Towards 3% R&D – Knowledge diffusion a key by Elliot Duff

Today in our editorial series – Towards 3% R&D – Turbocharging Australia’s Innovation Effort – Elliot Duff identifies the issue as a lack of capability in diffusing knowledge through the economy to its grass roots.

Knowledge Diffusion in Australia

While doubling R&D spending to 3% will help turbo-charge the Australian innovation system, it is essential to assess other metrics that gauge Australia’s innovation performance, such as:

• Productivity Growth – Labor 1.4%, Multifactor 0.4% per annum
• Gross National Income (GNI) – 60,830 PPP dollar
• Harvard’s Economic Complexity Index (ECI) – 93 of 133
• Hamilton Index (Industrial Performance) – 0.46
• Collaboration between industry and academia < 10%
• Global Competitiveness Ranking – 19 out of 63
• And WIPO Global Innovation Index (GII) – 23rd

Regrettably, Australia lags behind in numerous metrics. Unravelling the intricacies and repercussions of their interplay can be challenging.

One seemingly promising metric is the Global Innovation Index (GII), where we hold the 23rd position. However, this ranking warrants deeper scrutiny.

It’s a composite of the input rank (16) and the output rank (30), signalling that despite substantial innovation investment, we struggle to yield significant outcomes—a phenomenon termed innovation efficiency.

This resonates with evidence indicating that while Australia excels in knowledge creation (inventions), we encounter difficulties in knowledge translation (commercialisation), resulting in ineffective monetization of our inventions.

Knowledge diffusion

Delving further, what are the underlying reasons for this poor innovation efficiency?

Part of the answer lies in our Knowledge Diffusion, where we rank 72nd.

Knowledge diffusion refers to the spread or dissemination of knowledge, information, or innovations throughout a society or across various communities. It involves the process by which new ideas, technologies, practices, or discoveries are communicated, adopted, and integrated into existing systems or practices.

The concept of knowledge diffusion is often associated with academic research, where scholars publish their findings in journals or present them at conferences, allowing others in the field to learn from and build upon their work.

However, knowledge diffusion extends beyond academia and encompasses various channels such as informal networks, educational institutions, mass media, and digital platforms.

So, what are the impacts of low knowledge diffusion?

In 2022, the Productivity Commission’s 5 Year Productivity Inquiry – Innovation for the 98% said: “While novel, ‘new-to-the-world’, innovation is an important source of economic performance, it relates to only one to two per cent of Australian firms. The slow accretion of existing knowledge across the economy — diffusion — is often overlooked as a source of productivity. It has the scope to lift the performance of millions of businesses.”

Improving knowledge diffusion

Knowledge diffusion, which is related to the theory of Diffusion of Innovation, is a branch of social science which delves into the significance of networks and social capital within innovation ecosystems.

Researchers in this field examine how information and innovations spread through interconnected networks of individuals, organisations, and communities. They analyse the role of social relationships, trust, and shared norms in facilitating knowledge exchange.

Here are some recommended ways to improve knowledge diffusion:

• Knowledge Mapping: Document expertise and knowledge across the organisation
• Collaborative Tools: Implement knowledge management systems to facilitate sharing
• Encourage Open Communication: Foster a culture of transparency and open dialogue
• Cross-Functional Teams: Assemble teams with diverse expertise (boundary spanners)
• And Incentives and Recognition: Reward individuals for sharing knowledge.

As listed – the first step to knowledge diffusion is documentation.

Regrettably, documentation is not appreciated in Australia (see issues with funding of Trove). It might be surprising, but Australia lacks a public repository for publicly funded R&D projects.

In contrast, the Community Research and Development Information Service (CORDIS) serves as the European Commission’s central hub for outcomes from projects funded by the EU’s framework programs for research and innovation, spanning from FP1 to Horizon Europe.

It boasts a repository of over 133,459 projects listed since 1990, documenting the objectives, funding, outcomes, individuals involved, providers, and partners for each project.

While many might argue that academic publications and patents are sufficient for knowledge diffusion, in my three decades of collaboration with Australian SMEs, none have shown any interest in publications, they were more interested in the projects I had engaged in and the products that I developed.

@AuManufacturing is in its last week of publishing contributions from readers for our series – Towards 3% R&D – turbocharging our national innovation effort – and will shortly publish contributions in an e-Book. Information: Peter Roberts, 0419 140679 or write to [email protected].

Therefore, to enhance knowledge diffusion in our country, it’s imperative to document and archive the R&D projects we’ve undertaken.

In my field of interest, robotics, it is clear that if we want our Future to be Made (manufactured) in Australia, then we need to rapidly adopt robotics and autonomous systems, as “the PM also believes the problem of labour costs is diminishing — thanks to robotics”

But in Australia we currently have a very low robot adoption rate (28th).

Whilst robots have become increasingly smart (with AI) they are still complex machines that require some thought (and expertise) to deploy on the factory floor – and it is this expertise that is lacking. We currently don’t have enough people with the skills to deploy existing commercial robots, nor do we have the skills on the boards of companies.

The Australian manufacturing industry will require access to significant knowledge about robots. One solution to this problem is to create technology hubs that facilitate this diffusion.

Fortunately we have the ARM Hub and the Australian Cobotics Centre. And we have the robotics use cases documented in the RAG Robotics Roadmap.

Once again from the Productivity Commission report – “Innovation diffusion depends on information. While industry organisations and business networks facilitate information flows and spillovers, businesses may benefit from more tailored information to help identify the need and opportunities for innovation.”

Hence, I would suggest that this be achieved through dedicated funding of these networks.

As previously reported, the best countries in the world for knowledge diffusion are Ireland, Finland, Israel and the Netherlands. Australia should spend more time studying the nature and performance of these small, open economies. Perhaps the Ireland Innovation Voucher System.

Elliot Duff is an independent research consultant specialising in manufacturing, robotics, and innovation. With 35 years of experience as a research scientist at CSIRO, he has played a pivotal role in the development of several commercial successes, including an underground mining navigation system and a handheld mobile mapping device. In recent years, he has shifted his focus to supporting the Australian Robotics SMEs community.

Picture: Elliot Duff

This series is brought to you through the support of our principal sponsor, public accounting, tax, consulting and business advisory BDO, and R&D tax incentive consultancy Michael Johnson Associates.