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Australia's innovation blind spot

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I recently had the good fortune to host the Commercialisation EXPO 2006 conference held in Melbourne. It covered all the right areas and was a great success, but it is clear that one troubling issue remains – the chasm between innovation and marketing is as wide today as it has ever been.

aa17-aug-sep-2006-australia-s-innovation-blind-spotWhile investors, academics and entrepreneurs have made great strides in learning each other’s language and working together, the same cannot be said for the last two of those parties when it comes to understanding marketing. An excellent presentation given by former Yahoo! vice president and serial entrepreneur Tony Surtees was greeted with silence by the EXPO 2006 audience, while some of the presentations relegated marketing to almost an afterthought – well down the road from discovery, development and prototyping, leaving it to languish somewhere just before general product distribution.

This is in no way a criticism of the conference organisers, who gave over an entire quarter of the first day to a marketing-oriented session – it is an observation on the process of commercialisation in Australia overall. So much emphasis is placed on the discovery moment and the path of the science. So little is placed on determining whether there are indeed markets for these discoveries.

It would also be wrong to blame scientific academia. Few marketing departments at universities ever make their way over to the science and engineering labs. And part of the blame also lies with industry – a sector that is constantly berated about Australia’s poor showing in terms of commercial research and development activity (industry was also the least represented group among the EXPO 2006 delegates). It is, of course, within industry where marketing expertise lies, and if the academic and commercial groups are not talking to each other often enough, there is little hope of the marketing message making it across.

Another component of the problem lies within academic teaching programs, which are geared to producing researchers, not entrepreneurs. I’m in no way advocating a de-emphasising of scientific endeavour. But a well-rounded entrepreneur (and lets face it, they are rare) understands the value of marketing throughout the process of innovation and commercialisation, from the discovery moment onwards. Indeed, some of the greatest commercial innovations of recent times have involved practically no discovery moment at all – and very little innovation – but have been driven entirely by marketing.

Take Apple’s iPod. The concept of a hard-disk-based music player had been around for more than a year before the iPod hit the market. It was not even Apple’s idea, having been bought to the company by a third party (who had already been rejected elsewhere). But smart marketing, including around the design and packaging of the product, has led to Apple taking around three quarters of the total market for portable digital music players. The iPod and its related economy is now responsible for more than half of Apple’s revenues.

Marketing is an essential component of the commercialisation process. The very basis of these words make them practically inseparable. But this is easily forgotten in the race to build the best mousetrap. If we are going to be a nation of smart mousetrap builders, we also need to be a nation of smart mousetrap sellers.

Marketing isn’t rocket science, and some of the questions are quite basic. Things that any entrepreneur needs to ask themselves after the discovery moment include:

  • Is Australia a big enough market, or do I need to be thinking global from the very beginning?
  • What is the existent alternative to what I am creating?
  • Is my product disruptive? How will I educate my market about my product?
  • What are the marketing programs and sales arguments of my would-be competitors? How can I counter these?
  • Will my product be cheap enough to encourage my market to switch away from other products?
  • If not, is the benefit I provide sufficient to make changing worth their while?
  • Through what mechanism will I reach my market? Will I sell direct (perhaps via the internet) or will I need to recruit sales partners?
  • If I do need sales partners, will my margins be sufficient to encourage them to sell on my behalf?

A product without a market is worse than useless – it is a waste of time and money. Australia has seen enough of these already.

Brad Howarth is a journalist and the author of ‘Innovation and the Emerging Markets: Where the Next Bulls Will Run’, a study on the challenges facing small Australian technology companies.

* Disclosure: In addition to his work as a freelance journalist, Brad Howarth is also a member of the national executive of AIMIA.

You can read his blog at lagrangepoint.typepad.com

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