Tuesday 24 May 2011

Stimulating innovation in entire industries

Stimulating innovation in entire industries

Innovation can occur at different levels � at the individual, organizational, and industry sector levels. Most of the focus on innovation has been at the individual and organizational levels. Government innovation programs have been historically targeting skills development and incentives for the individual entrepreneur, and funding and support for individual organisations, rather than groups of firms acting collectively in an industry.

An opportunity exists to stimulate innovation at the industry sector level by taking into consideration the needs of the stakeholders within a specific industry sector or sub-sector. More specifically, an �innovation ecosystem� of an industry sector or sub-sector consists of a variety of stakeholders including inventors, entrepreneurs, researchers, innovators, small to medium enterprises (SMEs), large corporations, government agencies and end-users. Many new and emerging industry sectors, such as clean  technology and nanotechnology, are characterised by fragmented and dispersed players, many possessing a piece of the puzzle and trying to make a difference on their own.

The Australian Institute for Commercialisation (AIC), through its experience in delivering a number of innovation programs on behalf of the Australian and state governments, and its own innovation and commercialisation programs that are focused on addressing immediate issues and opportunities facing businesses, has developed the �Industry Innovation Framework� (diagram below), which drives innovation and collaboration at the industry level, and is focused on development across new or emerging industry opportunities.                 

The Industry Innovation Framework engages multiple stakeholders across a particular value chain to develop specific industry sectors that can strengthen a nation�s economy by:

  • adopting new knowledge or technology;
  • enhancing collaboration activities;
  • building new value chains; and
  • increasing innovation capability.

The core components of the Industry Innovation Framework include the process of Value Chain Mapping and TechClinics�.

Value chain mapping determines the activities, participants, and capabilities that a particular industry needs to develop so that it can build industry sectors. For example, in order to establish a viable algae-based biofuels industry in Australia a large-scale algae production and oil extraction capability needs to be established. Australia currently has the research, development, processing, refining and end-user capabilities for this industry sector, but lacks adequate scale in algae production and oil extraction. However, algae production and extraction integrate between the development and processing activities of the value chain (refer to diagram below) and therefore are integral to the building of a complete  algae based biofuels industry in Australia.


To identify this and start to address the missing links, the TechClinic� is a structured forum that brings together multiple stakeholders (research organisations, industry, government and end users) across the value chain to interact and engage in collaborative activities. The TechClinic� strengthens an industry sector that is fragmented and dispersed, and allows organisations and firms to identify opportunities and overcome challenges.

Government stakeholders who participate in the TechClinic� forums are informed of the issues and opportunities, but also the specific needs required to build industry level capability in established or emerging economic sectors. Government can therefore target support and incentive programs specifically towards identifiable market failure to fill the gaps across the value chain.

The TechClinic� facilitates and encourages firms, to collaborate with other stakeholders across the value chain to:

  • facilitate collaborative opportunities with researchers and other firms;
  • promote awareness of solutions available to industry;
  • provide networking opportunities with end-users and larger corporations;
  • improve uptake of technology by industry; and
  • increase industry and innovation capability.

The challenge for governments is to change their mindset, assume new paradigms of thinking and adopt novel globally leading programs to assist the development of industry capabilities, so that specific industry sectors remain competitive in the global arena.

Government funding, support and incentive programs must be aligned with the needs of industry sectors to build value chains and strengthen the organisations that operate across these value chains, in addition to specifically targeting the different needs of businesses.

Dr John Kapeleris

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