Australia’s innovators are inefficient when it comes to applying ideas in practice, according to a Department of Industry, Innovation and Science report released in February.
To gather insight into the European experience and help industry overcome the challenges in application, mining services growth centre METS Ignited hosted European innovation expert Dr Erkki Ormala in a whirlwind tour of five presentations across five states in five days.
Dr Erkki sat down with National Mining Chronicle Lead Resources Reporter Jack McGinn on the fifth day in Perth to talk innovation, leadership and the international experience.
It was 2013 when Dr Erkki Ormala first recognised what he considered to be the need for a shift in the way business thought about innovation. A senior Nokia veteran from 1999 to that point, he left his field, took up a post as Professor of Practice in Management and International Business at Aalto University in Finland and embarked on a study to test his hypothesis.
Launched as a pilot project in Finland, Dr Ormala and his team spoke to businesses big and small and confirmed their findings in a report, before receiving funding from the EU’s Horizon 2020 framework to undertake a similar study across Europe.
Eleven countries and 700 companies deep, Dr Ormala is convinced now, more than ever, of the hunch he felt on leaving Nokia in the European spring of 2013 – that the components required to apply innovation in industry have changed from what they once were, and they’re not changing back any time soon.
Aussie innovation lagging behind
The Australian innovation experience is one which in the last few years has drawn heavily from our resources sector. Where prices have fallen, companies have pursued process improvement and lowered baseline costs.
While these results have shown an ability to adapt relatively quickly in a volatile environment, the nation as a whole is still considered to lag behind its international competitors when it comes to top-tier innovation.
That’s according to the Department of Industry, Innovation and Science’s Performance Review of the Australian Innovation, Science and Research System 2016 report released earlier in the year, which showed that while the nation’s ideas across all fields are plentiful, their application leaves much to be desired.
“As a nation we’re good at creating knowledge, but simply not good enough at transferring or applying it,” Innovation and Science Australia Chair Bill Ferris said.
“In both our number of researchers per capita and the proportion of highly cited publications we produce, we sit in the top 10 internationally.
“We are, however, performing relatively poorly in transferring that knowledge and, ultimately, applying it. It is these activities that create the types of new goods and services that not only improve our lives – think breakthrough medical technologies, environmentally friendly production techniques and new ways of growing and storing our food – but also provide economic growth and sustainable jobs.”
In the METS sector, where innovation is at the forefront of what companies are trying to achieve and deliver, this likely means lost opportunity and cash.
Europe’s innovation ecosystems
The Australian issue of a disconnect between ideas and their delivery is one seen in the European experience as well, according to Dr Ormala.
“It’s partly a cultural issue, but it’s also partly the question that the processes are so complicated and complex that companies may have difficulty implementing new ways to innovate,” he said from the Thomas room at the CORE Innovation Hub – a co-working space in the Perth CBD designed to foster collaboration in the resources sector.
“That was exactly one of our key findings [in Europe], that nowadays, innovations don’t happen in an individual company, they happen in an ecosystem.
“What that means is companies need partners – they collaborate with the customers, with the suppliers, with their partners and with the public research institutions.
“If this kind of collaboration is not smooth, if it’s not efficient and benefiting all the partners within it, then the ecosystem can’t survive.”
The key takeaway is in sharing knowledge for mutual benefit, rather than transferring it in one direction or another.
“Universities, for example, can benefit from collaboration exactly as much as companies can,” Dr Ormala said.
“This is why there needs to be a collaboration culture with trust between partners.”
By sharing knowledge with partners, rather than shielding it, organisations in Europe have provided a pathway for Australian METS to consider as they look to revolutionise the industry in which they operate.
Change on a business level
Progressing toward more deliverable innovation in Australia may not be as simple as replicating the actions of a forward-thinking few in the Northern Hemisphere.
While Dr Ormala concedes there’s no simple recipe to making Australia’s METS sector more actively progressive on innovation, he believes, based on his research, that traditional means of doing business are a barrier to getting ahead.
“One of the key observations from the European companies is that they still utilise the stage-gate model of business extensively,” he said.
“You do the research, and then you make a project plan with checking points, and then when everything’s ready to go, you go to the marketing department and they start commercialising – that’s not how it works now.
“Nowadays, everything happens in a systemic manner; in a seamless process. Therefore, companies have to explore their internal organisation.”
Dr Ormala said companies of all sizes in Europe had opted to introduce an innovation board, operating independent of their executive board, but guaranteeing innovation strategy is in line with business strategy. Others have set up separate business units devoted to innovation and research.
Another key theme is the involvement of the product’s end user during the development process – allowing tailored solutions to specific problems.
“We have a customer involvement, so the customers are brought into the process right from the beginning,” Dr Ormala said.
“That speeds it up – you don’t have to negotiate with the customers when you have the product ready because you develop the product together with the customer.”
A message for METS
The truly innovative organisations in Europe are led from the top, with incentives for those who push ideas forward.
“In the most advanced companies we have KPIs which reward individuals and teams for new innovative ideas or commercially successful innovative partnerships,” Dr Ormala said.
“We need culture which welcomes public-private partnership, or external partnerships, so people understand it’s not enough that they are just working in their closed office rooms.
“They have to open up, have a dialogue and eventually look for partners which might help the process become faster, more efficient, or actually expand it.”
Picture: Dr Erkki Ormala. Credit: Sonja de Sterke