Paul Wallbank – Brilliant Communications

Category: government

  • Legislating for innovation

    Legislating for innovation

    Can bureaucrats define innovation? It seems Australia is about to find out as the country’s regulators struggle to decide what businesses will be eligible for taxation concessions under the government’s Innovation Statement.

    That bureaucrats are tasked to identify what businesses are worthy ‘innovators’ is worrying for those of us who hoped the new Australian Prime Minister would end two decades of managerial complacency.

    Adding to the ‘business as usual’ under the revamped government was a speech by the Minister for Mineral Resources yesterday describing the glowing future of the nation’s resource industry in face of continuing Chinese demand.

    While Josh Frydenberg was delivering that speech to Canberra’s National Press Club, the world’s biggest shipping line, Maersk, reported an 83% drop in profits in the face of slowing global trade and collapsing Chinese commodity demand.

    Australia’s long term economic policy of riding on the back of a never ending Chinese resources boom is looking shaky, and the luxury of a tax system that favours property speculation over productive investment is increasingly looking unsustainable.

    Rather than looking at ways to define ‘innovative’ companies, Australian governments would be better served levelling the playing field to attract investment into new businesses, inventions and productive infrastructure.

    Just as a narrow group of tech startups are important so is investment into new plant and equipment for agriculture, manufacturing and tourism. Encouraging workers to attain new skills should also be an objective of the tax system, instead of disallowing school fees and book costs.

    The treatment of taxpayers’ education costs versus that of property speculation expenses speaks volumes about the current priorities of the Australian tax system.

    For a government wanting to encourage productive, employment generating investment and building a first world economy that’s competitive in the 21st Century, the first priority should be to put all forms of investments on the same footing.

    Asking a committee of well meaning bureaucrats to create an artificial group of ‘innovative businesses’ seems unlikely to help Australian workers and businesses meet the challenges of a digital century.

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  • Australia’s missing technology leadership

    Australia’s missing technology leadership

    This morning Cisco announced its latest global innovation centre in Sydney focusing on what it describes as Australia’s strengths in agriculture, resources and smartcities.

    Along with with Cisco’s commitment to support the Sydney centre to the tune of 15 million Australian dollars and invest in local IoT businesses the project promises to bring together the data resources and skills of the University of New South Wales’ Engineering faculty, the Data 61 research agency and various state government departments.

    Cisco’s launch though comes at a difficult time for the Australian scientific and research communities as just last week the national research agency, the CSIRO, launched another wave 0f job cuts immediately after restructuring the sector and even the location of the announcement is being sold off to property developers as the state government sees real estate ventures trumping technology investments.

    Governments go missing

    Even more telling during Cisco’s announcement was the poor presence by governments and corporate partners, the New South Wales state government at least sent along a minister and his Departmental head but the Federal government, despite its much heralded Innovation Agenda, was nowhere to be seen.

    That lack of Federal government support is telling, particularly given regional and rural development is supposedly a priority of the current administration. An informed observer may be forgiven for thinking 21st Century technology investment would assist even the 1950s inspired project to develop Australia’s sparsely populated north but one supposes that grand vision extends to dams and highways.

    The missing corporate links

    Probably the most troubling omission is that of telecoms providers, agricultural and  resources businesses utilising the Internet of Things or M2M technologies need connectivity and the absence of either Telstra or the flailing government owned National Broadband Network means an important piece is missing from the push to connect these industries.

    Once again both Optus and Vodafone – the latter probably having the best global M2M capacity of any provider – miss an opportunity to position themselves as an alternative provider to Telstra which proves whingeing about competition in the Australian market is a damn sight easier than putting some money down.

    Notably missing as well is support from Australia’s corporate sector. While resources giant Woodside is a partner of the Perth centre, there’s little engagement from any other major company. The reply to a question by this writer to the panel about accessing the data held by the large pastoral companies illustrated what little engagement there is from key private sector stakeholders.

    Fighting the innovation bureaucracy

    To be fair to Cisco, these missing links are not the company’s fault and the delay in launching their Sydney centre was due to various shenanigans within Australia’s innovation bureaucracy beyond their control.

    Hopefully Cisco’s Sydney centre will be successful – despite the fine words of Prime Ministers and other politicians Australian industry desperately needs some genuine leadership as the nation realises the safe certainties of the 1990s have passed.

    For the moment though the lack of engagement in the technology industries by political and business leaders is striking. It’s hard not to think the country has regressed back to a smug 1950s view of the view, something not helped by all these events being almost overwhelmingly dominated by white, middle class middle aged men.

    It’s time for Australia to start thinking differently. The nation’s business and political leaders can’t expect multinational corporations to drag the nation into the 21st Century.

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  • Taking responsibility for algorithms

    Taking responsibility for algorithms

    Who is responsible for the effect of renegade computer programs is going to become a serious legal topic as an increasing number of things become ‘intelligent” and connected to the internet.

    Britain’s Financial Conduct Authority (FCA) is one of the first regulators to start looking at how companies’ algorithms. In their just released rules for wholesale traders, the FCA sets out the responsibilities for companies and their managers.

    “We are determined to embed a culture of personal responsibility within the banking sector,” says the FCA’s Acting Chief Executive Tracey McDermott. “Clear individual accountability should focus minds, drive up standards, and make firms easier to run and to supervise. And if things go wrong, it will allow senior managers to be held to account for misconduct that falls within their area of responsibility.”

    The definition of ‘misconduct’ when an algorithm goes awry will undoubtedly prove contentious, as will the idea of ‘personal responsibility’ in the banking sector.

    While it’s too tempting to be dismissive of such move in the financial services industry, the FCA’s regulations are a pointer of what most industries are going to face over the next ten years as the more devices make decisions for themselves or communicate with other equipment over the Internet of Things.

    In many areas the question of who is responsible for a rogue computer program will be left to the uncertainties of the legal system with no doubt many surprises, injustices, inconsistencies and unintended consequences so the earlier regulators develop a framework for dealing with mishaps the better.

    Should the IoT start delivering on its promise of a connected world a poorly designed algorithm in even what should be relatively trivial devices or services may have the potential to cause massive disruption and damage. It’s hard not to imagine many other regulators in other industries are looking at how to attribute responsibilities, if not minimise risk, in a smart connected world.

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  • Does venture capital really matter?

    Does venture capital really matter?

    Around the world governments are trying to replicate the Silicon Valley startup model. But does that model really matter?

    On the Citylab website, Richard Florida looks at which cities are the leading centres for startup investment.

    Unsurprisingly eight of the top ten cities are in the United States with San Francisco and San Jose leading the pack. While London and Beijing make up the other two, the gap between the regions are striking with the Bay Area being home to over quarter of the world Venture Capital investment while the Chinese and London capitals com in at around two percent.

    global-startup-cities

    While these proportions are impressive, the numbers are not. The total VC investment identified by Florida in 2012 is $45 billion, according to the Boston Consulting Group there was $74 Trillion of funds under management in 2014.

    That makes the tech venture capital sector .06% of the global funds management industry.

    In the US alone over 2013 small businesses raised $518 billion in bank loans, more than ten times the global VC industry.

    What this scale shows is how small the tech startup sector really is compared to the broader economy and, more importantly, how the Venture Capital model perfected in the suburbs of Silicon Valley is only one of many ways to fund new businesses.

    Even in the current centre of the startup world, it’s estimated less than eight percent of San Francisco’s workforce are employed by the tech industry although that goes up to nearly a quarter in San Jose.

    None of this is to say the startups are not a good investment – Thomas Edison’s first company raised $300,000 in 1878, $12 million in today’s dollars, from New York investors including JP Morgan. The Edison Electric Light Company, while relatively modest went on to being one of the best investments of the 19th Century.

    That twelve million dollar investment looks like a bargain today and it’s highly likely we’ll see some of today’s startups having a similar impact on society to what Edison did 140 years ago.

    Edison’s success created jobs and wealth for New Jersey and New York which helped make the region one of the richest parts of the planet during the Twentieth Century and that opportunity today is what focuses governments when looking at encouraging today’s startups.

    So it’s understandable governments would want to encourage today’s Thomas Edisons (and Nikola Teslas) to set up in their cities. The trick is to find the funding models that work for tomorrow’s businesses, not what works for one select group today.

    While the Silicon Valley venture capital model receives the publicity today, it isn’t the model for funding most businesses. Founders, investors and governments have plenty of other options to explore.

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  • Reinvigorating Australia’s research sector

    Reinvigorating Australia’s research sector

    Could Australia’s poor track record in commercialising research be turned into an advantage? Data 61’s CEO Adrian Turner believes so.

    Australian research agency Data61 was formed last year following the science hostile Abbott government’s slashing of research budgets coupled with a merger of the National ICT Australia organisation (NICTA) with the long established CSIRO.

    The intention behind Data61 was to create a world leading data research agency. At the time of the announcement then communications minister and now Prime Minister, Malcolm Turnbull said, “Having a single national organisation will enable Data61 to produce focussed research that will deliver strong economic returns and ensure that Australia remains at the forefront of digital innovation.”

    Having been in the role for six month and now, in his words, having his feet finally under the desk, Data61’s CEO Adrian Turner met with the media last week to discuss the directions he intends to take the organisation.

    Business in a data rich world

    Coming from a corporate Research & Development background and having spent over a decade in Silicon Valley tech businesses, Turner is conscious how industries are being changed in a data rich world.

    For corporate R&D model shifting as industries are changing he says, “their challenge is they can’t hire the digital and data talent that they really need.” Turner sees one of the opportunities for Data61 in providing access to the high level expertise large companies are struggling to find.

    Giving Data61 is global focus is Turner’s main objective with an aim of capturing a tenth of one percent of the world’s private sector R&D budget, describing how he will sell the organisation’s scientific expertise to global corporations, “we can plug them into the Boeing and GMs of the world and introduce them to the people to short circuit the sales process.”

    “We’re going to go around the world where corporate R&D dollars get allocated and convince these companies that Australia is a place where primary R&D can take place,” Turner continued, “we’ve got the talent and we’ve got the capabilities to do the research.”

    Good at the basics

    Turner highligthts an ongoing problem in Australian science and industry. The nation historically has been good at basic research but poor at getting those developments to the marketplace, something the World Intellectual Property Organisation’s Global Innovation Report has regularly flagged.

    While Australia ranks at 17 overall in the 2015 WIPO report, the nation’s business community flounders at 38th in the world for its collaboration with researchers and 39th for knowledge and technology output. Put bluntly, Australian businesspeople are not very sophisticated or research orientated.

    Adrian Turner puts that down partly to the nation’s being weak at product management, “I think it’s a function of global companies seeing Australia as a sales and marketing outpost so we don’t have the product development expertise.”

    Inward looking locals

    The nation’s inward looking local corporations are also part of the problem, “for us to succeed as a country we have to have a global mindset. We can’t have the zero-sum mindset that I win if you lose in the domestic market,” Turner continued. “In that sense what we’re doing is creating a product marketing function.”

    So to meet Data61’s objectives of meeting its own financial performance targets, developing an R&D ecosystem and having an impact on the nation economy, Turner sees the organisation having to go overseas for most of its partnering with private sector researchers.

    Sparking the startups

    All is not lost though for Australia with Turner believing Data61 has a role in helping the local startup community develop. “We don’t have the infrastructure in place to support the entrepreneurs to go out and build new business,” he says.

    “In Silicon Valley over decades you have this infrastructure, you have this workforce, you’ve got the legal infrastructure, you’ve got capital, all of these things that have built up organically over decades and they stack the odds in favour of the entrepreneurs.”

    Data61 was born out of an unfortunate period of Australian politics where for the first time the nation was lead by a government that was genuinely hostile to science. Now the political winds have changed and the organisation has a global focus, it may be possible to reverse the long-term neglect of Australian research and build a new business culture.

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