Innovation, Creativity and Leadership Report of a Study of the ACT Innovation System March 08 ISBN-978-0-642-60439-2 ISBN-10: 0-642-60439-8 © Australian Capital Territory, Canberra 2008 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission from the Territory Records Office, Community and Infrastructure Services, Territory and Municipal Services, ACT Government. GPO Box 158, Canberra City ACT 2601. Produced by Publishing Services for: InnovationBusiness & Industry Development Branch, Business & Projects Division, Chief Minister’s Department, Enquiries about this publication should be directed to: GPO Box 158 Canberra City, ACT 2601 Phone 1800 244 650 Howard Partners www.business.act.gov.au/ ABN 89 090 817 360 Level G, 15 Beauchamp Street Publication No 08/0324 http://www.act.gov.au Deakin ACT 2600 Telephone: Canberra Connect 132 281 www.howardpartners.com.au ii Contents Executive Summary 1 Recommendations 6 1 Introduction 9 1.1 Background 9 1.2 Innovation and innovation systems 10 1.3 The competitive environment 21 1.4 Approach to the study 22 2 The innovation policy context: vision, plans, and frameworks 23 2.1 Innovation policy objectives 23 2.2 The Canberra plan and strategy 24 2.3 The economic framework 26 2.4 Australian Government purchasing and procurement 32 2.5 Issues and implications 37 3 Innovation system capability 39 3.1 Research and development capability 39 3.2 Creative capability 52 3.3 Business and entrepreneurial capability 62 3.4 Conclusions 64 4 Innovation system institutional framework 65 4.1 Institutions for teaching and research 66 4.2 Cultural institutions 67 4.3 Lead businesses 68 4.4 Networks 73 4.5 Conferences, awards and prizes 78 iii contents 4.6 Technology parks and seed funds 80 4.7 Investors 81 4.8 Support services 83 4.9 Policy and strategic framework 84 5 Innovation system dynamics 85 5.1 Framework 85 5.2 System attributes 87 5.3 Interactions and connections 90 5.4 Issues and implications 92 6 Canberra’s distinctive capabilities 93 6.1 A City with an international outlook and connections 93 6.2 An international centre for research and teaching 94 6.3 Centre for culture, arts, and creative practices 94 6.4 A Centre for defence procurement 95 6.5 An attractive place to live and work 95 6.6 Implications 96 7 Best practice 97 7.1 Berlin 97 7.2 Ottawa 98 7.3 Washington, DC 98 7.4 London 101 7.5 Wellington 102 7.6 Observations and implications 103 8 Some emerging trends 105 8.1 The ‘democratisation’ of information technology 105 8.2 The convergence of information technology and creative practices 106 8.3 Higher education engagement 107 8.4 Biotechnology 108 8.5 Demand for security solutions 109 8.6 Government procurement practices 110 8.7 Centralisation of government administration in Canberra 112 9 Key issues to address 113 9.1 Creating critical mass 113 9.2 Leadership 114 9.3 Building a culture of collaboration 114 9.4 Building business capability in the creative industries sector 115 9.5 Support for new business development 116 9.6 Resources 117 9.7 Out-migration of skilled people 117 9.8 Policy issues 117 iv contents Innovation, Creativity and Leadership Report of a Study of the ACT Innovation System March 08 10 New visions for Canberra 119 10.1 A centre for a technology, arts and creative practices industry 119 10.2 A ‘connected city’ 120 10.3 An international city of design 122 10.4 An international centre for conservation management and practice 123 10.5 Australia’s ‘education’ capital 123 10.6 Sustainable City 124 10.7 Issues and implications 126 11 Actions and initiatives 127 11.1 Establish leadership and direction 127 11.2 Build a framework for new business support 130 11.3 Advocate for innovation in government procurement 133 11.4 Position Canberra as an international city 134 Attachment A: Strategies and actions to establish Canberra as an international city of design and architecture 135 Achieve UNESCO ‘City of Design’ status 135 Branding through the Canberra Biennial 137 Establish a Graduate School of Design 138 Plan for a National Design Museum 138 Encourage Establishment of a Peak Body for Design 139 Overall framework 139 Attachment B: Australian Government Contracts Gazetted for Procurement of Goods and Services in the ACT and Region 2006-07 141 Classified by ANZSCC Code 141 Classified by Agency/Department 144 Attachment C: Profile of Research and Development Expenditure in the ACT. 147 Overview 147 Higher education 148 Government 153 Attachment D: A note on financing start-up businesses 155 Attachment E: The MIT Media Lab 159 References 163 v contents Table 1: ACT Industry Percentage Contribution to Total Factor Income 27 Table 2 ACT Employment by Industry Sector (‘000) 31 Table 3: Australian Government—purchases of goods and services in the ACT and region exceeding $10m 33 Table 4: Australian Government purchases of goods and services in the ACT region—ANZSCC code 34 Table 5: Innovation system capability investment framework 40 Table 6: Higher education expenditure on R&D by type of activity 2004 ($’000) 41 Table 7: Higher education expenditure on R&D by type of activity 2004 (proportion) 41 Table 8: Summary of higher education expenditure on R&D by research fields 2004 ($’000) 42 Table 9: Summary of higher education expenditure on R&D by socio-economic objective 2004 ($’000) 43 Table 10: Higher education research commercialisation indicators 44 Table 11: Government expenditure on research and development 45 Table 12: CSIRO research commercialisation indicators 46 Table 13: Major Australian research infrastructure located in the ACT 46 Table 14: Business expenditure on R&D, by industry - by location: 2005-06 47 Table 15: All ACT Students by Higher Education Provider and Broad Field of Education, Full Year 2005 48 Table 16: Students by Higher Education Provider and Broad Level of Course, Full Year 2005 49 Table 17: Australian Government Business Support Programs 51 Table 18: Employment in Creative Industry Segments, 2001 census 54 Table 19: Number of creative businesses in the ACT by segment—2006 55 Table 20: Innovation system institutional framework 65 Table 21: Expenditure on R&D, by industry - by location: 2004-05 147 Table 22: Higher education expenditure on R&D by source of funds 2004 ($’000) 148 Table 23: Higher education expenditure on R&D by source of funds 2004 (proportions) 148 Table 24: Higher education expenditure on R&D by type of activity 2004 ($’000) 149 Table 25: Higher education expenditure on R&D by type of activity 2004 (proportion) 149 Table 26: Higher education expenditure on R&D by research fields 2004 ($’000) 150 Table 27: Higher education expenditure on R&D by research fields 2004 (proportion) 151 Table 28: Higher education expenditure on R&D by socio-economic objective 2004 ($’000) 152 Table 29: Higher education expenditure on R&D by socio-economic objective 2004 (proportion) 153 vi Executive Summary This is a study of the ACT innovation system. It is entitled Innovation, Creativity and Leadership as it is now very clear that innovation, the successful exploitation of new ideas, does not and cannot occur without two vitally important ingredients: creativity and leadership. Whilst innovation is the successful exploitation of new ideas, creativity involves the development of original and novel ideas that have a commercial application. Leadership is the capability that ensures the translation of ideas into practical application through management and organisational frameworks. Innovation is reflected in the introduction of new products, new services and new ways of interacting with suppliers, distributors, customers, and clients. It is a building block for sustaining competitiveness and productivity as well as quality of life. Innovation contributes to economic outcomes through increased production of goods of services, increased employment, increased investment, and increased exports. It contributes directly to productivity and business performance through process efficiency, process design, branding and marketing (Great Britain. Department of Trade and Industry, 2005). Governments have a major interest in ensuring that businesses that fall within their jurisdictions are innovative—as business success is reflected in overall economic success as indicated by new business formation, business growth, and longer term business sustainability. Businesses build innovation capability through interactions and relationships with other businesses along the value chain, with research and teaching organisations, and in the context of the ‘creative’ economy, with arts and cultural institutions. 1 executive summary Cities and regions provide the frameworks for innovation by being ‘hubs of capability’ and facilitating ‘linkages’ between businesses, research and teaching organisations and government organisations. The concept of ’hubs’ and ‘linkages’ provides the basis for the analysis of ‘innovation systems’. Although the focus of this study is on the economic and business aspects of innovation, the adoption and application of new ideas through creativity and leadership processes is also relevant in the social, environmental, and cultural spheres. This study endeavours to draw a link between economic and cultural dimensions by drawing attention to the economic contribution of the creative industries. The link between economic and environmental outcomes is also addressed through innovation to ensure sustainable futures. Studies of innovation systems have tended to focus on the ‘science system’ as a foundation for research and development and the creation of new technologically oriented products and services. Studies map and document capability in research institutions, expenditure on research and development, and count patents and start-up companies. There tends to be a focus on discoveries and inventions in the natural and life sciences, engineering, and the enabling technologies of information and communications technologies (ICT), biotechnology, and nanotechnology.