel around the country and talk to companies and to universities, I see some great examples of collaboration. We’ve seen a range of different metrics which suggest that the picture is a bit more complicated and I think we are probably in the middle of the pack rather than the bottom of the pack as some people say.

What can we do? Well the good news is that universities are reaching out more proactively. The Government has changed the way it allocates funding to universities to make it more attractive for universities to work with business. And universities are responding to that: we’re seeing a lot of interest from universities in partnering with business. In the manufacturing space for example, there is some great work going on down in Geelong around Deakin University and the Carbon Fibre Technology Hub. And there are many other examples around the country.

We’re seeing some encouraging trends, but it’s still early days. And the reality is that Australian business as a whole doesn’t have a lot of experience in working with universities because it has been a weakness in the past. There is a bit of a climate and a culture issue and an inexperience of working with universities that I think Australian business needs to work on.

AMT: Is there perhaps a tendency in a way for Australia to talk itself down and take a bit of a glass-half-empty perspective about this when we are probably punching somewhat above our weight in some areas?

CD: I think that is true to a point. And one piece of evidence to support that is if you travel around the world I think you’ll find virtually every country will say they’re struggling with the same kind of issue. And we can’t all be below average, right? Some people have to be above average.

I do think that Australia sometimes doesn’t take an objective look and see some of the things that we are good at. And that matters, because I think innovation involves risk-taking, and your level of confidence – your belief that you have the knowhow and capability to succeed – does influence your decisions about your willingness to take risks. That matters a lot.

More generally, in manufacturing, I think there’s a lot of unnecessary pessimism about where manufacturing is going. I see a lot of change going through the manufacturing industry, but I see some great manufacturing businesses that are growing, and I see a lot of businesses that are providing not only the design and R&D services, but also the sales and marketing services that support manufacturing. I see a lot of positive things happening in the manufacturing space, but I don’t think a lot of the public discussion captures that.

AMT: What advice would you give to an Australian manufacturing business that basically wants to improve its innovative capacity, that maybe feels like it’s got great ideas but doesn’t know how to take those next steps?

CD: What the research shows is first and foremost that the key driver of innovation is understanding the customers’ needs really deeply: listening very carefully to customers and working with them. Increasingly what we’re seeing in highly innovative countries is that suppliers and customers are working really closely together to co-innovate, rather than one party taking on all of the load. So listening to and working with your customers is really important.

The other thing where Australia doesn’t rank particularly well on international metrics is in the skills of our managers to manage innovation. There are some real skills and disciplines around managing the process or the risks around innovation, so I would say if you’re a business owner looking to innovate: are you investing in skilling up your management team to oversee that process successfully?

And the third thing I would say is again we see at the macro level that the way to really hone your skills is to play in an export market. The most innovative businesses tend to be active in global marketplaces; global customers are very demanding, and that drives a circle of innovation. So if you’ve got some great ideas or if you’re looking to drive innovation, you need to be playing in those global markets.

AMT: What sort of assistance can manufacturers access to take these steps?

CD: There’s a whole range of programs from the Federal Government, and in fact many state governments also have programs. But certainly I’m most familiar with the Federal Government’s programs that support a range of things whether it’s commercialisation or new technologies, or skilling up managers and giving advice. There are investment incentives available for venture capital and obviously with the R&D Tax Incentive, which although is changing, still offers an incentive for businesses to undertake R&D. And then there’s things like the Export Market Development Grant, which can help businesses that are looking to go global.

So there’s a really wide range. In fact one of the challenges I find talking to people in businesses around the country is just navigating all those different grants and being able to find what’s available. There is a website – business.gov.au – that is the single entry point for those things. That’s a great place to start.

AMT: What does your role entail on a day-to-day basis?

CD: On a day-to-day basis, I lead a team of what’s called the Office of Innovation and Science Australia. And we work with the Innovation and Science Australia (ISA) Board; we provide research and analytical support to the Board to help them frame their advice to government. The Board comprises  active executives or leaders with their own day jobs so they’re part-time, whereas I and my team are full-time, so I do a lot of the running around. I try and get around to as much of the community and the nation as I can. I’m on a plane a lot visiting firms, universities and other players in the space to understand what the issues are, what’s working and what’s not working, and helping to identify gaps or improvements in government policy that we can channel through the Board’s advisory mechanism. So on any given day I can be in all sorts of different places working with a mix of people from across the public and private sectors.

AMT: Tell us about your professional background and how you ended up at ISA?

CD: I’m an engineer by training. I went into engineering because I’ve always had a bit of a fascination with technology. But specifically I was always interested in how technology goes from the lab to the marketplace. I’ve always been curious as to why sometimes there are really good technologies that don’t ever find their way into large-scale products, or take a very long time to do that. So I studied engineering, I did a PhD in gas turbine design, and then after a few years in business consulting, I found myself at the University of Melbourne working in their pre-seed investment fund UniSeed, trying to back researchers who were taking their ideas to market. That led to a 15-year stint at the University working at that business-university interface, taking ideas and trying to get them from the lab into products and services that can compete in the marketplace. About a year and a half ago the opportunity came to lead ISA, which was a new entity the Government had established and was looking for someone with my sort of background. I was excited to have the opportunity to work with the Federal Government and try to make the innovation system work better.

AMT: What’s the most satisfying part of the job?

CD: One of my favourite quotes is attributed to the sci-fi writer William Gibson who reputedly said: “The future is already here, it’s just not very evenly distributed.” And I have the privilege as I travel around the country, to see people who are working on the future and making it reality. It’s a tremendous privilege to see what really inventive and ingenious Australians are up to every day. It gives me tremendous optimism for our future because I see the talent and the skills that we already have in abundance around the country. I’m reassured that we can find ways to scale up those ideas and spread them more broadly not just across Australia’s economy, but across the global economy; I think there’s tremendous opportunity for Australia. Being able to work with people who are active on the frontier, that keeps me very excited in coming to work every day.

www.industry.gov.au/isa