SPEECH: A Prescription for Australian Innovation
The following is based on the speech delivered at the Global Access Partners National Economic Review: Australia’s Annual Growth Summit, 17 September 2010, by Martin Duursma, CTO Office Chair, Vice President of Citrix Labs, Citrix Systems.
Let me frame the discussion with a couple of statements:
- The greatest barrier to success is the fear of failure.
- Failure is good.
Today all of us find ourselves in an Australia that is one of the leading economies in the OECD, in large part due to our good fortune with our resources boom. But, is this a long term condition? Indeed if you think about the word ‘boom’, isn’t it usually followed by the word ‘bust’?
Do we want to tie the long term success of Australia, our people, our society to such dependence on one type of economic activity?
I think Australia needs to broaden its economic base.
There are many ways for government to influence the development of new sectors to achieve this goal; however I believe that one area, that of smaller-scale entrepreneur-led innovation, needs much more attention.
And there are good reasons for this, not the least of which is that entrepreneur-led innovation contributes to rapid job creation, GDP growth, and long-term productivity increases. This is what Australia needs.
So, “Entrepreneur-led Innovation”, what is it? Why does it matter? Does Australia have enough of it? And how can we get more?
To answer these questions, I’m going to take you on a journey through my experience with research and development at Citrix; some definitions of innovation; and how the Australian culture both helps and hinders the entrepreneur. I’ll conclude with some pragmatic recommendations.
THE CITRIX STORY
So let’s start with Citrix. Citrix is a global software company. Since my company was acquired by Citrix in 1997, Citrix has grown from around 100 million US dollars of revenue to today’s almost two billion of annual sales. For much of that time, my role has been as VP of the global Citrix Labs organization, driving product innovation. I have been extremely fortunate in being able to lead that group from Sydney.
(This has of course meant that my true second home is somewhere over the Pacific inside an aircraft, due to the extensive travel required – Qantas being the primary beneficiary.)
My organization, Citrix Labs is an applied research group. Unlike pure research groups, we don’t try to create new core algorithms or advance the state of computer science. Rather we look at technology trends, emerging technologies, and prototype new solutions to advance the competitive capabilities of the Citrix product portfolio.
Over the last nine years we have been extremely successful in driving these competitive capabilities into the Citrix product range. Working as an independent group, separated from the main engineering teams by our location in Australia and elsewhere, we have been able to exercise more free thought, and largess, on innovative ideas and along the way we have learned a few lessons.
The most relevant lesson for our discussion, at the Global Access Partners Summit, is that every new idea, or innovation, is considered in the light of a company’s current business model. Let me give you an analogy, ‘If you have a hammer, every problem looks like a nail’. Now, this is an overused analogy, but it is an important insight into how companies behave. New initiatives have to connect to existing strengths.
In our Citrix innovation practice, we typically find two categories of ideas.
The first, are ideas that are incremental to our current offerings. These are easy for the business teams to understand, and can be expected to find easy traction inside the company. Ideas like this make for an easy win for Citrix Labs.
The second, are ideas which are revolutionary, or outside the current business model. These are far less straightforward to deal with. While there can be outsized returns from these ideas, they require significantly more business championing and effort to bring to fruition.
Let me put it in a different way with a Citrix specific example. About six years ago, Citrix’s primary market was the enterprise market segment. At about that time we started hearing about alternative ways to deliver remote desktops to the small business market place.
For most of our product teams this development was completely outside their experience and understanding. They could see no way to even sell into this small business marketplace.
The only way for Citrix to enter this marketplace was to acquire a company that was already completely focused on selling to small businesses. This acquisition has gone on to become the Citrix Online division and is now a top five global software-as-a-service business with products like GoToMyPC, GoToMeeting, GoToWebinar, GoToTraining and more.
This is an example of how new business models, or indeed technology outside the experience of the existing business, is often better developed, pioneered, and made commercial by third party start-up organizations. We have found that for disruptive or major new initiatives, acquisition of an outside entity is the road to success.
Due to this insight, Citrix has now chosen to encourage a broad range of entrepreneurs to join us on that road to success. Our approach is to establish an investment fund to provide capital or seed-money to early stage start-ups that are relevant to the Citrix long term vision. Think of this as Citrix becoming a corporate angel investor.
From a Citrix point of view, this approach lets us balance our innovation portfolio. We will continue with our internally-focused innovation programs, while at the same time nurturing an ecosystem of entrepreneur-led innovation. The goal is that Citrix grows new opportunities without detracting from our focus on the current businesses.
Entrepreneurial, free market energy is a key enabler for new and disruptive businesses.
The takeaway: For Citrix, an external ecosystem of entrepreneurs is critical to drive our innovation agenda.
INNOVATION IN GENERAL
Let’s now get a little more specific about what I mean by “innovation”. I consider there to be two types, upstream and downstream innovation, but in reality they are two sides of the same innovation coin.
1. Upstream innovation is invention that has been commercialized. The creation of an new idea and a way for it to become embodied. Let me give you an example. John, an inventor, has an invention that has been commercialized as a new type of cutting machine. This is upstream innovation, an invention with a path to those who will benefit.
2. Downstream innovation, on the other hand, is about the consumption of an innovation. Continuing our example, Sam, who owns a shoe factory, invests in John’s cutting machine to improve productivity. This is much closer to the definition of innovation from Peter Drucker, a well-known US management theorist. For him innovation is “Change that creates a new dimension of performance.” This has a follow on effect of driving competition across industry segments.
Both sides of the innovation coin are important. One is concerned with creating new intellectual property and its commercialization. The other brings innovation to bear in the broader activities of the economy.
My focus is on upstream innovation; the commercialization of inventions. I believe that Australia still needs to find the right balance of policies to encourage upstream innovation.
For Citrix, and for the high technology industry in general, upstream innovation is the force that shapes the market through ongoing replacement of old technologies and methods. This change brings disproportionate opportunity and economic reward to those who are in the driving seat; this is an important observation in an era where the pace of technological change continues to rapidly increase.
An example of this change are the well-known series of transitions in IT from the Mainframe, through mini-computer, PC, the Internet, and Cloud – each one a tectonic shift in business model and technology.
Each shift is the end result of a large amount of entrepreneurial activity, creating new ways of doing business, and new ways of consuming technology. This is far more than just invention. It requires the skills of a particular person. That person is the entrepreneur.
What do they look like? If I was to describe Joe the typical “successful” entrepreneur, he would be 33 years of age, university qualified, most likely had some experience in a large company, self-funded his first business, and often more than once… Joe doesn’t wear a suit and his tee shirt hangs out over his jeans … I think you get the picture I am painting here…
The entrepreneur is a unique type of character; they have passion and enthusiasm, maniacal focus, they can stay the course irrespective of headwinds.
(You could almost call that pig headed.)
To become skilled in the art of entrepreneurship you not only need these character…attributes, but require hands on experience, often acquired through multiple failed businesses. And indeed in some parts of the world, the right sorts of failure are seen as a badge of honour, recognition that much has been learned.
The Takeaway: The entrepreneur is a skilled and necessary element of successful innovation.
AUSTRALIAN CULTURE
The entrepreneur is often the dogged rule breaker, visionary, the mongrel who wouldn’t take no for an answer.
And that, brings me to Australian culture, and how it helps and hinders innovation.
In many ways, Australians fit the entrepreneurial recipe. Our irreverence for authority, the willingness to ‘go it alone’, and strength of character are a large part how we identify ourselves. This is the Australian bushman archetype.
Australia is also a nation of immigrants; people who have left their original country to seek a better life, to risk much for significant returns. So the combination of the Australian culture and immigrant aspiration should make us a beacon for entrepreneurial activities.
Unfortunately, the reality is different.
On the negative side, for Australia, is our ‘she’ll be right’ or ‘no worries’ attitude. We are a lucky country with tremendous resources and a lifestyle that is the envy of every other country. We are riding a resources boom. Our economy is performing well; unemployment is low. So we are fat and happy, right?
Is there any wonder, that many Australian’s are complacent?
I ask you, if you’re fat and happy, why would you risk all to become an entrepreneur?
Takeaway: The Australian culture and our economic reality discourage entrepreneurial activity.
A PRESCRIPTION
Now … Imagine an Australia with entrepreneurs unleashed, with a sense of potential; where the ‘tall poppy’ becomes the big story and displaces the sports hero as the role model. Imagine an Australian self-image of strength, can-do and innovation.
We need to make trying a cultural positive even when followed by failure. We need to revere the high achiever.
As I was preparing for this talk, I came across a recent article in the Harvard Business Review authored by a certain Professor Isenberg. This article examines the links between the entrepreneur and innovation and suggests a recipe for creating an entrepreneurship ecosystem. All of the recommendations in the article should be considered, however I have chosen to focus on the importance of cultural attitude as a key enabler.
Three countries were highlighted as successfully changing cultural attitudes toward entrepreneurial activity, these were Chile, Puerto Rico and Ireland. In all cases negative attitudes to the entrepreneur were reversed within a generation.
In Chile, entrepreneurs seen as ‘greedy exploiters’ in the 80s were redeemed as role models by the 90s. While the reasons for this change are complex, popularization of entrepreneurs played a significant part. Chilean entrepreneurs were quoted in Isenberg’s article as saying, “Today the youth, everybody, wants to be an entrepreneur. If a successful empresario is interviewed in the newspaper, everybody reads it.”, They want to know, “Why was he successful? How did he do it?
Popularizing the entrepreneurial career path has been a critical component for these cultural changes in many countries. One way that this has been achieved is though celebrating success in the media. For example, in Puerto Rico, the largest daily newspaper supports local entrepreneurship by dedicating a page each week to start-up success stories. These stories became part of the social dialog and raised awareness about the opportunities of entrepreneurship.
I believe that we can also build more enthusiasm for the entrepreneurial path in Australia by using similar initiatives.
Indeed, there are encouraging changes already underway with the growth in recent years of grass-roots communities for business and entrepreneurial activity. These include mailing lists and informal groups of angel investors and entrepreneurs. Some local examples are ‘Sydney Angels’, ‘Startmate’ and the ‘Silicon Beach’ social network for entrepreneurs. These have been fostered largely by individuals who are Australian high-tech success stories who want to give back to the local community.
These groups provide a great source of stories of success and inspiration as well as the ‘have a go’ that we need to see more of. I would like to see government partner with organizations like these to evangelise the entrepreneurial path.
Of course there are many other mechanisms that can be put in place to encourage more entrepreneurial activity; however my belief is that the most critical step is to develop our culture to bring a new generation of entrepreneurs to the fore.
The Takeaway: Our culture can be evolved toward supporting and celebrating entrepreneur-led innovation.
CONCLUSION
In conclusion, I began with the statement that “The greatest barrier to success is fear of failure,” and that “Failure is good.”
We need to jolt ourselves out of complacency, and build a culture where people aspire to create rather than to live comfortably; to seek risk, with appropriate return; and to celebrate those who achieve these goals.
Celebrating the entrepreneur is a critical part of Australia’s Innovation future.
