Episode 50 - Innovation, Productivity and Economic Reform Roundtable with Catherine Livingstone AC

In our 50th episode, I had the great privilege of exploring innovation, productivity and the Australian Business Model with Catherine Livingstone AC. Catherine is a distinguished and extraordinary contributor Australian public and business communities, having held a range of roles including CEO of Cochlear, chair of Telstra, chair of CSIRO, chair of Commonwealth Bank of Australia and currently Chancellor of University of Technology Sydney.

In this extended conversation, we set the scene with some discussion around industry and neoliberal policy and explored the role government played in the formative stages of Cochlear. The Australian Business Model, an idea that has been in motion over the past few years, was discussed and the phase change that is underway, at both scale and speed. While the global market will sort things out, there are policy and government decisions to be made to either accept 'what is left over' in contrast to how can we take control of the future that Australia wants. Catherine noted that industry policy has been tarnished in recent years with a sense that this currently is seen as corporate welfare or grants. Australia needs to look at its comparative advantage and take this to globally competitive advantage. We discussed examples from Singapore and Taiwan, and reflected on the recent podcast with Dr John Howard around the impact of issues of design and policy.

We also explored the question of 'what is productivity?' and drew parallels with health, in that everyone really wants it but it's rather tricky to define! We discussed productivity and introduced the ideas of capital and technology deepening as a means to this very broad end. Catherine noted that solutions are at disaggregated levels and different in market and non-market sectors, and reflected on a recently published McKinsey study from the USA. Catherine introduced the need for investible propositions and the role of government signalling through policy and its convening power. We agreed that thoughtful design of industry policy needs to be at the centre of government thinking around what Australia's future business model could be.

Catherine also contended that Australia has a challenge around research translation. We teased out what this means and connected the concept to investible propositions, reflecting back on the Cochlear experience. In identifying that Australia has a deep tradition in integrating technologies, we then explored why the capability to integrate hasn't found its way into Australia's ability to translate. We touch on factors such as management impatience, (sporadic) government funding and (changing) policy settings. The 'Missing Middle' was the centrepiece of the 2023 National Innovation Policy Forum. Catherine and I discussed whether there is, in fact, a missing middle and whether this nomenclature is helpful in improving Australia's 'innovation' translation performance.

A concept that we've had on the podcast for some time is that Australia has a 'demand side problem with innovation'. Catherine suggested that we are not good at communicating our successes, with a lot of innovation adopted internally and not necessarily in the form of a new venture. We noted that if you don't have sectors looking to solve problems, or don't have the sectors, you don't have the problems! We then reflected on the need for government to become a demanding customer and how they may not be geared that way. I reflected on our recent discussion with Kerstin Oberprieler and her government procurement experience. Our conversation with Catherine reflected on a combination of risk aversion and brand familiarity driving current government procurement. Catherine noted that with things moving quickly, it's harder for people, and specifically, bureaucrats, to be immersed in and informed as a purchaser. How do industry and government build better connection to be well informed buyers and sellers?

We closed our conversation with Catherine outlining her hopes for the upcoming Economic Reform Roundtable. Catherine shared an ambition for a whole-of-system review, where choices are made that are consistent in scale and impact – not laundry lists. Furthermore, activities should be implementable and their interdependence recognised, for which a systems view is required.

This was an extraordinary conversation, exploring a range of perspectives around the intersections of the innovation system, and government and business needs. While we touched on this in our most recent discussion with Dr John Howard in Episode 49, the discussion with Catherine connected to so many themes that we have explored in the podcast from case studies connected to translation with Ray Miller, Alan Finkel, Victor Pantano and Tony Peacock through to the 2024 National Innovation Policy Forum reflection with Jane O'Dwyer.