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Does Governance stifle Innovation?Rob Chalmers
Adelaide– Thursday, 5 June 2014
© Governance Institute of Australia
Innovation in Action: Research to Impact
ARI’s role:• Building reputation, relevance
& revenue for the University of Adelaide
Managing a diverse array of external engagement:• Grants, collaborations,
contract research, consulting, commercialisation
Balancing entrepreneurialism and governance…
Solving our partners’ real-world problems
Commercialisation
Heart Metabolics Limited
Spinout example: SNAP
2009 University spinout
Technology developed by the Australian Centre for Visual Technologies:
turns a collection of hundreds of unrelated cameras into a fast and powerful network, providing the ability to automatically track a target from camera to camera (“video pursuit”). www.snapcontrol.com
Spinout Example: Muradel P/Lwww.muradel.com.au
Licensing
Slide 7
Does Governance Stifle Innovation?
Yes (to a degree)
Governance of innovation– Regulating use of technology – Promoting technology development: “Stage gating”,
“Lean Startups”, crowdsourcing
Contextual understanding
Achieving Balance
Life on Mars…
Governance & Innovation:harnessing the technology Genie?
Laissez Faire? Educate? Activism?Regulation
• Industry Self Regulation • Promoting the adoption of technologies
– by conferring legal benefits – by removing regulatory impediment
• Mandating the adoption of technologies • Restricting the use of technologies • Prohibiting the use or communication of technologies
Impact of Contracts, Insurance, Tort, other laws
Technical methods of controlPrecautionary principle vs lost opportunity cost
Poor regulation is hard to avoid
• underlying issues are often ill-understood and continue to evolve with the technology
• “If the source, nature and scale of the problem are not fully understood, then the proposed policy is likely to be inadequate, inappropriate and/or inefficient. A complete understanding of the nature of the problem is essential for the proper specification of objectives and selection of appropriate alternatives”
(State Government of Victoria, Office of Regulation Reform)
Regulating Frankenstein:Gene Technology Act 2000
Caught between Scylla and Charybdis:• providing an enabling framework
– “friends of the new economy”• reacting to issues of immediate public concern – “slaves to the
shock jock”
Act excluded “old” gene tech: mutationsby irradiation/chemical mutagenesis/conventional breedingAOK
“New” GMO techheavily regulated
Promoting Technology Development: Innovation isn’t a sausage machine…
Disclosure Evaluation
IP protection & packaging
Proof-of-concept
Commercial pathway
& resourcing
Value addingExit
Research & Discovery
Adelaide Research & Innovation Pty Ltd
Lean Startup & “A/B” testing
Eric Ries, “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses”
• loop between build (code) measure (data) and learning (ideas)– Baseline: build a ‘minimum viable product’, and measure how
customers behave – Tune: experiment to improve– Pivot or persevere: when experiments reach diminishing returns, that is
the time to pivot• Startups: a human institution delivering products
and services under conditions of extreme uncertainty• Entrepreneurship is a “Bayseian sport”
Crowd Sourcing ideas & money
Eg Kickstarter - funding platform for creative projects: films, games, and music to art, design, and technology. Since launching in 2009, over $1 billion pledged by more than 5 million people, funding 50,000+ creative projects.
Getting Innovation To Market
Selection of strategy, partners
Due diligence
ownership and rights, IP issues, records, “freedom to operate”.
Funding and not least - Taxation
Legal
Structures, competition laws, franchising controls, relevant law, choice of law/jurisdiction, dispute resolution, responsibility for meeting regulatory controls and complying with applicable laws; currency; franchising laws; risk, liability, insurance, indemnity….
Understanding your context
Managing Risk Without Stifling Innovation
“Risk management has become a key function … but all too frequently it makes an organization so risk-averse that initiative and innovation become paralyzed.A central part of the problem is that risk managers, mainly reporting to the chief executive officer, tend to see their role as one that’s apart from other employees—as some sort of überguardian of the organization. This is a mistake.The role of risk manager should be to help build a culture that encourages all employees to take risks—prudent risks, of course.”
Fred Crawford March 17, 2014 businessweek.com
Risk appetite
Risk management/mitigation• to what extent is it code for risk aversion?
Are we leaving enough room for error? (source: FTI Consulting Inc “Blueprint for innovation”)
Jurisprudence:rules are inherently unreasonable
Adelaide Research & Innovation Pty Ltd
Governors: technology
American engineer Willard Gibbs analyzed Watt’s governor
He observed that in practice it was beset with disadvantages of sluggishness and a tendency to overcorrect for the changes in speed it was supposed to control
Gibbs theorized that (thermodynamic) equilibrium for any work producing system depends on the balance of 2 entities
(1) the heat energy supplied to the intermediate substance,
(2) the work energy performed by the intermediate substance (steam)
Innovation in governance
Detailed proscriptive approaches
are doomed to failure - from over and under inclusion
Meld Systems (Consistency) and People (Flexibility)
Genuinely accept risk and failure
criticise its absence
Apply innovation methodology to the governance process itself?
look outside your box
Innovation is reliant on trust
“Govern a great nation as you would cook a small fish. Do not overdo it.”
Lao Zi
© Governance Institute of Australia
