In a time of political and financial uncertainty, Australian businesses are presented with a unique set of challenges and opportunities in the Indo-Pacific region. Australia’s strategic geographical position in one of the fastest growing regions in the world has opened doors to new markets and consumers.
Two decades of strong economic growth, combined with growth in the value of exports, has provided for a stable economy and enhanced trade ties with many of our neighbours. This has nevertheless been matched by falling commodity prices, an ageing population and slow multifactor productivity. The World Economic Forum’s Global Competitiveness Report ranked Australia 22nd out of the 144 countries surveyed. In 2010, Australia ranked 15th.
In a further report about information and communication technology (ICT) usage, the World Economic Forum highlighted that Australia “is largely dependent on commodity exports and is not particularly innovative”. The lack of a coordinated approach between the public and private sectors on investment in supporting entrepreneurs has been cited as one of the reasons for Australia’s slipping performance.
The Harvard Business Review also noted Australia’s lagging innovation, especially in the field of the digital economy. The issue at hand is not a skills shortage, but rather the lack of opportunity to link talented and forward thinking students and young professionals with established businesses.
This is in sharp contrast to our neighbours. Shanghai and Singapore were leading the region as havens for supporting digital innovation. According to research conducted by the Fletcher School, Australia ranks 12th, behind Korea, the United States, Singapore and Hong Kong. More significantly, Australia finds itself in the list of ‘stall out’ countries that are losing momentum in digital development.
The Australian business community can often been seen as risk averse and as such, they shy away from breaking new ground. Inertia from large scale businesses to drive creative change in products and processes is a distinct barrier to keeping up with foreign competition and providing opportunities for moulding future innovators.
Innovation and entrepreneurship pave the way for finding solutions both to local and global challenges affecting our region in the 21st century. Entrepreneurial enterprises create jobs (accounting for 97% of all jobs in emerging economies), increase productivity and generate renewed economic growth.
Innovation, new solutions and creative thinking is needed in all sectors of the economy to identify and pursue new opportunities in our neighbourhood. Entrepreneurs are key to creating new and game changing technologies and to providing business models that can promote Australian interests abroad. The ‘disruptive entrepreneur’ is vital to a thriving economy and their role cannot be filled by government, corporate or university research.
An overhaul of corporate culture is therefore crucial. Corporations must learn to see the startup culture and young entrepreneurs not as threats to the established order, but as important players in creating innovative solutions to increasingly complex problems. Initiatives and programs that encourage knowledge sharing and experimentation can help create strong business dynamics.
The relationship between established corporations and startups can be a mutually beneficial one. Corporations can provide entrepreneurs with much sought after marketing and finance opportunities, as well as business advice. In turn, corporations have access to fresh and dynamic talent and up-to-date information about the latest products and developments.
The difficulties that entrepreneurs face in seeking funding in Australia has seen young innovators seek alternative and more flexible markets overseas. The Crossroads 2015 report by StartupAUS states that the government-run Entrepreneurs’ Infrastructure Program was only able to provide half the funding for startups than its predecessor, Commercialisation Australia.
Australia is clearly lagging when it comes to funding and strategies supporting innovation, especially compared to regional neighbours and global benchmarks. China, South Korea and the UK have recently announced multi-billion dollar initiatives while New Zealand is extending its network of government-supported startup incubators.
Globally, the energy sector has witnessed some of the most exciting developments in innovative technology, and Australia is missing out on important opportunities in this field. Tesla Energy, SolarCity, Google and Nest are just some of the pioneers in disruptive energy technologies, supported by government policies and a willing private sector.
For example, in 2011, Nest introduced self-learning Wi-Fi that enabled and remotely controlled thermostats, leading to a decrease in energy consumption. At the start of 2014, Nest was allegedly selling 40,000 – 50,000 thermostats per month, with rapidly increasing sales. Embracing new energy technologies early and investing in research and development projects that work with young innovators, has long term benefits for all involved.
There is no shortage of passionate, driven university students and young entrepreneurs who are in tune with the latest developments of modern technology. A multi-disciplinary approach is crucial as “innovation will come from people who are able to link beauty to engineering, humanity to technology, and poetry to processors”. In order to secure continued growth Australia needs to support more entrepreneurs.
Valeriia Minigoulova is the International Trade and Economy Fellow at Young Australians in International Affairs.
Image Credit: Bas (image cropped) (Flickr: Creative Commons)