Industry Growth Program: discussion paper

The definition of SMEs should reflect and match the definition provided in the Commonwealth Procurement Rules, with no exception or modification.
The tendency for different Government agencies to fiddle and create unique definitional boundaries for standard, industry-wide terminology is unhelpful in the extreme as well as being a key contributor to the evident lack of joined-up approaches to programs across the bureaucracy.
If, however, the intent of the program - consistent with other Government initiatives - is to nurture and grow businesses beyond this scale that are diversified, financially stable and positioned to grow to fill a widely-observed void of genuine mid-sized companies servicing defence and other industry sectors, then the program’s overarching design narrative (and any accompanying restrictions to provide services and grants to SME’s only) should be urgently amended now, rather than as an afterthought later.

As referenced on Page 4 of the discussion paper, but apparently then just as quickly overlooked in the sections thereafter, cashflow and finance are key risks to young and innovative businesses. This challenge is particularly acute for nascent/fledgling companies in the pre-revenue stages of the lifecycle. To apply a mandatory and non-negotiable level of grant matching is self-defeating in this regard.
The program guidelines should be flexible enough to be informed by case-by-case judgements from the respective business adviser, and critically should also retain the flexibility for the grantee’s matched component (or elements of it) to be made up of non-cash contributions, subject to appropriate auditing checks and assurances.
Another issue which is not addressed in the discussion paper is an intention or focus on forming and supporting collaborative teams. Allowances should be made within the program design and guidelines to both incentivise and provide clear guidance on matching contributions as they apply to multi-party collaborations.
A further consideration, consistent with the overarching philosophy of the NRF, should be to make allowance for state or other government funding to be counted as a key element of the overall investment, and as an element of the matching contribution.

While not the only benchmark that is applicable, TRLs offer an established and standardised benchmark of the progressive development and maturity of a technology. They provide a common language across technology disciplines and sectors. While conventional wisdom would suggest that commercialisation might only become a key consideration at TRL 6 or above, DMTC’s experience is that earlier industry engagement provides vital context and direction for the advancement of the technology in question.
TRLs should not be the only determinant of eligibility, as the understanding of the maturity or development trajectory of a technology must be nested in a far-broader examination of the business model, strategy and estimated time to market. Perhaps more so than a cursory judgement of appropriate TRL levels, commercialisation decisions will depend on these other factors.

Rather than playing catch-up later, DISR should be working now to develop sophisticated measures of growth and impact to inform both the decision-making on grant applications and the ongoing monitoring and reporting on performance. These measures should extend beyond simple return on investment calculations and take a broad view of impact.
Noting that this program is intended in some ways to be a ‘feeder’ for future NRF investments, the evaluation of proposed projects should be weighted towards those with a clear and stage-gated business strategy that anticipates and provides target timeframes for progression to both NRF funding and eventual acquisition of a fielded technology or system.

This can only be determined on a case-by-case basis. The DMTC model provides an exemplar here that could be considered in the finalisation of the program’s design. DMTC’s default position in relation to Intellectual Property is geared towards providing maximum value to industrial and research partners, while also ensuring that access to developed technology is held beneficially for sovereign capability benefit on behalf of the Australian Government. This approach acknowledges and inherently preserves/values the background IP that all partners bring, while at the same time seeking the best outcome in relation to the immediate and longer-term realisation of the foreground IP arising from the project.

While the discussion paper provides insufficient detail to comprehensively answer this question, some barriers are apparent. One practical barrier is the capacity, expertise and ability of a relatively small group of advisers (perhaps 20 if the recent release of tender documentation from DISR is a guide) to service national demand for this program across such a broad range of technology themes.
The role of the industry partner organisations, and their interaction with the contracted program advisers, is unclear and is a risk to industry confidence in the program. Similarly, it’s not clear that the lessons learned from reviews of previous initiatives (including the Industry Growth Centres) have been considered by DISR or reflected in the early work on program design.
The limitation imposed on grant applications – that requires an invitation from a program adviser – could prove to be a significant barrier both to early momentum and to overall program outcomes, if it relies on either or both the capacity, subject matter knowledge of the respective adviser to form a pre-judgement that a project is “most promising” as described in the discussion paper. This is particularly evident in a broad area of endeavour such as that covered by the Enabling Capabilities theme of the National Reconstruction Fund. Further consideration should be given to the potential unintended consequences of this element of the process.
Another risk and potential barrier to access to the Program is the speed of decision-making on grant applications. Too often, there is a misconception and unrealistic expectation that project teams will have the latent capacity or resources to wait on application review decisions and then be ready to commence immediately, regardless of the length of time taken to review, approve and then publicly announce the decision. These delays can impact on both the availability of specified personnel and the competitive advantage of introducing a new technology in a timely fashion. It will be critical to confidence in the program for DISR to commit to matching the apparent pressure on project teams to deliver at speed with a commitment to a sense of urgency in the decision-making process.

Yes, particularly in line with other Government priorities around support for indigenous-owned businesses. At a minimum, the program design should include targets and measures commensurate with the Indigenous Procurement Policies by federal departments (i.e. ~3% of investment).
Providing support to these underrepresented groups should also be a consideration in the selection and appointment of program advisers and partner organisations.

The discussion paper provides insufficient detail on the role of the industry partner organisations, and even less on how they will be engaged and deployed. The clear overlap between the possible roles of these organisations and extant service providers (for example in the defence sector, the Office of Defence Industry Support) is also not addressed.
DMTC encourages DISR to undertake more targeted engagement on this point, and would be more than willing to be involved.

Industry partner organisations should be more than just an additional layer of ‘advice’ or ‘support’, an over-emphasis on both of which would only serve to create confusion and duplication with the role of the contracted program advisers.
The industry partner organisations should be capable and have a demonstrable track record in innovation stewardship and acting as an effective bridging mechanism. DMTC’s experience in the defence and adjacent national security and health security sectors is illustrative here. On numerous occasions, the result of DMTC’s involvement and active role in innovation stewardship has been to multiply/broaden the impact of a technology’s adoption by its extension and application into adjacent domains that were not originally envisaged or conceived.
DMTC’s approach to industry capability development, to support capability uplift for Australian industry, particularly small to medium enterprises, has received strong support from federal and state governments alike, both in regard to funding and in guiding the decision-making around priority areas of focus.
A key ingredient in the success of the program is that it is complementary to, rather than competing with, the business advice and ‘introduction to Defence’ type of services offered by agencies such as the Office of Defence Industry Support (ODIS), or the regional business adviser hubs supported by respective state governments.
At a strategic level, DMTC’s program is firmly focused on enhancing Australian industry capabilities and positioning Australian firms to be competitive in domestic and global supply chains. At a practical level, it is providing pathways for local industry to achieve step-changes in industrial capability.
One tangible example is DMTC’s Smart Enough® Factory initiative, which is working on the factory floors of many already-capable small businesses to turn the threat posed by the three D’s of decarbonisation, digitalisation and disruption into opportunities and discriminators for their business.

The committee charged with oversight and providing recommendations on grant assessment should be representative of a broad range of industry, public sector and University experience. A deep understanding of the pipeline links between industrial development and the demand/supply equation for workforce talent, skills and experience is also required.
A further consideration in the formation of the assessment committee should be continuity across grant rounds to demonstrate consistency over time. This, alongside of the independence of assessors, will be vital in building confidence in the program.

Consideration should be given to the alignment of this program with other Government priorities. As one example, the Government’s stated priority to lift the digital literacy and cyber security posture of the small business sector could be borne out in the design of this program. Businesses that are invited to apply for grants, or shortlisted for further consideration if the number of applications demands a two-stage process, could participate in cyber readiness workshops as a precondition of continuing with the program.
Businesses seeking to engage in this program could also be incentivised to contribute to other Government priorities, for example supporting women to be engaged in STEM disciplines.

The drawback of this proposed limitation is the dislocation between it and other initiatives such as the Government’s Industry PhD Program. To allow for projects to be up to 36 months would allow for genuine alignment between these initiatives.

Rather than playing catch-up later, DISR should be working now to develop sophisticated measures of growth and impact to inform the decision-making on grant claims and ongoing monitoring and reporting on performance.
In considering these grants as an investment in the future, not simply as a cost, measures of success should include the impact with respect to the footprint and longer-term benefits of a modernised manufacturing sector and upskilled workforce. Quantifying the leverage of knowledge, partnerships, technologies and systems developed from investments in research capability and innovation should also be carefully considered.

Focus on outcomes, not counting inputs and admiring process