Governments
and innovation
Ralph Lattimore
Assistant Commissioner
Productivity Commission
NATSTATS 2010, September 16,Sydney
Productivity Commission
A NASA story
“You’re creating quite a stir with
these new ideas”
See: Barriers to Innovation and inclusion
Andrew Thomas, Astronaut NASA
You-Tube video
Productivity Commission
2
Money is paper with pictures of dead
national heroes on it
Productivity Commission
3
Innovation is about more than material
prosperity
• Upper level goal - a happy and worthwhile society
• Solving social, environmental, social justice and
health problems
• Meeting human drives for curiosity, ego, altruism
• Meeting people’s material aspirations - ‘prosperity’
• New products and services
• Making life easier
• Better jobs
Shows up as higher incomes, conventional productivity,
and as ‘competitiveness’
– but these are not the goals per se
Productivity Commission
4
Several direct roles for government in
innovation
• As a supplier and customer (just like business)
• Fostering a cultural interest in innovation
• Some peculiarities in knowledge
Productivity Commission
5
But government is a trivial source of ideas
for business innovation
Industry associations
Conferences, meetings & trade shows
Research publications
Commercial R&D enterprises
Private non-profit research
4.1
Government
Higher education
Consultant
Same industry
Suppliers
Clients
Within business
0
10
20
30
40
50
60
70
Share of businesses
Productivity Commission
6
Governments are more important to large
enterprises
Share of businesses
Business source of ideas
9
8
7
6
5
4
3
2
1
0
8.3%
4.6%
3.8%
3.6%
0–4 persons 5–19 persons
20–199
persons
200 or more
persons
Employment size
ABS 2010, Innovation in Australian Business, 2008-09, Cat. No. 8158.0
Productivity Commission
7
Government’s direct spillovers to business
reflect its competencies
Other Services
Arts & Recreation Services
Health Care & Social Assistance
Administrative & Support Services
Professional, Scientific & Technical
Rental, Hiring & Real Estate
Financial & Insurance Services
Information Media & Telecommunications
Transport, Postal and Warehousing
Accommodation & Food Services
Retail Trade
Wholesale Trade
Construction
Electricity, Gas, Water & Waste
Manufacturing
Mining
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Ratio of government to suppliers as source of ideas
Productivity Commission
8
1.0
Several direct roles for government in
innovation
• As a supplier and customer (just like business)
• Fostering a cultural interest in innovation
• Some peculiarities in knowledge
Productivity Commission
9
Some historical examples of innovations in
government ‘provision’ we now take for granted
•
Old ones
• property rights and laws
• sewerage
• national parks
• police and national defence
•
Not so old
• unemployment benefits, social welfare, public schools
• urban planning
• an independent central bank
• public health insurance
•
More recent or impending (often social, not economic)
• higher education contribution scheme
• case mix funding
• Job Network
• dealing with indigenous disadvantage?
• a national disability insurance scheme?
• carbon abatement policies?
Productivity Commission
10
Environmental needs suggest big gains from
clever science and policy
0.98
96
96
97
94
0.96
95
0.94
0.92
89
0.9
0.88
0.86
0.84
Biodiversity Threatened
mammals
Productivity Commission
NoX
SO2
Volatile
Carbon
organic emissions
compounds
11
R&D as foreign aid
Project
Benefit/cost ratio
Conservation tillage for dryland cropping
in China
205
Breeding and feeding of pigs in Vietnam
118
Controlling Phalaris Minor in the Indian
Rice belt
275
Bio-control of the banana skipper pest in
Papua New Guinea
258
Productivity Commission
12
Is there scope for improvement?
Best-performing firms
Does government?
(Big, successful) firms strategically think about innovation
throughout their company
Firms know why they should spend resources on innovation
Firms hire (some) people for their creative skills and encourages
them to be creative
There are (pecuniary and non-pecuniary) rewards to individuals
and groups from successful innovation
Firms recognise failure is necessary for good innovation
Firms are unapologetic imitators
Generally not
Not always
Partly
Partly
Generally
not
Partly
Firms stop what doesn’t work
Not always
Firms measure inputs and outputs of innovation
Sometimes
Productivity Commission
13
The chance to be innovative seems to be of
diminishing importance of job satisfaction
in the public sector
Is being innovative important
for your job satisfaction?
If yes, how satisfied with capacity
of the job to allow innovation
80
35
70
30
60
25
50
20
40
15
30
10
20
5
10
0
2002-2003- 2004-2005-2006- 2007-200803
04
05
06
07
08
09
Productivity Commission
0
2002-2003-2004-2005-2006-2007-200803
04
05
06
07
08
09
14
What attracts public servants to their jobs?
Job security
Matches interests
Make a difference
Job location
Money
Important work
Good workpractices
Future career in agency
Development
More experience
Innovative/leading edge job
0
10
20
30
Very important
Productivity Commission
40
50
60
70
80
Important
15
90
Is there scope for improvement?
Best-performing firms
Does government?
(Big, successful) firms strategically think about innovation
throughout their company
Firms know why they should spend resources on innovation
Firms hire (some) people for their creative skills and encourages
them to be creative
There are (pecuniary and non-pecuniary) rewards to individuals
and groups from successful innovation
Firms recognise failure is necessary for good innovation
Firms are unapologetic imitators
Generally not
Not always
Partly
Partly
Generally
not
Partly
Firms stop what doesn’t work
Not always
Firms measure inputs and outputs of innovation
Sometimes
Productivity Commission
16
Governments
and innovation
Ralph Lattimore
Assistant Commissioner
Productivity Commission
NATSTATS 2010, September 16,Sydney
Productivity Commission