Sally-Ann Williams is the CEO of Cicada Innovations, one of Australia’s leading deep tech incubators. Before joining Cicada, Sally-Ann was an Executive Program Manager at Google Australia for 12 years, driving Google’s entrepreneurship and startup engagement. We asked her about building resilience into Australian industries, cultural shifts in the way we innovate and emerging opportunities for businesses.
What are the biggest challenges to the economy in the next few years?
The biggest challenges to the economy over the next few years are in how we think about short-term and long-term recovery.
In the short-term, there have been a lot of jobs displaced in travel, hospitality, tourism and retail. We can’t replace those jobs quickly. It’s not like we can turn on the travel spigot and we get flying and international tourism tomorrow. It’s just not going to happen. We need to think about what we’re going to do with all those people employed in those industries.
In the long-term, opportunities for growth are going to be companies in deep tech that are solving the world’s biggest problems that haven’t disappeared because of the pandemic. Those companies have navigated the disruption in supply chains and they’re up and running and going full speed. They are desperately in need of people to join them. The challenge is bridging the gap between the people looking for opportunities and the skills they need to come into these growth companies.
What exactly is deep tech?
Deep tech is a phrase that encapsulates companies and businesses founded on science and engineering breakthroughs. Generally they are very IP intensive, they’re quite capital intensive because of the scientific and engineering processes involved in bringing a product or service to market. They’re also things that are not easily reproducible.
Think about innovation and tech as a spectrum. On one end you’ve got businesses that are consumer-facing, maybe they’re apps or convenience-based organisations. They’re pretty easy to reproduce and there’s not a lot of IP.
On the other end, if you’re looking for a diagnostic test kit that can not only tell you whether you have COVID-19 but can actually tell you how severe your symptoms will be by looking at your genetic biomarkers, that is something that’s not easily reproducible. This is deep tech. Deep tech is quite hidden from consumers and people might not understand it, but they consume it.
The other unique characteristic of deep tech is that it typically takes a long time to bring something to market. We’re not talking a year or two years, we’re talking 10-30 years because of their extended R&D and production timelines. But it’s really resilient as an industry and it is the foundation of economies that are much more complex.
Australia has a pretty simple economy. We have really relied on simple industries. Complex economies like Germany and Israel rely on deep tech as significant drivers of economic growth.
How has the pandemic affected deep tech in Australia?
This is a fork-in-the-road moment for Australia. We have incredible capacity and capability for deep tech and we have it across all verticals. Deep tech is vertically agnostic: it’s space, it’s agriculture, it’s medicine. It flows through every industry. We have these great strengths. What we need to ensure is that we get the long-term policy levers right to sustain research in the country. We also need to then ensure investment and business.
If we look at the top 2,500 R&D global leaders, Australia only has 14 of them. There’s 60 and 28 in comparable economies like South Korea and Canada. We’ve got to close the gap and we’ve got to find ways for business to engage in deep tech. This means transformative products and services that can build new revenue streams for their business versus some of the business innovation we’ve seen which is a little bit more on the theatre side of things. It looks good and feels exciting but it’s not actually game-changing. It’s not a new product or service, it’s only operationally helping them be more efficient.
We’ve got to have a vision for it. I liken it to a moon shot. When Kennedy launched the space race, he said we’re going to put a man on the moon – we don’t know how we’ll do it, but we’ll do it anyway.
The opportunity for Australians now is to say that in this decade, we’ll solve renewable energy for the world – we don’t know how we’ll do it, but we’re going to do it anyway.
Let’s get bold statements out there. We don’t need to know how we’ll do every step of our plans. But by getting a stake in the ground, you start to drive policy levers and cultural levers.
History has shown us that when there’s someone visionary, the results flow through to decades of economic benefit. If we look at the US, Silicon Valley was built on a semi-conductor industry. Now the products we have in our homes and hands are beneficiaries of that. It fills decades of opportunities.
You’ve mentioned two drivers: policy and cultural levers. Do you think the fact that Australia only occupies 14 of the top 2,500 R&D global leader positions is due to a policy lag or cultural lag?
It would be nice to say that it’s a policy problem, but really business is also a big part of the problem. Most of our large corporates procure technology and innovation from overseas. They don’t generate it inside their organisation.
Some people say that’s partly because of how we treat the share market here. People are looking for dividends. If you’re driven to produce dividends for your shareholders, you want to reserve cash and you will think about how to operate your business differently. If you look at how Silicon Valley works, there are massive investments in research and development inside organisations and they never plan on giving dividends. They look for capital growth and arguably the shareholders are better off for that.
We need to unpack how we think about business in Australia. If you’re driving for shareholders, we need to ask what value they want. Do they want the share price to increase or do they want dividends? Dividends, I think, fuels unhealthy thinking.
We haven’t understood that a greater investment in research and development actually leads to better business outcomes. With R&D, people will fail after a year or two and just kill it. But R&D takes longer than that. Instead, we should be thinking about researching for the thing we’re going to release in 20 years time.
It’s not about building a better product today, it’s about a thing that doesn’t even exist yet. Identifying a problem that you’re going to solve and working back from it is foreign to Australians.
But no company is immune to survival rates. We need to ask how we are reinventing the future. I have to be honest, I don’t see enough of that conversation happening.
How can we overcome this myopic perspective on research and development?
We have to be bold and visionary. I do believe there is community appetite to buy into long-term change and transition. We need people to come up with a 20-year plan that is robust and isn’t politically motivated.
Energy is an important one. Where are we getting our energy from? How is it going to be clean? There is a massive desire for renewables. This isn’t just from industry. Every business is talking about it. Shareholders are driving towards that. General community is saying that. Yet there’s a lacking in boldness because people fear their political careers will fall over. Without boldness, we end up with mediocrity.
But with that boldness, you need to be okay with failure and Australians are not good with failure. We have a cultural problem with it. We don’t like to see people fail. But we need to normalise failure.
Failure is part of the scientific process to get to a solution. When you view it that way, you don’t notice the failure, it’s only a learning exercise.
The best example is the program FIRST Robotics. It’s a global program that teaches kids to build robots to solve problems. Along the way, you’ll fail hundreds of times – your hardware fails, your design fails, your software fails. But what you see in these kids is that failure gets normalised and they race to solve it. If we have that mindset in the future in policy and businesses, we’ll change the culture top down.
What kinds of government policies could nurture that entrepreneurial mindset?
When we think about policy, there’s no one magic policy that’s going to solve everything. We need to think of how policies interact.
The R&D tax credit is something everyone talks about. It can’t be changed to just prevent bad actors, you need to understand you could be preventing good actors. We need to understand how policy settings between departments interrelate. For example, we have things around privacy and copyright. Most people view copyright through the lens of news, media and music, but it also impacts health and yet those don’t really collide. So we need to understand the intersections of policy and where it might be preventing innovation in Australia.
The challenge is having a voice in Canberra if you’re a small company. The one thing I would like to see is not so much a policy transition, it’s a practice transition. I would like to see Government, in every policy decision they make, rounding up businesses to get their voice. If you look at energy, we know who’s going to be at the table. It’s going to be every single mining company. We need to figure out how to give a voice to small businesses, because if they succeed they won’t be small businesses forever.
Are there any industries we need to focus on or anything that we need to defocus from?
We should focus on areas where we have historical strengths: agriculture, energy, health, space, oceans. When figuring out where to focus most of our energy, we need to ask “is it solving one of the world’s most pressing problems or not?” If it’s solving a pressing problem it will find a market in Australia, and other countries, and a customer waiting for a solution.
You’re quite optimistic that Australian innovation can easily find footholds across the globe. Do you think this will always be possible, seeing as globalisation has slowed during the pandemic and countries are now strengthening their domestic capabilities?
Let’s think about agricultural innovation in Australia. When we’re building a robot for selective spraying of weeds, at a higher level what we’re actually doing is solving the problem of food security. We’re just delivering that vision at a local level. You always need to have that high-level vision but operationally your market will be local at the beginning.
The difference is that if you only think of the domestic market first, you never build for that global opportunity. So build for global and start local. It’s a subtle shift in mindset. It changes the way you make decisions. Our interconnectedness as a world is not going to go away, we just need to find our opportunities.
What can business founders do right now to get through the pandemic?
This will be the most unsexy answer but it’s the truth: learn how to manage your P&L, understand your balance sheets, understand where your money comes from and where it goes. If you’re a founder and don’t understand financials, you need to. Founders and executives need to be focused on financials on a daily basis. We need to understand what our risk appetite is and what we’re willing to do.
For some people right now, their risk appetite needs to be really condensed and they need to ride it out because they don’t have something new to bring to market. For others who have capacity, it’s time to pivot and put something out there. If you’ve got something, find out what adjacent markets there are. The bigger conversation is your long-term view and what you are doing to invest in the long-term.
A crisis builds a burning platform. Not everyone survives, but it is a great time to take a risk.
So many companies have been built out of economic crashes. For those in uncertainty, this might be the opportunity you’ve been waiting for.