Tuesday, October 10, 2017

Industry and Innovation on show - a contrast in styles

The past couple of weeks have been a contrast in styles. I spent the last week of September at the International Astronautical Congress (IAC) in Adelaide and most of the following week at the Pacific 2017 International Maritime Expo in Sydney, of which I’m part of the organising team.

Both events have been judged by attendees to be a great success. It’s hard to judge Pacific 2017 from the inside (though the feedback has been universally positive), but I was certainly impressed by IAC. And I can see some interesting differences.

Both events gave plenty of scope for innovators to shine, especially small, agile SMEs and start-ups. The difference, however, was that IAC was unashamedly a global event that drew prime contractors and national government agencies from around the world: NASA, the European Space Agency, Lockheed Martin, Boeing, Airbus, Ariane Group, CNES, the Chinese space community and even the nascent space agencies of nations like the UAE, South Africa and Romania. Of course, the Australian Federal government was there in force, too. And there were Astronauts – real, live men and women from around the world who’d been into space, many of them several times and for weeks or months at a time. We were able to meet and listen to real heroes, including two – that’s right, two – Australian astronauts. Name them both – I challenge you!

Pacific 2017 was different, and no less exciting. It was dominated (deliberately so) by a major national customer, the Royal Australian Navy, which is undertaking its most significant force structure upgrade in peace time. Australia is about to start building 12 submarines, nine Future Frigates, 12 Offshore Patrol vessels and more than 20 Pacific Patrol Boats. Not surprisingly, the world’s naval prime contractors were in Sydney, along with a massive ‘tail’ of SMEs from Australia and around the globe and an unprecedented number of senior naval officers from the Indo-Asia-Pacific region and further afield.

The big contrast between these two events, and the industrial activity they embody, lies in the nature of the markets they showcased.

IAC showcased an industry, research and government community that is global, diffuse, fragmented and outward-looking, one that offers both heavily resourced prime contractors and the tiniest of start-ups multiple paths to market. The space sector supports a vibrant, international innovation and high-technology eco-system. You could feel this vibrant mood among Australian space entrepreneurs and SMEs who suddenly found themselves confronted with literally dozens of potential opportunities and contacts – venture capital providers, potential customers, research partners. The global and relatively unrestricted nature of the space market meant that entrepreneurs and innovators had massive freedom to seek out and pursue opportunities – borders weren’t barriers and inspiration was everywhere, and there was a sense of urgency about getting into space and getting on with business. 

IAC was a portal into a global market, and the announcement on Day 1 that Australia would form its own Space Agency (at long last!) was a critical step towards opening that portal.

By contrast, the majority of exhibitors and Trade Visitors used Pacific 2017 to focus principally on a major domestic customer. The sheer size of Australia's naval market gives it dominant status in the Indo-Asia-Pacific region, but Pacific 2017 was also an outward-looking showcase for Australian firms looking to export to the region and the northern hemisphere: the USA and Europe.

The defence industry is global, but the majority of SMEs tend to think and act local – that’s simply a function of their size and resources. The monopsony nature of the defence market in most countries means that the size of the market in any one country, and the way it behaves, and the barriers to entry, are dictated by a sole customer. And unless that customer wants to engage with its local industry base and promote defence exports, the scope for innovation is diminished.

Happily, the Australian Federal government has taken this on board. Yes, Defence remains a monopsony, and market authority – the ability to specify, to shape, to actually purchase defence goods and services – remains closely held in a single organisation. But the changes in defence industry policy and engagement since early 2016 mean there’s unprecedented scope for defence innovators and start-ups, and increasingly also for exporters. Australian SMEs, primes, research establishments and universities will all benefit.

The defence business environment in Australia is probably better than it has ever been, and this shone through at Pacific 2017. In particular, the Maritime Australia Industry Innovation Awards and Defence Science Institute's Innovation Pitchfest showcased a very lively community of energetic and ambitious SMEs.

But an essential truth remains. Innovation is sparked by contact and communication: you need to be talking to the end users, and you also need subject matter expertise to understand a challenge, a problem or an emergent opportunity. And there’s serendipity as well – unexpected insights from conversations, simple observation and shared experiences can throw up all sorts of opportunities. Pacific 2017 provided a melting pot to enable that kind of contact; and at the time of writing there are more than 20 Australian defence firms, under the Department of Defence's 'Team Defence Australia' banner, showcasing their products and services to the vastly greater US and global markets at the AUSA Show in Washington DC – wouldn’t it be great to see twice that number in a couple of years’ time?

For all sorts of good reasons, the defence market can’t organise itself like an unrestricted, unregulated commercial market (and if you don’t understand why then it’s worth making the effort to do so, otherwise you’re doomed to disappointment). The defence business will never be like the space business, but if the Department of Defence wants to sustain and grow a vibrant, creative technology and innovation eco-system here in Australia, if it wants to get the best from Australia’s creative technology firms, start-ups and innovators then it needs to maintain and if possible expand its current open stance towards industry and academia.

It could start by showcasing some its heroes and making them more accessible to both the general public and the industry that’s there to support them. Does anybody remember the publicity afforded during WW2, and the positive effect this had on civilian morale, to warriors such as ‘Bluey’ Truscott, Paddy Finucane and the Australians who formed part of the Dambusters? The modern ADF has plenty of its own heroes – men and women who can share their frontline experiences and expertise, inspire youngsters to join the industry (or the ADF) and who can help explain to smart, defence-savvy industry experts what their problems are. They can inspire Australian firms in a way that nothing else does – not even a purchase order. And they can help ensure that the ADF gets what it needs.

PS: Australia's two astronauts are Andy Thomas (everybody knows that!) and Paul Scully-Power. How many people remember a third Australian member of the NASA astronaut corps who never made it into space? His name is Philip Chapman - he was selected for Apollo 14 but resigned from the program in protest at NASA's decision to build the Space Shuttle. Ironically, it was the Space Shuttle that transported both Scully-Power and Thomas into orbit. 


ENDS

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