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Does Governance stifle Innovation? Rob Chalmers Adelaide– Thursday, 5 June 2014 © Governance Institute of Australia.

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Presentation on theme: "Does Governance stifle Innovation? Rob Chalmers Adelaide– Thursday, 5 June 2014 © Governance Institute of Australia."— Presentation transcript:

1 Does Governance stifle Innovation? Rob Chalmers Adelaide– Thursday, 5 June 2014 © Governance Institute of Australia

2 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…

3 Solving our partners’ real-world problems

4 Commercialisation Heart Metabolics Limited

5 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”).

6 Spinout Example: Muradel P/L

7 Licensing Slide 7

8 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

9 Life on Mars…

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12 Innovation: a threat to be “governed”?

13 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 control Precautionary principle vs lost opportunity cost

14 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)

15 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: mutations by irradiation/ chemical mutagenesis/ conventional breeding AOK “New” GMO tech heavily regulated

16 Promoting Technology Development: Innovation isn’t a sausage machine… Disclosure Evaluation IP protection & packaging Proof-of- concept Commercial pathway & resourcing Value adding Exit Research & Discovery

17 Adelaide Research & Innovation Pty Ltd

18 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”

19 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.$1 billion5 million people

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21 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….

22 Understanding your context

23 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 CrawfordFred Crawford March 17, 2014 businessweek.com

24 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”)

25 Jurisprudence: rules are inherently unreasonable

26 Adelaide Research & Innovation Pty Ltd

27 Governors: technology American engineer Willard Gibbs analyzed Watt’s governor Willard Gibbs 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 entitiesequilibriumsystem (1)the heat energy supplied to the intermediate substance,heat (2) the work energy performed by the intermediate substance (steam)work

28 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

29 “Govern a great nation as you would cook a small fish. Do not overdo it.” Lao Zi

30 © Governance Institute of Australia


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