Australia’s venture-capital community has “some ways to go” before its investments begin to deliver the level of actionable innovation that would mark an innovative and successful start-up ecosystem, an organisational transformation leader has warned.
Speaking during a wide-ranging panel discussion at this month’s ACS Reimagination Thought Leaders’ Summit 2018, Commonwealth Bank of Australia (CBA) customer experience, innovation and transformation executive Tiziana Bianco said that many Australian incubator programs were still finding their feet despite billions of venture capital (VC) funding invested to date.
“We are seeing some R&D turn into innovation at the moment,” she said, “but while there are a number of reports and indexes [ranking VC success], Australia doesn’t come on top of any of those lists.”
“Although there are a lot of research capabilities, we are not necessarily seeing that evidence through commercialisation yet; the system needs to come together to be more collaborative.”
Aaron Birkby, CEO of Startup Catalyst, has been working to help Australian start-ups build that spirit of collaboration by taking young entrepreneurs on two-week educational missions to Silicon Valley.
Participants were “immersed in the culture, and smacked in the face with it,” he said, “and more than anything else, the point was to give them the confidence that they are indeed world-class.”
“They sat alongside engineers in the Valley and see that they are working on amazing things that are indeed shifting the needle of humanity – and if they can do it, we can do it too.”
Yet upon returning to Australia, those empowered entrepreneurs often quickly hit their heads on the ceilings in the Australian environment – “they were still pitching to Australian investors and trying to sell to Australian corporates,” Birkby explained.
As a result, Startup Catalyst expanded its programs to broaden the thinking of the others in the ecosystem necessary to nurture innovative ideas into effective companies: Australian policymakers, government officials, start-up founders, and corporate innovators.
Building an entrepreneurial ecosystem
Bianco is one such corporate innovator, having created and led the CBA’s global Innovation Lab network, which serves as an internal incubator for new ideas, business models, and emerging technologies.
Building the labs taught her how important it is for corporates to embrace a range of elements to successfully build and nurture internal innovation programs.
Foundational components for such programs, she said, include elements focused on both value creation and revenue generation; an R&D centre “with a lens on commercialisation”; access to capital both at early stages and as companies grow; an internal entrepreneurial drive to rival that of traditional start-up entrepreneurs; and talent “that is going to look at not only the skills today, but at emerging technologies”.
Finding the right mix of talent can make or break an incubator.
Krista Jones, enterprise managing director with the Toronto-based MaRS Discovery District, noted that the facility’s 1.5 million square feet – the largest urban innovation in North America – included over 120 “curated tenants” including a mix of start-ups; corporate R&D arms for firms like Airbnb and Autodesk; and thought leaders.
Those tenants generated over $1.3b in revenue during the last financial year and provided “the full gamut of maturation,” Jones said, noting that the facility had developed and run “a lot of programming” for corporates and VCs as a result.
Fostering adoption of innovation and the building of skills and talent had, she said, filled out the ecosystem “such that both corporates and the ecosystem have access to the right type of employees to fuel their growth going forward.”
Indeed, that access often proved as important to fostering start-ups as direct funding, noted Peta Ellis, CEO of River City Labs – recently acquired by ACS – which has mentored over 500 entrepreneurs and hosted more than 1000 networking events for start-ups.
Accelerator programs “open doors and introduce founders to people that would normally take them years to do themselves,” Ellis explained. “It is about being able to upskill and change your perspective on what you think you can do – and then to just push harder than everybody else.”
Finding the skills to grow
Yet pushing hard isn’t always enough on its own. Many start-up founders may be business-minded and don’t have the skills to build out a team, Ellis noted.
“For them, it’s about being able to multitask,” she said, “but also to be open to acquiring new skills that they don’t have.”
“If you have an amazing business idea and you’re not technical it doesn’t mean you can’t go and learn a new skill – but it’s also about finding the right people around you and bringing them onboard your journey.”
Willingness to learn is one of three key indicators of future success, Jones added, with the other two being a requirement for real innovation – and a confirmation that innovation is solving a problem that affects a lot of people.
“It’s not about whether the founding team has everything that they need know and all the skill sets they require,” she said.
“It’s about how coachable they are, how much they are willing to learn, and how much they are willing to grow with the venture that they’re building.”
“When we see the companies that are most successful, it’s because they have found a team that is really inquisitive, and creative, and willing to learn from as many people as they can.”
That process works somewhat differently within corporate incubators because those organisations draw extensively on internal skills possessed by people who have their own career goals, experience, and aspirations.
Bianco recalled speaking with staff who were consumed with concern that automation, for example, would eventually make their jobs obsolete. Not every staff member was attuned to innovation but many could be redirected and harnessed to help contribute to innovation programs that went far beyond simply building digital versions of their existing selves.
“It’s important for us to understand what it is that we need to build,” Bianco said. “As corporates, we need to understand that we want people who know they need to translate their skills into reskilling themselves.”
That knowledge “really comes from a growth mindset,” she continued. “You want to have people who want to work in really diverse teams with people who don’t look like them, people who don’t necessarily have the same opinions, and people who are willing to challenge everything they know to be true.”
Organisational structures were holding many businesses back in their efforts to drive this change, she added, with many organisations still sequestering their modernisation efforts within dedicated digital teams.
“If companies are still working on revising their digital strategies, they’re in trouble,” Bianco said. “We need to develop more digital literacy – and there are some parts that we need to double down to develop, and others that are really more about the mindset and being able to be a lifelong learner.”
“The more people that have that philosophy and adopt it, are going to be well suited for the unpredictability and the randomness and change that we are experiencing.”
Starring role, supporting cast
Ultimately, growing a successful start-up is about finding enthusiastic entrepreneurs – and helping them surround themselves with the right team.
And while an eager entrepreneur may get into the door of a VC, investors “will look to invest in a certain personality and a person”, Ellis said.
Longer-term investment depends on the presence and cohesion of that successful team.
“Incentives are usually there as a carrot at the beginning to kick off activity, but the right people need to be embedded into the ecosystem to maintain its growth and sustainability in the long term,” she said.
“Surround yourself with like-minded people that understand why you want to do this in the first place.”
Ultimately, finding those like-minded people will nurture a collective enthusiasm for the task at hand – and a growing loyalty as the company scales up.
But that’s where Australia continues to fall short, Birkby said.
“What we are lacking are those decent scale-ups and technology companies where they can have roles that are going to challenge them,” he explained. “Smart people want to be challenged – so let’s create those challenges.”