Australia does not have to sacrifice social and community wellbeing for economic prosperity. Or vice versa.

Too often, political debates present a ‘winner-takes all’ trade-off between a better economy or a better society, between wealth creation and its equitable distribution. Australia’s public policy does not have to be locked into such binary choices.

A recent essay by Treasurer Jim Chalmers reminds us of the concept of ‘shared value’. He argues for a re-set to values-based capitalism in response to the serial crises of the Global Financial Crisis, the pandemic and now, energy and inflation shocks.

The Treasurer’s call is for a more progressive, inclusive approach to capitalism, without a choice between our economic and social objectives. Rather, priority goes to action that serves both goals. 

Why are binary choices between the economy and society so durable?

Partly, because of the adversarial nature of party politics. Perhaps because of the fracturing of debate into ever more divided and extreme outlooks. Or as economist, Ross Gittins, suggests, binary positions that shift from one extreme to another over time, are an easy way of communicating complex policies. They also serve as a short-cut substitute for necessary “hard thinking”. 

Not everyone agrees with the Treasurer’s enthusiasm for a new capitalism. Critics label his approach as highly interventionist and contrary to landmark financial and market liberalisation reforms of the Hawke-Keating era. Others minimise its contribution, arguing it is ultimately silent on genuine, far- reaching reforms to capitalism that result in sustained social dividends. They see the Treasurer’s efforts as a modest, not radical, set of ideas with a highly limited capacity for implementation. 

The Treasurer refutes these reactions with prescriptions for a reform agenda for modern times. He highlights: co-investment and greater economic co-operation; reform of institutions, e.g., the Reserve Bank and the Productivity Commission; and an overhaul of markets to be more informed and well-designed. He points to concrete current examples of policies and structures to serve as practical role models. 

Whether you agree with Jim Chalmers’ arguments or not, there are two good reasons to welcome the Treasurer’s more thoughtful long-form essay putting a different angle on issues shaping Australia’s future. 

Firstly, the fresh emphasis of its subject matter at the intersection of shared social and economic value. Secondly, the case it puts for collaborative problem-solving. 

Intersection of the social and economic worlds 

Jim Chalmers’ essay opens up the debate on capitalism. It questions the conventional wisdom of neo-liberalism, which has been the predominant, if not exclusive, driver of Australia’s public policy in recent decades. 

Not only is this orthodoxy uncontested, but its outcomes in terms of both business competitiveness and people’s wellbeing, are disappointing. This neo-liberal philosophy has effectively isolated economic decision-making from social concerns.

Now, the Treasurer has focused our attention on the intersection and interaction of social and economic aspirations. This allows us to explore the commonalities and interdependency of economic and social policy. Most importantly, we are invited to delve deeper into the dynamics of how creating shared economic and social value works in reality. 

The end result of this greater understanding is that decision makers potentially uncover more versatile policy options and more informed measures of success.

Earlier articles in this Latest Thinking website have contributed insights on shared value. They provide examples of the drivers and effects of aligning the commercial and social purposes of businesses. See Redefining Capitalism: More Than Money (March 2020) and Companies With Purpose: Jobs With Meaning (November 2019). These emphasise the importance of spanning boundaries.

Collaborative problem-solving 

The other important contribution of the Treasurer’s essay is its focus on collaborative problem-solving. 

This also involves spanning boundaries, particularly between government, business and community interests. A vital prerequisite is a combination of a common cause, shared intelligence and trusting and productive working relationships. 

Essential ingredients for identifying and implementing workable solutions to complex problems include the ability to embrace and make sense of diverse, even opposing, views and proficiency in critical and design thinking. Closeness to consumers and communities that policies are aimed to benefit is also essential. 

This does not happen by accident, but requires expert brokering of connections of both people and ideas, and skill at drawing out alternative plausible innovative solutions to problems that matter. 

One example of expertise in addressing challenging problems in an inclusive and rigorous way is the work of the Eidos Institute. See the October 2020 Latest Thinking article, Making the Contest of ideas ‘Shovel-Ready‘. Its key feature is the ability to foster uncommon connections, new ways of working and intelligent compromises. 

To conclude, it is worthwhile giving the concept of values-based capitalism a go. 

This concept has the potential to bridge previously separate ideas—profit and purpose, cooperation and competition, social and economic outcomes, urgent challenges and future opportunities— and to craft solutions to problems that to date have resisted easy answers. 

Better than stark binary choices and past orthodoxies, values-based capitalism offers a way to experiment with policies that simultaneously deal with historic vulnerabilities and advance both the living standards and the quality of life for all Australians.

REFERENCES: 

Jim Chalmers, Capitalism after the crises, The Monthly, February 2023.

Michelle Grattan, Jim Chalmers lays out agenda for pursuit of values-based capitalism, The Conversation, 27 January 2023.

Politics with Michelle Grattan, Treasurer Jim Chalmers answers critics of his values-based capitalism, The Conversation, 30 January 2023. 

Carol Johnston, Humanising capitalism: Jim Chalmers designs a new version of an old Labor project, The Conversation, 1 February 2023. 

Guy Rundle, Chalmers’ plan isn’t radical. Labor needs an alternative to the rule of capital, Crikey, 6 February 2023. 
Ross Gittins, A better economy comes from policy, not picking sides, Sydney Morning Herald, 6 February 2023

What has business innovation got to do with the challenge of enabling better physical health outcomes for people with psychotic illness?

This was the question being asked at a recent Symposium led by the Psychosis Australia Trust. The answer required a deeper dive into the literature and practice of innovation management, drawing out crucial success factors of business innovation, and spanning the boundaries between economic prosperity and social wellbeing.

The active ingredients of transformative change for effective innovation in business and for solving difficult social problems are similar—a greater focus on human dimensions of business innovation, and not the conventional view that innovation equals technology and scientific research and commercialization.

The following key insights were shared with mental health policy professionals and advocates about the lessons from business innovation:

·      Impact, not just ideas

While innovation is more than just technology and research breakthroughs, it is less than just any form of creativity, bold new idea or entrepreneurial flair. Innovations hinge on execution; they must be put into action and make an impact.

Innovation is not an end in itself, but a vehicle for economic and social progress. Therefore, the innovation must also meet a recognized need or gap.

Put simply, innovation is defined as creating value by doing something new, which is needed and useful, and well-executed.

·      Learning, not ‘light bulbs’

Vital for putting bold ideas into effective action is the need to enhance innovation capabilities in enterprises, their management and workforces.

Success through new-to-the-world technologies and discoveries is rare. More likely, innovation capabilities are the result of enterprises:

• Learning by doing, through small, rapid and safe experimenting with new ideas in real world situations.
• Learning by using advanced technologies that bring new capabilities, and by mining diverse sources of existing knowledge such as design, market research, licences and prototyping.
• Learning by interacting with others through inter-firm collaboration, personnel movements, links to professional bodies and the like.

Most importantly, performance and productivity gains are realised when these innovative approaches are brought together in a transformed business model, a recipe which creates superior value for customers by meeting an unmet need and earns a premium for the business in doing so.

·      Not a solitary pursuit

No single individual or organisation holds all the answers. To get results, innovation practices require investment and contributions from multiple actors, disciplines and sources of knowledge.

Proficiency at collaboration is a significantly powerful innovation capability. Collaboration includes the ability to share information and to learn, to be outward and forward-looking, and to solve problems by cross-fertilisation of knowledge and expertise.

Skill at collaboration is valuable, not just in formal joint ventures and partnerships, but in managing relationships, building trust and shared interests, negotiating diverse opinions and outlooks, and brokering industry clusters, innovation eco-systems and communities of practice.

Similarly, encouraging flows of knowledge, is more important for securing innovation outcomes than just increasing stocks of knowledge held by individuals and organisations. The challenge is balancing the quest for diverse knowledge with efforts to continually strengthen deep, specialist knowledge.

·      More about the user than the producer

Any innovation worth doing should solve problems that matter to customers, consumers and communities, rather than being focused on the perspectives and assets of the producer or those tasked with fixing the problem.

A key theme here is the concept of people-led change.

People-led change involves harnessing and acting on the bold ideas for change for the better from a diverse range of perspectives, including from the general public, those directly affected by the problem, and those not usually well-connected to decision makers.

The power lies in unlocking their different insights and sources of knowledge as an untapped source of innovation. Among the approaches to activate people-led change are open innovation, crowd-sourcing projects and design-thinking initiatives.

In summary, this wider, less publicised angle on business innovation recognises many different forms of innovation—incremental, radical, disruptive and focused variously on products, services, processes and transformed business models.

It serves to uncover a broader range of ideas and contributors as change agents to put innovative ideas into action. It shows that innovation is not a rarefied concept, but one that affects the daily lives of ordinary people.

By being human-centred, not technology-based, these fresh insights build a bridge from business innovation experience to new ways of addressing difficult and complex social and community problems that are resistant to easy answers.

REFERENCES:

Based on a presentation on ‘The Power of People-Led Change’ by Narelle Kennedy AM to the Psychosis Australia Trust 2022 Symposium, 15^th September 2022.

Design is a familiar concept. Industrial design brings together utility and beauty in award-winning products. Similarly, good design is evident in buildings and architecture, where form and function are harmonized with environmental fit and sustainability.

But, there is more to design than remarkable products and buildings. Design is a powerful, but largely unrecognized, tool to enhance the lives, jobs, prosperity and well-being of ordinary people. This can result from embedding design practices in public policy-making and business strategies.

How does this work? A neat summary of the practices of professional designers is often presented as the ‘Design Council’s double diamond’ of design thinking. This is used to identify and address big, complex and significant challenges facing business, government or community decision-makers.

The key features of the design thinking ‘double diamond’ are as follows:

• Twin processes, one that delves deeply to understand the problem from all angles, and one that explores alternative plausible solutions.
• Priority is given to the perspectives of those affected by the problem, not those charged with fixing it. Sometimes referred to as a user or customer-centric approach, focused on unmet needs or demand, rather than the supply of ready-made services, information or technologies.
• Avoidance of jumping prematurely to solutions before the problem is well-understood.
• Caution about embracing the first preferred solution without exploring other imaginative options.
• Ensuring that both problem framing and problem-solving tasks benefit from the input of diverse people with differing interests, expertise and disciplines.
• Rejecting the conventional linear approach that moves in a straight line from problem framing to problem-solving until it reaches a single conclusive answer.
• Rather, the approach is iterative, looping around between problem framing and problem-solving, testing different ideas and solutions at small scale, and prototyping and validating incrementally to build up answers that work in practice.

What do we know about the impact and benefits of using design practices to boost the prospects and resilience of Australian communities, industries and enterprises?

The Australian Design Council and Food Innovation Australia Ltd (FIAL) are piloting a series of National Design Challenges in the food and agribusiness sector, as one of Australia’s growth industries with a presence in regional Australia. The first project is underway in the NSW Bega Valley. While it is still at an early stage, some emerging insights warrant attention.

The Australian Design Council’s mission is to engage Australia’s world-class design sector to help grow more globally competitive Australian firms, and in turn, national prosperity.  The National Design Challenge is a framework to scale the impact of design by embedding our world class professional design capability into Australia’s Modern Manufacturing Strategy as a key enabler.

The Bega Valley project introduced teams of world-class professional designers to work alongside local business leaders and partners, who had already embarked on a strategy and initiatives aimed at transitioning the Bega Valley region to a circular economy. 

What are the lessons so far about the role of design in adding greater value and impact to the Bega Valley’s efforts?

Design practices seem to be having the following effects:

• Challenging assumptions about the scope of circular economy projects and driving those involved to think differently, in particular, to be more aligned and impactful in their vision. 
• Inspiring and motivating managers and workers by expanding otherwise mundane business proposals and cost-benefit calculations into new initiatives with community-wide benefits and social purpose. Serves to make jobs more meaningful and the employer’s contribution to the local community evident. 
• Making collaboration a natural mode of operation, even if projects are initiated by individual business enterprises or government agencies. 
• Making sense of a diversity of perspectives and expertise, without key messages getting lost in the cacophony, or voices from the edge being drowned out by the mainstream. 
• Fostering rapid experimentation, with small scale testing of ideas, to learn fast and fail fast. This mirrors the approach of agile entrepreneurs, not the slower research methods and systems which are common practice in the corporate world.
• Demonstrating that complexity and clarity can co-exist, by finding ways of addressing contentious issues that defy obvious answers, and developing and implementing imaginative solutions. Complexity is, therefore, not overwhelming and overly simplistic answers recognized and rejected.

Most importantly, the use of design reinforces curiosity as the norm. It provides the legitimacy and opportunity to trial bold ideas in practice, without putting the entire business or political outcome at risk.

In short, the hidden power of design owes much to its ability to make progress by nurturing both innovation and ‘business as usual’ practices simultaneously.

REFERENCES:

Magda Lechowicz and Qi Xuan Lim, Design Thinking and the Double Diamond: FAQs, Foolproof, 22^nd July 2020, https://www.foolproof.co.uk

Design Council’s Double Diamond – https://www.designcouncil.org.uk/news-opinion/double-diamond-universally-accepted-depiction-design-process

Food Innovation Australia Ltd, Capturing the Prize, https://www.fial.com.au/sharing-knowledge/capturing-the-prize

Australian Design Council, National Design Challenge—Food and Agri Sector, Bega Valley, February 2022, https://australiandesigncouncil.org/wp-content/uploads/2022/02/Australian-Design-Council-Bega-Valley.pdf

Thanks to Sam Bucolo, Executive Chairman, Australian Design Council for his assistance with this article.

It’s time to believe in things we cannot see.

Things that have no physical presence, but still make an impact, are real and valuable. 

Standard accounting practices define and value intangible assets. Unlike tangible assets (such as land, buildings, machinery, computers, vehicles and inventory), intangible assets cannot be physically touched, but still hold long term financial value for a business enterprise.

Intangible assets include intellectual property, such as inventions and designs, protected by patents, copyrights, trademarks and licensing agreements, together with resources integral to the business, such as brand recognition, a loyal customer base and other forms of goodwill.

Intangible assets are important not just for the value contributed to individual businesses, but for the performance of national economies. The Organisation for Economic Cooperation and Development (OECD), among others, charts the rise of the ‘knowledge economy’. 

The knowledge economy is one in which production of goods and services is based primarily on knowledge-intensive activities, creating greater reliance on intellectual property and human capital, rather than physical inputs, for innovative and competitive business performance.

In other words, what and who you know is more important than what you traditionally own and use as the means of production.

Knowledge economies are commonly associated with high tech manufacturing such as electronics, IT and computers, and aerospace; service sector industries including education, healthcare and software design; and business services, e.g., insurance, information and communications. The knowledge driving these industries comprises both explicit knowledge (from formal qualifications, facts, figures, data) and tacit knowledge (from experience, judgement, how things work, intuition, ways of dealing with people, and learning by doing).

Effective use of intangible assets is at the heart of the growth of knowledge-based economies.

Knowledge-rich economic activity and investment in intangible assets has accelerated in modern economies, especially over the last three decades, reflecting an age of information and globalization. Undoubtedly, there have been both positive and negative impacts from these developments, from leaps in accessing transformative technological innovations in the everyday economy to the rise of insecure, low paid work in the gig economy.

Some commentators, like McKinsey & Company, now argue that the global COVID 19 pandemic has “accelerated the shift toward a dematerialized economy” and with it, an incentive to invest in the intangibles of learning, knowledge and intellectual capital that unlock greater productivity and future growth potential.

McKinsey & Company cite research showing that economies that are experiencing growth in intangibles investment are also posting growth in total factor productivity. They make the case that companies deploying all four types of intangible capital—-innovation capital, digital and analytics capital, human and relational capital, and brand capital—-not only grow, but build capabilities that create competitive advantage. This augers well for future growth.

In examining this link between use of intangible assets and enhanced productivity and growth, we must avoid the trap of mistaking correlation for causation. It is important to delve deeper to understand just how the two work together.

Valuable insights for doing this come from an unexpected source, the UK-based anthropologist and journalist, Gillian Tett, in her recent book with the sub-title ‘How Anthropology Can Explain Business and Life’.

In short, Gillian Tett advises us to go out of our way to learn from people and things that are strange to us. Just as anthropologists do in studying other people, societies and cultures that are different from their own. They watch and listen, alert to the silences, that is, to those significant statements that give context to observations, but are so unremarkable and natural to the local people that they go unsaid. Understanding this unspoken context is vital to finding the truth and avoiding false conclusions.

The message is to actively seek out and use different perspectives. Gillian Tett calls for bridge building between economics and the social and behavioural sciences, between the quantitative and the qualitative, and across academic disciplines. This ability to build bridges is itself an intangible asset.

Upcoming business leaders will benefit from mastering the art of managing these things that they cannot see.

REFERENCES:

Rob Waugh, Making sense of the knowledge economy, The Telegraph, 29^th May 2019.

Andrew Wyckoff, Knowledge is growth, OECD, 2019, see https://www.oecd.org/innovation/knowledge-is-growth.htm

Eric Hazan et al, Getting tangible about intangibles: The future of growth and productivity?  Discussion Paper, McKinsey Global Institute, 16^th June 2021.

Gillian Tett, Anthro-Vision—How Anthropology Can Explain Business and Life, London, 2021.

Innovation Precinct’ is a term that means different things to different people. 

Innovation Precincts typically include co-location of high tech businesses, universities and skilled labour; a hot-bed of entrepreneurs and start-ups; a site for industry clusters with global reach; science and technology parks for industries of the future.

Whatever its form, innovation precincts represent a geographic concentration of knowledge-rich economic activity and collaboration to drive both economic and social dynamism in communities.

This aspiration is often described as creating a local version of Silicon Valley.

Sadly, this is an unambitious goal. It serves only to narrow the options and obscure the opportunities for shaping more innovative local communities.

The challenge is not just to mimic Silicon Valley. But, to delve deeper into what is going to make an Innovation Precinct distinctive and effective for your circumstances, history and peculiarities. 

So, here are four questions to move beyond just imitating Silicon Valley to create an Innovation Precinct customised to local needs and conditions.

Q1. What is the Innovation Precinct’s purpose?

What is the prime reason for the Innovation Precinct to exist? What pain does it aim to fix and/or what opportunities does it seek to gain?

For example, think about the following possible purposes:

• Replace or transform declining industries and lost jobs.
• Make the area well-recognised as a great place to live, work and play.
• Keep jobs close to home and create liveable communities.
• Build the skills and capabilities of local businesses, their managers and workers, to be more competitive, entrepreneurial and forward-looking.
• Assist local businesses to access sales opportunities in domestic and international markets.
• Support less prosperous communities with declining populations to thrive again with new facilities, services and opportunities.

Q2. What type of Innovation Precinct is best fit for purpose?

Different Innovation Precincts can be distinguished by their priority focus. Options might include:

• Innovation Districts or Hubs, Co-Working Centres, Maker Spaces—the focus is on building innovation capabilities and profile at the level of a locality, region or neighbourhood.
• Industry Clusters—the focus is on industry sectors, fostering clusters of industries for smart specialisation, that capitalise on the strengths of the area and deepen and diversify its economic base.
• Incubators, Accelerators, Science or Technology Parks, Entrepreneurial Hubs—the focus is on business enterprises, start-ups and universities, bridging research, frontier technologies, entrepreneurial flair and business acumen in campuses for commercialisation.

Q3. What is the current state of development of the Innovation Precinct and what’s missing?

How is the Innovation Precinct progressing? What are its achievements and effective elements? What obstacles are impeding progress? What priority actions are needed to achieve desired results?

To plot the state of play of the Innovation Precinct, try this matrix of two intersecting dimensions. First, Number of Nodes and Connections in the precinct, from few to many, and second, Sources of Knowledge and Capabilities, from deep to broad.

The Innovation Precinct can be positioned on this matrix in a way that describes its current stage of development and the priority gaps to be filled.

For example, if the precinct has many and diverse participants (on the nodes and connections dimension), then the priority goal may be to facilitate productive working relationships and collaborations between them. If there are few participants, then the task can be about attracting more players and actively creating a shared identity and purpose.

On the second dimension of knowledge and capabilities that characterise the precinct, if it relies on deep specialist knowledge and capabilities in a particular field, then the task is to seek out and engage more world-class research and researchers and experts in translating research to commercial ends. If, however, the precinct’s activities cover broad, cross-disciplinary sources of knowledge and fields of interest, the priority may be to encourage open-source knowledge exchange, shared learning networks, and innovative problem-solving laboratories.

Q4. What are the practical programs most likely to make the Innovation Precinct successful?

For impact and for sustainable operations, it is preferable for the Innovation Precinct to look outward, rather than inward.

That is, focus on programs that identify new opportunities and unmet needs, and that build the skills and capabilities to meet this demand speedily and imaginatively.

Among the practical programs to choose from are:

• Voucher or grants schemes.
• Procurement programs.
• Industry or Technology Roadmap projects.
• Business leadership and mentoring programs.
• Innovation or Maker Spaces.

Attention to these four questions structures more in-depth thinking about the character and diversity of Innovation Precincts. 

It challenges a narrow version of innovation places as driven primarily by technology advances, research commercialisation and entrepreneurial start-ups on the model of Silicon Valley.

This framework recognises that Innovation Precincts are designed to bring social benefits, not just economic progress, to communities. Importantly, it acknowledges the significance of local differences –in geographies, aspirations, and challenges. 

REFERENCES:

See presentation by Narelle Kennedy on The Geography of Innovation – Making Sense of Innovation Places and Spaces, Economic Development Australia webinar, June 2020.

26^th July 2021

Persistent booing of Australian political leaders by the crowd at major sporting fixtures is commonplace. Is this the usual humourous and largely harmless streak of Australian larrikinism? Or does it herald a more serious widespread disengagement and disinterest in all things political?

It is evident that many Australians are fed up with the relentless negativity and self-absorption of politics and politicians. Most importantly, they fail to see themselves and their concerns reflected in today’s political debates and decision-making.

But it is premature to pronounce the decline of Australian democracy. Paradoxically, it has taken a global pandemic to boost Australians’ trust in government and in business, non-government organisations and other major institutions. 

The 2021 Edelman Trust Barometer’s report of surveys of 28 countries in October and November 2020 shows that, in sharp contrast to global trends, Australia experienced a significant increase in trust in governments from the previous year. Australia also topped the list of countries with the largest jump in overall trust levels across government, business, non-government organisations and media combined.

Despite this strong trust result, Australia had the highest gap in trust between its more-trusting ‘informed public’—wealthier, more educated people who consume more news — and the mass population.

It seems Australia has two different experiences of reality. This is a warning sign. 

The rise in trust overall is a verdict on how Australian institutions have handled the pandemic, protecting lives and livelihoods with responses that have generally been characterized by co-operation, competence and compassion. At least at the time of the Edelman survey.

This trust advantage is fragile, it’s a case of use it or lose it, according to Edelman and commentators.

The more detailed findings of the report signal some significant insights.

 It is accepted that business leaders should act to help solve big societal challenges, like sustainability, unemployment, and disruptions to patterns of work and essential skills. 

There seems to be an emerging shift in priorities to ‘my family and their needs’ and a greater reliance on ‘people in my local community’ for information and reassurance. 

Further, a call for straight talk, empathy and co-operative action to inform and address problems is an expressed preference.

With this backdrop, a new movement spearheading people-led change deserves a closer look. The Centre for Civic Innovation is the brainchild of business leader and community engagement specialist, Amelia Loye.

The Centre for Civic Innovation describes its purpose as empowering everyday people to make a difference in their communities. Recognising that people have latent knowledge and the power to act to improve the social and economic prospects of their communities, the Centre for Civic Innovation seeks to make opportunities for change more accessible and realistic.

They do not rely on government or business for answers, nor do they stop at just eliciting bright ideas from local people. The Centre for Civic Innovation guides people to develop and road test their prescriptions for change and put them into action. An early pilot with Liverpool City Council in Sydney, Australia has been a successful proof of concept.

There are lessons to be learned if Australia is to avoid a reversal of its current trust advantage.  

Political decision-makers may be best served by paying more attention to the mass population shown to be both less trusting and less engaged, than to their traditional political base, whose priorities are in the minority.

There is a case for systematic and deliberate action to engage ordinary Australians in shaping and securing what they see as vital improvements in their lives and in the opportunities open to themselves, their families and communities.

This is the promise of people-led change.

REFERENCES:

Trust Barometer 2021 Australia, Edelman, 19^th February 2021, www.edelman.com.au/trust-barometer-2021-australia

David Donaldson, The pandemic has boosted Australians’ trust in government—and made us scared to quit, The Mandarin, 19^th February 2021.

Trust in Government—Where is Australia Now? , 18^th March 2021, https://qld.ipaa.org.au/2021/03/trust-in-government-where-is-australia-now/

Centre for Civic Innovation, see www.centrecivicinnovation.org

Narelle Kennedy acts as an adviser to the Centre for Civic Innovation.

_{This article is based on Narelle Kennedy’s presentation to the Economic Development Australia national conference hosted virtually by the City of Liverpool in November 2020.}

If 2020 is good for anything, it has shaken up old certainties and encouraged us to be bolder in finding new angles and solutions to big challenges.

Lockdowns, isolation, physical distancing have dramatically affected the mainstays of both home and working life.

They have made us more digitally adept. We rely more on services and facilities in our local neighbourhoods. Businesses are of necessity sourcing locally. More regard for essential work and workers. A greater focus on the relationships and activities that are in walking distance. Closer and continual connections to home and family can bring both delights and challenges.

In short, 2020 has re-set the importance of ‘place’ and heralded the comeback of community.

Can this change be made to work in the interests of the many people and places where jobs and livelihoods have been disrupted, perhaps permanently?

Is there a new way to make local communities more innovative and prosperous? Can we re-think what makes places both smart and liveable?

Here are three insights to help answer these questions.

Innovation is more than high tech breakthroughs and entrepreneurial start-ups, but neither is it just any improvement, bright idea or piece of creativity or agility.

Innovation requires creating value by doing something new. This means putting a novel idea into action, so that it meets an unmet or even, an unarticulated, need in a better way than the alternatives. And, crucially, in doing so, it gains a return, whether in business revenue and profit or in measures of community wellbeing and prosperity.

Innovation is not just the province of high tech, high growth ‘gazelle’ firms. Ordinary mainstream businesses can innovate too. They can innovate through learning by doing, and through learning by interacting with others, by knowledge-sharing and collaboration.

Innovation can take many forms – unique business offerings from bundling products and services together, superior ways of managing your people and supply chains, high-quality customer service and experiences, to name a few.

So, don’t unnecessarily straight jacket the types of innovation open to your community.

Knowledge workers are not necessarily the main source nor the key beneficiaries of innovation. The benefits of innovation can be applied and spread more widely.

Innovation must be managed to benefit the wider population, including those who are most likely to become the casualties of economic transformations.

To do this, pay attention to the essential work and workers of the everyday economy, providing the goods and services that sustain our daily lives.

The everyday economy impacts on innovation because it affects everybody, it is interdependent with knowledge work and workers, and a significant element of the everyday economy is learning, caring and social support work. This work reinforces the social ties and human interactions crucial for social cohesion, resilience and a sense of belonging and community identity.

Strengthening the performance of the everyday economy is an innovation strategy—because it unlocks the untapped potential of communities. This has been referred to as ‘the economics of belonging’.

What makes a place smart is not the location of universities surrounded by tech hubs and industries of the future, or the operation and analysis of smart digital infrastructure. Rather, smart places are the crossroads where different knowledge worlds meet, explore and create something new and valuable to the local community.

To create an innovation precinct or smart place, don’t just seek to mirror Silicon Valley-like enclaves or dense urban knowledge hubs.

Smart places measure themselves on combined economic, social and sustainability outcomes.

They work on building proximity, diversity and interactions across different sectors, disciplines, and areas of knowledge and expertise. They allow for creative collisions of ideas and serve as safe spaces for enterprises to experiment with possible innovations.

They can be a testing ground for alternative imaginative solutions to complex societal problems and the best ways of implementing them.

In short, the message is take advantage of the comeback of community.

Probe beyond the obvious, beyond the usual suspects, into the active ingredients of both innovation and place-making. Delve deeper to understand how these innovation opportunities and capabilities suit your particular local circumstances and conditions.

Here, you can create the pathways that allow ordinary businesses and people to prosper, even in local communities with seemingly poor prospects.

REFERENCES:

Martin Sandbu, The Economics of Belonging, Princeton University Press, June 2020.

John Bessant, Managing Innovation. Creating value from ideas, https://johnbessant.org/2019/06/29 June 2019.

Diane Coyle, The Key to the Productivity Puzzle, Project Syndicate, 13^th October 2020.

The Australian Government’s 2020/21 Federal Budget and the Opposition’s Budget Reply Speech have been celebrated as a long-awaited, clear contest of ideas.

The C0VID-19 pandemic recession has changed the rules. Record spending and long-term debt have been accepted as the price of economic ‘life support’. But, there are fundamentally different prescriptions for the path to recovery.

Author and journalist, George Megalogenis, describes it as a contest of ideals:

“The (Liberal/National Party) Coalition stands for incentive and reward for effort. Labor is the party of the safety net and active government.”

Megalogenis reports that for the Coalition, the recovery will be driven by business. He quotes the Prime Minister as saying the massive spending is for this year only. “It’s not used as an opportunity to bulk up all sorts of public spending for years and years, employing more and more public servants.”

The Labor Opposition, on the other hand, sees the Government’s unwillingness to take direct responsibility for vital services as a blind spot that leaves behind many ordinary Australians who are excluded from economic prosperity through no fault of their own. Labor opts for a government safety net.

Child care is a case in point. Lack of affordable child care is the single greatest barrier to workforce participation for young families, especially women. Labor pledges to make quality, affordable child care universal. Similarly, Opposition policies favour making work more secure, lifting the level of income support to the unemployed, and shifting the emphasis from private provision of services in aged care and in higher education.

In short, the contest of ideas goes to incentives versus safety nets, private sector versus government as primary service providers.

These political differences of substance are in contrast to disquiet with indistinguishable policies in ‘small target’ elections, or populist policies from focus groups and social media fads, or political in-fighting and ideological mavericks with policies serving sectional interests, not the common good.

Hence, the contest of ideas across the political spectrum is welcomed as a genuine choice in Australian democracy. But, is a choice of credible alternative policies the best we can do? The challenge is whether we can bridge this legitimate divide with policies that lift the standard of public debate and allow for new ways of working and intelligent compromises.

Sadly, there are few avenues to bridge this gap.

Big, definitive and diverse ideas are one thing. Finding workable solutions and making them a reality is another.

It requires expertise in informed, collaborative problem-solving. Not quick fixes or partisan answers, but fresh ideas and practical solutions drawn from well-managed analysis of research and evidence, critical thinking and insights from diverse points of view. It is not enough to generate bright ideas. It is necessary to make these answers to complex issues ready for implementation.

This means being connected to the people, organisations, skills and know-how to put solutions into action in a timely way.

One not-for-profit organisation well-placed to serve this need is the Eidos Institute Ltd. Eidos has a track record as a pioneer of collaborative problem-solving and expertise as an impartial broker of ideas and action across diverse interest groups, with credible results.

Eidos aims to improve the way Australia’s complex social and economic challenges are solved. From the contest of ideas to building support for new insightful solutions ready for implementation, it is a job worth doing.

In the vernacular, Eidos has a mission to help make big, innovative ideas ‘shovel-ready’.

REFERENCES:

Narelle Kennedy serves as Chair of the Eidos Institute Ltd, see website at www.eidos.org.au

George Megalogenis, ‘The contest of ideals we’ve been waiting for’, Sydney Morning Herald, 10^th and 11^th October 2020.

Are efforts to attract innovative, entrepreneurial companies and their highly qualified knowledge workers misplaced?

A common focus of many national economic and industry development plans are strategies to attract and grow high-performance, innovative, globally competitive companies and industries and high value jobs.

This is seen as the best pathway to prosperity. Is it the right path?

These well-known investment attraction and innovation strategies give priority to globally mobile, highly skilled, technology-adept and knowledge-intensive economic activities, often concentrating on financial and information technology services, urban renewal and property development and the highly productive traded sectors of the economy. 

These have an in-built bias favouring cities and metropolitan centres, and the asset-rich and professional and creative segments of the population. Left behind are those in lowly-paid, low-skill or insecure employment, areas affected by de-industrialisation or those in outer suburban, rural or remote regions. 

Inequalities result. Analysts and policymakers have been concerned about the damaging disparities in jobs, income and opportunities across cities, regions and communities.

The ‘trickle down’ effect does not seem to be working. This leaves many in our society pessimistic about their opportunities to get ahead, and feeling alienated and disengaged. Further, there is much doubt that politics and politicians can solve the problem.

Then comes the COVID-19 pandemic, which starkly forces a rethink of what constitutes essential work and essential workers. It makes sense to shift attention from elite industries and jobs to vital activities of the ‘everyday economy’.

The everyday economy describes sectors that are immobile and relatively protected from competition, but that provide what has been called “the services, production, consumption and social goods that sustain our daily lives. Its core activities include transport, childcare and adult care, health, education, utilities, broadband, social benefits and the low wage sectors of hospitality, retail, food processing and distribution”. (Reeves, Tomaney and Williams, 2019).

Essential workers are, among others, truckies, “warehouse workers, delivery workers, police officers, fire fighters, utility maintenance workers, sanitation workers, supermarket cashiers, stock clerks, nurse assistants, hospital orderlies and home care providers”. (Sandel, 2020).

The everyday economy is significant because everyone, regardless of income, participates in the everyday economy – in the public, private and social sectors and distributed across all cities, regions and hinterlands. 

The message is that to enhance prosperity and wellbeing, it is just as important to secure the everyday economy, as it is to foster the traditionally-acknowledged engines of growth and productivity. 

There is also a message for people in places losing out in the wealth and job-creating knowledge economy. Don’t just imitate the strategies of strong, large urban regions, but build on your own strengths and capabilities to create lasting local sources of competitive advantage. By making the most of what you have locally, you can lock in investment, industries and jobs. You can also reduce the risk of exposure to footloose capital and short-lived incentives. 

The task is to invest in existing skills, talents, capabilities, assets and infrastructure, involving a range of political and civic actors and a diverse mix of policies and programs tailored to getting the best results from local conditions. This includes strengthening the performance of the everyday economy and in particular, serving its unmet needs. (Tomaney and Pike, 2019).

The activities of the everyday economy include lowly-paid, but highly necessary, caring and learning functions. These are often not captured in measures of productivity, but they are central to human connections and social ties that are essential for a sense of belonging, resilience and identity in communities. The everyday economy has even been described as “the economics of belonging”.

Greater attention to the everyday economy can unlock the untapped potential in communities to drive both their economic and social wellbeing.

REFERENCES:

Reeves, J. Tomany and K. Williams, The Everyday Economy: why it matters and how to rebuild it, London School of Economics and Political Science, 7th April 2019, see blogs.lse.ac.uk

Tomaney and A. Pike, The economics of belonging: the hidden costs behind large cities, Prospect Magazine, 19th September 2019, see https://www.prospectmagazine.co.uk

Institute of Public Administration Australia, NSW, IGNITE newsletter, COVID-19 and the frailty of the social contract, reprinted from Financial Times, accessed on 16th April 2020.

M.J. Sandel, Are We All in This Together?, The New York Times, 13th April 2020, see https://www.nytimes.com/2020/04/13/opinion/covid-workers-healthcare-fairness.html?smid=em-share

 

It is no surprise that Australian manufacturers are strong early responders to the global COVID-19 crisis.

Research into Australian manufacturing shows it is an industry in transformation, not decline, in the face of fundamental structural and technological disruptions.

Manufacturers have demonstrated their ability to re-tool or pivot quickly and to supply vital health and protective equipment and products. The Advanced Manufacturing Growth Centre reported that in less than a week, over 1300 manufacturers had registered their capability to supply essential goods and services to fight COVID-19.

It is plain now that manufacturing matters to Australia, not only for economic self-sufficiency and security, but for the contribution it makes to the resilience and sustainability of the wider economy. 

It is time for a new deal for Australia’s manufacturing policy, one that reflects this renewed recognition of the value of manufacturing and moves beyond the general inaction and disinterest of governments over recent decades.

But first, a cautionary note. A new deal manufacturing policy for Australia should not be a return to past glory days, nor should it be a plan for some idealized future of a manufacturing resurgence. Rather, the new deal must be framed by realism and pragmatism, an innovation in policy that builds on Australian manufacturing’s competitive strengths and redresses its weaknesses and limitations.

Past bail-outs, protection or favoured treatment for manufacturing, based on a diagnosis of Australian manufacturing in terminal decline, should not feature in this new deal. Rather, new manufacturing policy should be built on strength. Manufacturing is valued as an irreplaceable sector of the Australian economy, but one which warrants strategic support to adapt, evolve and grow.

The task is to bolster Australian manufacturing so it can continue and expand its contribution to Australia’s success as a small, open, free market economy, even in times of crisis and volatility.

This means action at the level of the manufacturing firm and its workforce.

The key mission of such manufacturing support is to make it feasible for Australian manufacturers to compete on value, not price, both globally and at home.

This requires fostering the following abilities in manufacturing firms: 

• methods of experimenting with innovative business models;
• access to and absorption of new knowledge, both from customers and researchers;
• organizational learning and capability-building;
• closeness to customers;
• matching new opportunities with capabilities and skills;
• the right people empowered and well-managed;
• a sound radar for new trends, technologies and opportunities;
• processes for managing risks;
• simultaneously managing current business activities, selectively abandoning past activities and exploring ideas for new activities;
• a mindset of willingness to collaborate with other businesses, higher education bodies, government, and other stakeholders.

An opinion piece by Professor Roy Green for the Australian Manufacturing Forum summarises the case for a new deal for Australian manufacturing policy and identifies five important building blocks, including better co-ordination of a national industrial strategy, industry clustering and procurement initiatives. 

Endorsing and drilling down into Roy Green’s commentary, it is useful to define the following priorities for a new deal manufacturing policy.

A fresh approach to Australian manufacturing policy should be driven by the twin imperatives of creating demand and opportunities in lucrative markets, and building the necessary capabilities and skills in a critical mass of Australian manufacturers (not just high tech, high growth firms) to respond imaginatively to this demand.

This banner of ‘demand’ and ‘capability’ can be translated into practical programs such as:

• Voucher schemes which provide an incentive and make it easier for manufacturing businesses to seek external help with acquiring knowledge and solving business problems or undertaking change transformation projects. 
• Procurement programs which are designed to provide manufacturers, often small and medium sized enterprises, with a lead customer to challenge them to find solutions and pull through new knowledge and skills that they can then take to the wider marketplace. 
• Industry or Technology Roadmap projects, which are effectively industry clustering initiatives either for a sector or geographic region, where manufacturing firms and other related interests are brought together to explore the potential of ‘smart specialisation’ initiatives. 
• Shared Learning Programs, often peer learning involving practical and case-based presentations by other manufacturing firms and their leaders, e.g. advanced manufacturing technologies for business performance; business model innovation; design thinking.
• Manufacturing Leadership and Mentoring programs that are industry-led and involve the leadership teams of manufacturing enterprises participating in structured networking and mentoring sessions with credible and experienced manufacturing business leaders.
• Innovation or Maker Spaces provide opportunities for manufacturers to experiment with business innovations in a ‘safe’ space without risking all the resources of the enterprise. Such spaces can be used to retrain workers, trial business ideas, test out business applications of new technologies, and create manufactured products and prototypes.

The current crisis of a global pandemic shows that economic and social goals cannot be separated, action to safeguard both lives and livelihoods are presenting a complex and community-wide challenge. Australia’s manufacturing industry can be part of the solution. A new deal for manufacturing policy in Australia is a significant first step.

REFERENCES:

This is an extract of an article posted by Narelle Kennedy, Managing Director, The Kennedy Company on the Australian Manufacturing Forum LinkedIn group, 20th April 2020, see www.aumanufacturing.com.au

Roy Green, A New Deal for Manufacturing—Five Building Blocks for a New Plan, 14th April 2020, go to https://www.aumanufacturing.com.au/a-new-deal-for-manufacturing-five-building-blocks-for-a-new-plan-by-roy-green