Industry Innovation Councils Update

Championinginnovation

January 2012

For further information see /industryinnovationcouncils

  • Industry Innovation Councils Framework
  • Information brochure
  • It’s all about innovation
  • Industry Innovation Councils Update: Towards Innovative Australia
  • Building a culture of innovation: Stakeholder feedback
  • Summary of completed projects, reports and activities
  • Innovation Profiles
  • Media Releases
  • Industry Innovation Councils

Automotive

Built Environment

Future Manufacturing

Information Technology

Pulp and Paper

Space

Steel

Textile, Clothing and Footwear

Contents

Page

1Introduction1

Importance of innovation1

Purpose of the report2

Key achievements in 20112

Background6

Membership6

Role6

Established6

2Stakeholder engagement7

Multiple strategies7

Stakeholder forums8

Championing innovation and industry10

Tools for business11

Collaboration12

Chairs of advisory bodies12

Government13

Industry and industry associations15

3Building a culture of innovation15

Stakeholder feedback15

4Strategic role18

Strategic reference group18

Strategic mapping18

Strategic advice20

Government policies and programs20

Skills21

5Future work plans23

Prime Minister’s Taskforce on Manufacturing23

Priority areas23

Individual snapshots24

Page

Boxes and figures

Box1Trends in manufacturing to 20203

Box2Cloud Computing: Opportunities and Challenges5

Figure1Innovation perceptions: disaggregated by sectors16

Figure2Innovation perceptions: aggregated into four categories16

Figure3Innovation perceptions: disaggregated by sectors

compared to industry overall17

Appendices

AMembership27

BCouncils, Chairs, membership and meetings35

CSummary of projects, activities and reports37

DHyperlinks to cited reports and programs50

1

1Introduction

Importance of innovation

Innovation has the power to transform and strengthen the economy, society and the environment. It is the key to resilience. Innovation is a prime driver in improving productivity, competitiveness, skills and sustainability. It can stimulate the creation of new industries and new jobs, as well as revitalise mature industries.

Innovation is the implementation of a new or significantly improved product (good or service), process, new marketing method or a new organisational method in business practices, workplace organisation or external relations. (OECD, 2005, Oslo Manual Guidelines for collecting and interpreting innovation data).

Innovation in business takes a valued idea and implements the innovation to deliver an advantage and value to business and customers. Innovation can deliver better material and nonmaterial benefits to improve people’s quality of life.

Innovation is international and an important part of the seismic shifts in the rapid growth of economies in Asia, in particular in China, India and South East Asian nations. All sectors in Australia—private, public and notforprofit—need to liberate and harness talent to create opportunities and enhance industry and society’s ability to meet the challenges of the 21st century. It is neither desirable nor possible to reduce the pace or size of change in a globally connected world. Business recognises that they may not know the details of the shape of the world of business in fifteen to twenty years, but they do know that it will not be the same as today and that building the capability and capacity of firms is essential for individuals and the nation.

Innovative businesses in Australia play an important role in boosting productivity, creating wealth and prosperity. The Australian Bureau of Statistics(ABS) data on performance of firms in 2009–10 compared with 2008–09 indicate that the percentage of innovation active firms reporting:

  • increased productivity are twice that of their noninnovation active counterparts;
  • increased profitability are around 40%higher than noninnovation active firms;
  • an increase in the total number of jobs are just over twice that of the noninnovation active firms; and
  • increased social contributions are over double the noninnovation active firms.

The Government aims to create conditions for innovation to flourish to support its economic, environmental and social priorities. Government policies, initiatives and institutions support and promote innovation, productivity and competitiveness by:

  • stability and incentives—stability in the macroeconomic environment to provide more certainty for firms in their critical decision making to best use resources, and incentives to encourage organisations to perform well;
  • flexibility—in microeconomic policies to support the ability to make changes to respond to market pressures and apply the right incentives to address market failures; and
  • capability building—at the firm level, including public good spillovers (forexample well targeted investment in physical infrastructure, and investment in innovation and human infrastructure, such as skills and training).

Ultimately improvements in innovation, productivity, competitiveness and skills come from thousands of decisions by firms and organisations in all sectors in developing and implementing new products (goods and services) and processes, and changing management, organisational, marketing and work arrangements.

The Government established Industry Innovation Councils (Councils) to contribute to building a strong innovation culture in Australian industry. They are amechanism for the Government to link with a broad stakeholder base which includes people from industry, unions, research and government.

A clear message from the Councils is that Australianeeds to be and needs to be seen to be innovative.

Purpose of the report

The purpose of this report, Championing innovation, is to provide an update on the work and contribution of the eight Councils in 2011. This report builds on the 2010 update on Councils entitled Towards Innovative Australia.

Championing innovation highlights the work of the Councils around four key themes:

  • stakeholder engagement, in particular through forums and collaboration;
  • stakeholder feedback on building a culture of innovation in the eight targeted industry sectors which align with the Councils;
  • strategic role of Councils, in particular their value as an expert reference group, their strategic mapping of industry sectors, and their strategic advice; and
  • future work plans of Councils, noting that their focus will be shaped by the Prime Minister’s Taskforce on Manufacturing.

Key achievements in 2011

The Councils have a strategic advisory role. Memberswork inclusively to identify strategic needs, gaps, challenges and opportunities. They support projects and work collaboratively with stakeholders to champion innovation, and provide advice and reports to government, industry and research organisations.

The coverage of issues by Councils is extensive and their varied workis discussed throughout this report. Highlightsof some Councils’ advice and reports which are influencing decisions in government, industry and research include the following.

  • Trends in manufacturing to 2020(see Box1p.3) which discusses current and emerging trends, and their impact on manufacturers to 2020 and beyond. The discussion paper is contributing to the Prime Minister’s Taskforce on Manufacturing. It also contributed to considerations at the Future Jobs Forum on 6October 2011 and the Round Table on Manufacturing on 20September 2011.
  • Cloud Computing: Opportunities and Challenges(see Box2p.5) which gives an outline of industry development issues due to the growth in cloud computing. This is one of the decade’s biggest shifts in how organisations use information technology and a leading strategic innovation issue. The report is contributing to the government’s policy considerations through a National Standing Committee on Cloud computing operated by private company Global Access Partners.

Box1Trends in manufacturing to 2020
Australian manufacturing is a diverse and vibrant industry that plays a significant role in the economy. It employs close to onemillion people, its total industry gross valueadd was 10percent of gross domestic product (GDP) in 2010–11, and manufactures accounted for onethird of Australian exports. Manufacturing is also an important driver of innovation in industry—being responsible for a quarter of research and development among businesses.
The industry is faced with both challenges and opportunities. Some of these are shorter term 'shocks', while others are longerterm trends. Trends, such as globalisation, an ageing workforce, and the small size of the Australian domestic market have been recognised for some time. More recent trends include requirements for low carbon production, the impact of the strong terms of trade and the associated rise in the exchange rate of the Australian dollar. Global 'megatrends' resulting from population growth, economic growth, urbanisation, 'peak' resources and societal changes are contributing both opportunities and threats over the medium term.
Technology is also driving 'disruptive' change, providing major opportunities and challenges in products (goods and services) and production process innovation.
A robust manufacturing sector of the future requires firms that are not only technologically sophisticated, but also agile, adaptive, and efficient. This is only possible in firms that are knowledgeable, innovative, well managed, and which have access to skills as well as capital. Such assets make possible the absorptive capacity needed by successful firms to embrace new knowledge, technology and innovative practices to increase productivity and competitiveness.
The resilience of Australian manufacturing lies in firms that:
  • recognise that to succeed in the high valueadd, low volume products in which they are likely to have a competitive advantage, they must bundle products (goods and services) to sell solutions, rather than just sell tangible products;
  • have the capability to identify need, design, develop, make and sell products and services that are in demand;
  • operate with high efficiency and productivity, allowing them to optimise the use of their capital—human, intellectual and material;
  • have the ability to maximise leverage from strong and sustainable partnerships through local and global supply chains; and
  • seek markets in emerging growth economies, both by partnering in global supply chains, and by meeting demands from their growing middle classes for high valueadd niche products, rather than low valueadd commodities.
There is often a tendency to view the innovation needs of an industry through a sectoral lens. A more systemwide approach to building an innovation system is required. Policies and programs that support the development of knowledge, skills, competencies and capabilities that can be effectively translated across industry sectors are likely to contribute to the future robustness of Australian manufacturing.
Source: Trend in manufacturing to 2020, (2011), Future Manufacturing Industry Innovation Council. The report is at
  • Productivity in the Buildings Network: Assessing the Impacts of Building Information Models(BIM) which outlines a compelling economic case for the accelerated adoption of BIM to deliver substantial productivity gains for firms and the economy. The Government agreed to establish an interdepartmental committee to develop a wholeofgovernment National Framework for BIM to cover how government could include BIM in its procurement processes.

Stakeholders’ perceptions of innovation in the eight targeted sectors aligned with the Councils were released in the Building a culture of innovation: stakeholder feedback report in May 2011. Of the 102responses, 81percent strongly agree or agree that the culture of innovation improved in their industry sector from January 2010 to March 2011.

For Councils, strengthening Australia’s skills is integral to strengthening industry, the economy and society. The strategic goal of ‘adaptive and skilled people’ is a high priority for all Councils. For example, Councils provided leadership and advice on industrywide challenges and opportunities in upskilling information and communications technology(ICT) capability to transform industry to better meet the challenges of the century. Councils looked at crosscutting skills issues and suggested solutions covering design, information dissemination, delivery and accreditation.

Council members provide an established expert reference group and their views are sought by people from the public and private sectors. Members provide practical advice on issues affecting firms, research, government and the economy. For example, nine members of Councils were appointed to the Prime Minister’s Taskforce on Manufacturing. The major focus of Councils in the first half of 2012 will be contributing to the to the Prime Minister’s Taskforce and to considerations in the development of the Government’s White Paper on ‘Australia in the Asian Century’.

The provision of strategic advice to the Minister, and people in industry and research is an essential role for the Councils. They make a valued contribution in providing advice on the design and implementation of government policies and programs.

For example, Council led stakeholder forums directly contributed to the Councils’ advice to Government on a range of issues, including:

  • theResearch and Development(R&D) Tax Incentive and guidelines;
  • the Clean EnergyFuture plan;
  • the development of the Principles for a National Space Industry Policy;
  • manufacturing for a sustainable built environment;
  • the need for cooperative research to better link industry, research and government in the built environment. On 22November 2011 the Government announced the creation of two built environment related Cooperative Research Centres (CRCs) for low carbon living with funding of $28million, and water sensitive cities with funding of $30million; and
  • the possible impact on specific industries in implementing a mechanism to price carbon.

Councils adopt multiple strategies to engage directly with stakeholders. It is in these strategic connections and collaborations that insights and initiatives of stakeholders are shared—giving stakeholders an opportunity to have a voice.

Box2Cloud Computing: Opportunities and Challenges
Cloud computing has emerged as the decade’s biggest shift in the way organisations use information technology (IT). The Cloud provides a new paradigm for delivering computing resources (examples include infrastructure, platform, and software) to customers on demand in a similar fashion as that provided by utilities such as water, electricity and gas. The result for the business community is the ability to transform their use of technology and to improve their organisation’s efficiency and effectiveness through the use of the cloud. However, with cloud services able to be provided from any geographic location, there is an imperative to ensure that Australia’s IT sector is not left behind.
In 2011 the IT Industry Innovation Council advised Senator the HonKim Carr on a range of areas including the potential benefits for the Australian IT sector, any barriers to achieving those benefits, and the role cloud computing could play as an enabler of innovation in the wider economy.
The advice can be grouped into five core areas that government, industry and research agencies could address.
  • Providing confidence in cloud solutions—including addressing privacy, security and trust elements.
  • Australia becoming a regional hosting destination.
  • The Australian ICT sector as leaders in cloud applications research and development.
  • Government as a cloud adopter and leader.
  • Increased awareness by Australian business and government of cloud usage potential and benefits.
The report will be considered by Government within the context of existing crossagency work on cloud computing policy, and through a National Standing Committee on Cloud Computing operated by private company Global Access Partners. Consultation with the IT Industry Innovation Council will continue as the issues are progressed.
Source: Cloud Computing: Opportunities and Challenges, (2011),
Information Technology Industry Innovation Council.
The report is at

Background

Membership

The number, coverage and membership of the Councils are by Ministerial appointment. The Minister for Industry, Innovation, Science, Research and Tertiary Education (the Minister) appoints innovation leaders for their individual experience, expertise and leadership. Members come from industry, unions and professional associations, science and research agencies, and government. The breadth of the stakeholder groups involved in Councils is one of their strengths. A list of the members of each Council, as at 1January 2012, is at AppendixA(p.27).

Members are essentially ‘volunteers’ who generously give their time and expertise. They work at a strategic level, meeting around three times a year. A detailed list of the meetings of each Council is at AppendixB(p.35).

Role

The role of the Councils is to:

  • provide strategic advice on innovation priorities to the Minister,
  • champion innovation in industry, and
  • build connections and collaborate with other innovation initiatives and organisations.

From time to time the Minister may ask a Council to investigate and provide advice on additional issues specific to their sector.

Councils’ completed projects, activities, and reports are listed at AppendixC(p.37). Hyperlinks to cited reports and programs are at AppendixD(p.50).

Established

In the period from 2008 to 2010, Senator the HonKim Carr, then Minister for Innovation, Industry, Science and Research, appointed eight Councils. The Councils covered the following industries:

  • Automotive,
  • Built Environment,
  • Future Manufacturing,
  • Information Technology (IT),
  • Pulp and Paper,
  • Steel,
  • Space,
  • Textile, Clothing and Footwear (TCF).

Membership of the Pulp and Paper Council expired on 27July 2011. The future of the Council is being considered in the context of the wholeofgovernment response to the Pulp and Paper Industry Strategy Group Report which is due for release in 2012.

Further information

Further information on Industry Innovation Councils is available via:

Phone(02)62137221

Web

2Stakeholder engagement

Engaging and communicatingwith stakeholdersis a key strength of Industry Innovation Councils (Councils).

Councils are a mechanism for:

  • Government to engage with industry innovation stakeholders; and
  • stakeholders to communicate their views to Government and other stakeholders.

It is in these strategic connections and collaborations that insights and initiatives of all stakeholders—from industry, unions, research and government—are shared.

Multiple strategies

Councils adopt a multilayered and multidirectional approachto engage and communicate with stakeholders. Examples of strategies adopted by Councils include:

  • publishing information at ;
  • collaborating within and across Councils;
  • Chairs of Councils meeting with other Chairs of the industry innovation portfolio advisory bodies;
  • initiating small and medium sized meetings to workshop stakeholders’ ideas;
  • inviting experts to work with Councils to identify challenges and opportunities, and propose solutions;
  • actively linking research to industry, government to industry, business to business, and industry to the general community;
  • making submissions to parliamentary and departmental inquiries;
  • initiating forums to engage directly with stakeholders;
  • disseminating newsletters and other Council updates;
  • taking up speaking engagements and leadership roles at stakeholder events;
  • providing evidence based analyses and reports to contribute to discussions on innovation priority issues and possible solutions;
  • working with other government initiatives, including Enterprise Connect and Supplier Advocates;
  • initiatingonline information gathering; and
  • developing ongoing initiatives to cut through the media by providing:

multimedia resource materials,