Chief Executive Dr Larry Marshall shared insights to inspire leaders to open their eyes and start steering toward the future.

Check against delivery

I would like to begin by acknowledging the Traditional Owners of the land that we're meeting on today and pay my respect to their Elders past present and emerging.

Thank you for having me here today, I'm always keen to spend time with leaders to find out more about your vision for the future. We'll spend some time on that in our Q&A at the end.

Today I want to talk to you about our journey to re-steer CSIRO and head into unchartered waters and hopefully you'll see some examples of leadership along the way.

  • I left Oz for Stanford in 1988
  • Built six startups, took two public
  • Simon McKeon, of Macquarie, who invested in me, was also the Chair of CSIRO, and twisted my arm to come back to Australia and try and help CSIRO recover from major cuts in 2014.
  • CSIRO is startup #7 for me. I've never done gov before
  • In the US, innovation thru VC backed startups generate 21 per cent of US GDP and nearly all job growth

If we are going to harness the benefits of global disruption and protect our way of life, then Australia needs leaders who are willing to think radically and see what others cannot, who are ready to create bold new visions, Not spin, hype, or politics – not marketing as we think of it in this country – but market – market insight to turn challenges into opportunities.

As a nation, we have become too comfortable – three decades of economic growth has made us complacent.

At the heart of it, we lack entrepreneurial spirit – that desire and drive to think and act bigger, to take on challenges, and to change the world. But we haven't always been this way.

As a nation we bred cotton that's grown around the world, invented fast WiFi for connecting us all – and even received the first images of humans landing on the Moon.

We've taken on challenges and shown the world what Aussie ingenuity looks like.

But what are we showing the world today?

CSIRO has recently spelt out the challenges we face in the Australian National Outlook 2019 report. A report CSIRO produced in consultation with 50 leaders across more than 20 leading Australian organisations just like ANZ – in fact the report was developed very deliberately in partnership with a bank..I'll come back to that.

The report demonstrates two contrasting outcomes.

The first shows a prosperous model of growth if we start taking decisive action to address the challenges in front of us; the second outcome shows a long slow decline into the sunset if we take the "do nothing" approach.

The gulf between those who are already taking action around the world and those who are waiting to see what happens is growing exponentially. We can choose to disrupt ourselves, embrace the challenges in front of us or we can wait until someone else does it to us.

Our future will be defined by the decisions and risks we take today and will be invented by the science we back.

If we wait for others to solve the challenges for us, we can kiss goodbye our high standard of living, high wages and future prosperity.

For too long, we have been a nation of innovation adopters, not innovators. We need to turn that around.

Sometimes you have to rock the boat to ride the waves. The question is, as leaders, how much risk can you stomach?

So as I mentioned earlier, today I will share with you our journey to re-steer CSIRO and head into unchartered waters. There are three key takeaways:

  • First, to start, you have to know who you are and where you are going. Sounds easy, but few people can really look hard in the mirror, even fewer really see what's looking back at them.
  • Second, take bold action and steer in that direction. It's all good saying it; but you have to make the tough decisions as you navigate unchartered waters
  • And third, jump on new opportunities when they show up – don't be afraid to change course and adapt, even double back.

The rate of change is only going to accelerate. The trouble with exponential technologies like AI, quantum, synthetic biology, and polymorphics – is by the time you notice they are competing with you, they've already raced far ahead of you

Decisions need to be made quicker, in a more engaged way, and will take on more risk. As leaders you need to lean in to do that.

Know who you are and where you are going

To begin, you need to have a vision, a purpose that unifies your people, in turn they will unify your customers, who in turn will unify your stakeholders and reward your company.

You can see countries moving forward when they have a clear direction and unified action behind it.

China's vision to move away from "made in China" to "designed in China".

Putin has said Russia will be the world's biggest supplier of eco-friendly food.

Sweden has passed legislation to reach net zero emissions by 2045.

They all have clear visions.

They are getting ahead of the market and creating their own, new opportunities.

China also saw years ago the market for Solar Panels.

They weren't the only ones, in fact Australia actually invented those solar cells, but the difference between us is while we invented, they invested. They bet big, when it was a 0B$ market, now they own it.

In Australia we are sitting around arguing with ourselves about whether in fact there is a problem, or if there is then who can we blame for it, and most important – if we can solve it who will take the credit!!

When I came to CSIRO, the national science agency was a bit like Australian innovation.

In the past five years we've turned that around – we've delivered four years of growth. We've delivered over 500m of external revenue through partnerships with industry, government and universities.

How did we do that?

30 years ago, when I started working in Silicon Valley, I learned that market is paramount for success– no matter how brilliant the invention, without a clear market vision it won't create value. Science and tech can create new markets, where you are the only winner - just as China did.

So back in 2015 we invested in using science to predict the market through an earlier version of our Australian National Outlook, and industry roadmaps, to identify the opportunities Australia should seize to lead and transform our core industries.

We simplified CSIRO's purpose to solve the greatest challenges through innovative science and technology.

We spent two years using science and our partnerships to identify the challenges where our research and innovation would provide the greatest value and the most unique advantage for Australia. We used the deeper market roadmaps to target our science into areas we believed Australia could be globally competitive, like Hydrogen energy, precision AG, and preventative health – each underpinned by breakthrough science and technology like synthetic biology, quantum, and AI.

From that we identified the six greatest challenges that we can turn into opportunities for Australia to lead.

  1. Food security and quality - how do we feed 3B more people, with half as much water
  2. Health and wellbeing - 11m Australians suffer chronic disease, we can't afford to cure them, can we prevent disease instead
  3. Resilient and valuable environments - making industry and environment partners instead of competitors
  4. Sustainable energy and resources - follow the global market shift towards renewables, without derailing our economy
  5. Future industries - create new unique products that deliver high margins and support high wages, rather than just commodities
  6. A secure Australia and region. - Both physical and pandemics are growing exponentially. Cyber-attacks will cost the world $6+ trillion annually by 2021.

Each of these challenges is scary enough to get attention, but equally presents an opportunity for Australia to develop new sources of economic growth, protect its landscapes and marine ecosystems, and allow future generations of Australians to enjoy an even higher standard of living than today.

We don't have decades to sit back and ponder or gather statistics. We need real solutions.

What's missing is a culture that embraces more risk taking and early investment to back ourselves. To back our science. To turn our own inventions into innovation.

At CSIRO, we made a bold bet on H2 - it may fail - its a $0B market today - but how else can we overcome the market pull to renewables -

Recently NASA asked us to support their missions to Mars, building on our partnership of more than 50 years. They are investigating water & we are looking at food & AG because of our expertise.

We have also been testing soil from Mars. Why?

At CSIRO we found a way to turn beach sand into titanium ink which has been used to 3D print replacement body parts like a sternum which has saved lives around the world.

Future industries are about turning commodities into unique high margin products that others can't compete with –

  • Like turning sand worth pennies per pound into ink
  • Or turning Soybeans into Graphene the world's hardest material, and giving Australia a unique patented recipe
  • Or weaving carbon fiber in a new patented recipe so Australia can make its own
  • Or reinventing gold so it uses no arsenic or cyanide and can be produced sustainably with a premium price.

These breakthrough products were science driven by market vision – they fueled CSIRO's turnaround and growth.

Tough Decisions and New Directions

So that's a bit about setting your vision and charting your course; my second point is about making the tough decisions as you set sail.

We began re-steering CSIRO five years ago. It's been quite the journey.

  • 1st we gave 5,500 people a voice
  • We built a unique crowd platform
  • We debated strategy live
  • As leaders we argued hard to give our people - WHY
  • We created a brains trust of some of the smartest people in Australia
  • We brought them together in real-time, and continuously ever after digitally
  • We connected them through their skills to break down silos - and leverage our key differentiator
  • We changed from an institution to a network.

Along the way as we navigated these new waters, we needed to ask tough questions.

  • Why are we structured into disciplines like a uni, rather than market verticals like a company?
  • Why do our leadership teams look like Tony Abbott's cabinet?
  • We've been measuring and modelling climate change for three decades, do you think its time to work on fixing it?
  • Why is our food group separate from our AG group?
  • Why don't we have a health group, when Australia invests <2 per cent into health vs. medical (prevention v. cure).
  • We invented Australia's 1st computer - why on earth aren't we more digital?

Guess what, we needed to change, and we did.

To start the turnaround we needed a real market vision to focus our science and innovation on solving real problems that matter to real people – in essence we had to make our science real. We needed to be out in the field with customers – literally. We needed to be on the ground looking at the issues and coming up with real world solutions. Not just ideas but products or at least prototypes that people could actually use

Market vision is at the heart of every startup – an ability to see a different future where you create something the world didn't expect.

It's often based on an uncomfortable truth, and always driven by breaking from conventional wisdom.

Science needs this market vision even more than entrepreneurs do, because science can take years to cook – so you want to be sure you aim it in the right direction up front.

We recognised a significant opportunity to help shape the foundations of Australia's future industries through great science and technology. What was clearly missing was ability to translate science into market. We aren't short of ideas like the solar cells, but we have failed to capture the full capability of them.

The risk paid off.

We created Australia's national deep science and technology accelerator ON and we created the venture capital fund investing in science Main Sequence Ventures.

It teaches our scientists how to get their science off the lab bench and into the hands of a real customer to solve a real problem

Today, if CSIRO was Australia, we would top the OECD list for collaboration – but the reality is that Australia as a nation is at the bottom. In fact today, Thompson Reuters rank CSIRO is the worlds top 20 innovation organisations – placing Australia 6th as a country – a list we've never been on before

Has it done anything for business? – The short answer Yes. It's reversed a 25 year trend and we've now delivered four years of growth.

Have we done it at the expense of science – no – in fact our investment in blue sky science has grown nearly 10x, fueled by the growth in our customers.

Likewise our equity portfolio has grown 10x, because we are sharing risk with our customers and they in turn share reward with us. Now that's innovation.

Equally we have increased our engagement with existing companies, especially SMEs – who bring products, customers, and market share but don't have the leverage to use science to reinvent themselves to be more competitive globally.

We have supported thousands of SME's developing and delivering innovation to existing industries and through utilising our facilities for testing and evaluation. Giving Australian SME's a headstart.

For example, our Lindfield Collaboration Hub -

is now an innovation incubator.

A recent example is Baraja which started at the Hub with two people and now employs 100 people.

Baraja have invented a new type of sensing mechanism for self-driving cars – Lindfield story – started with just 2…. closed series A funding, including investment from Main Sequence Ventures, with $32 million invested in the venture.

When we invest our science into them it can be game changing – as it was also for Medical Developments International (MDI). For a mere 1m investment in science, we grew their domestic and international markets for the "green whistle" (Penthrox) and their market cap tenfold to over $200M – now that's a venture investment.

For us at CSIRO – we are investing in solutions from science.

But science working with business, together will solve our six national challenges.

Be ready when new opportunities show up

So that's a bit about how we make the tough decisions to turn the battleship on a new course. The last point I want to discuss today is about being ready for when new opportunities show up. Fortunately, CSIRO has done some of the hard work for you.

In the ANO 2 report I mentioned earlier – we identify five major, intergenerational shifts that Australia will need to undertake, starting today – an Industry Shift, an Urban Shift, an Energy Shift, a Land Shift, and a Culture Shift.

You have to also look outside to see where the market wants to go and simply ask can I change that?.

Industry shift first we need to boost productivity in our existing industries – science and tech are great for that. Second, we need to invest in human capital and education to give our workforce the skills it will need to adapt to new technologies and the jobs of the future. And third, we need to create new sources of economic growth by investing in high-growth, export-facing industries that draw on Australia's strengths.

Moving on to the Urban Shift. 41B people by 2050 We need to enable our cities to grow while maintaining their liveability. Planning for higher density, more diversity of housing and land use, plan our infrastructure accordingly. This includes moving away from our current hub-and-spoke mass-transit model and planning for autonomous vehicles, which will make ride sharing and last-mile transport more convenient. And an AI system to manage and minimise energy use

Looking at the Energy Shift, drive toward 100 per cent renewable energy sources. Optimising our energy productivity using readily available, cost-effective technologies and turning our vast renewable resources into an economic opportunity by investing in low-emissions energy export, such as hydrogen. This could create new sources of economic growth and jobs for us, and help countries like Japan and Korea reduce emissions in their economies.

Then we have a Land Shift. We need to boost agricultural productivity through new R&D.

Climate change has driven down our crop yields 30 per cent but CSIRO science has engineered them back - that's going to be harder but genomics + AI + syn bio = feed 3B more people in the world, from the driest continent on earth.

And finally, the Culture Shift. In many ways, this is the most important of the five to address failing trust in our institutions and inspire our people and businesses to act. Unfortunately, there's no silver bullet here. But through action we can begin to make these shifts and regain the public's trust is by showing a commitment to the long-term interests of the country: our economic well-being but also our natural environment and the communities we live in.

So here is my question to you:

  • What are you going to do with these global market shifts?
  • Are you a victim of the tsunami or are you riding it?

Australia's innovation dilemma is how to use science and tech to build big global companies right here in Australia -

You as investors can lead that mission – you can build and profit from your own new market in our own backyard

People expect more from leaders today –

  • To take strong positions on issues people care about, even at personal risk
  • to lead on change and not wait for government.
  • Keep promises and admit mistakes
  • To give every employee a voice
  • Taking care of people and creating fair and equitable environments
  • to give back to the society they profit from.

People want greater action, someone to solve bigger problems, greater equality and a sustainable future.

CSIRO and AlphaBeta have estimated the digital economic potential to be $315B for Australia but we must begin to act if we have any chance of capturing this opportunity.

It is crucial for Australia that we build a culture willing to take more risk on opportunities we see because if we don't, we risk losing the lifestyle we enjoy.

This is much harder in our culture, where boards fire CEOs who fail – ANO identifies management as a flaw in Australia, but I believe Australia grows great managers and great managing directors – but to lead in the innovation age, we need founders not managers.

We must look now to invest in the industries of tomorrow. To embrace the science and technology of the future.

AI will replace many human jobs and tasks, but I believe the future is about collaboration between machines and people.

When we have collaboration between the best human brains and the synthetic world, we see solutions like custom-designed replacement body parts.

Imagine what's possible when you design a town or suburb from scratch using science that can simulate every aspect of what you imagine building – from energy and environment, to economics and social science.

We must be ahead of the wave on this and use this to our unique advantage.

Any savings made; will you invest in new innovations and technology to stay out in front, will you invest in people, or will they be handed over as dividends – is that selling the future to buy today?

Closing

So, in summary, as I said in my opening: The future needs a new breed of leaders to steer us. Are you going to be a victim of the wave of change, or will you swim out in front and ride it?

As leaders these are the choices. In this room, that choice is yours. – so over to you.

[ends]

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