Industry Growth Program: discussion paper

Our Ref: CI_IGP_Consultation_feedbackV1_03082023.docx

Friday, 4 August 2023
Attn: IGP Evaluation and Design Committee

Dear Sir/Madam,

CI Consulting Suggestions/Feedback for the New IGP

Firstly, thank you sincerely for the extension to deadline to allow for this submission.

Secondly, apologies up front for the perhaps contrarian nature of these ideas. It’s not intentional, rather based on a number of years of SME consulting experience working in and around the old EP service as well as other
State and Federal grant and support programs.

Context
As just mentioned I’ve had a fair number of grant applications and engagements under the former EP, as well as approvals under the NSW Regional Jobs Growth Fund, (1 and 2), the Export Development Program (also
State based) and supporting work under Innovation, Commercialisation programs as well as the R&D Tax incentive (support only, not submission).

My very small business improvement consultancy is registered on the grants portal at bus.gov.au as well as an approved provider under the AI Group BIG Hub and finally, I write for a trade journal based in the U.K. covering
Technology, Logistics and Supply Chain (and the intersection of these) both within the region and globally
(www.theloadsdtar.com also at https://www.linkedin.com/in/russell-wood-205327b5/recent-activity/articles/ .

General feedback #1 – Overemphasis on Tech
In my admittedly partially limited view, the new draft guidelines for the IGP (I suspect), overemphasise tech and digital as themes in and of themselves.

(Incidentally, I thought this about the old EP as well). It runs contrary to popular opinion but in this last decade generally and more recently with the advent of examples like ChatGPT et al, there is an almost obsession with technology for its own sake, as a panacea for business. Some of this enthusiasm for tech may be misplaced.

Some tech focus is very hype based and can actually be a distraction from genuine, patient business improvement and growth. It takes some courage at times to point this out, especially in the context of policy development and Government growth programs when the public narrative recently is so dominated by a tech bias.

In short, any tech investment for any business, but especially SME’s, must be backed up by a sound business case and strong business requirements statement before any money is spent. I hope this doesn’t sound too shocking, but much of the current wave of tech innovations including Blockchain, 3D Printing, Big Data/Analytics and IoT (which has been quiet lately) have turned out largely to be “solutions looking for a problem”.

That’s not to say that there’s been no progress with these or that they can’t add any value, but rather that much of the time they’ve been overstated and their respective contributions have been in small pockets or on the fringe.

Further, my engagements with SME’s suggest to me that their greatest challenges generally are in process improvement, management structure, capability development and strategy more so than technology perse’ .
And in any event, to develop or implement new technology successfully they need a certain level of structure, process and standardisation in the business in the first place. Which points us back to fundamentals and process improvement as opposed to a purely tech or digital miracle cure.

Page 1 of 4
Many of the success stories from the prior EP seem to reinforce this, https://business.gov.au/grants-and- programs/entrepreneurs-programme/customer-stories .

General Feedback #2 – Size/Scale of Industry Partners
I acknowledge from the outset a bias on this point, as a very very small firm who has no chance of competing against the big players, or “Tier One” Consulting firms.

But it strikes me that the prior model within the EP of appointing delivery partners in each state, who generally were top tier firms, might actually serve to constrain agility, flexibility and innovation for SME’s looking to access business growth/support programs.

This is perhaps even more topical given recent events and the news cycle surrounding large firms and their
Federal Portfolio engagements.

If there were a mechanism that broadened the Industry Partner scope while still ensuring that actual funding as much as possible went to small medium expert service providers based on merit and value-for-money, this could develop a thriving eco-system around innovation for SME’s and providers alike. (Perhaps a concept along the lines of those used for local industry participation, LIPP ensuring a certain percentage of project cost is compliant).

Specific Comments from the IGP Consultation paper questions

Forgive me, but as a brief overarching note, it would be extremely helpful to define and articulate what “gap” precisely the program is seeking to fill. As in, where the proposed program would fit, and how it would complement the existing innovation and commercialisation services already available within Federal programs.
Understanding the why here, and the specific target for the proposed program

 What objective criteria should determine eligible innovative SMEs? For example, annual turnover of $20
million or less, employee cap and/or net asset cap?

I strongly advocate that lower turnover opens the net toward more new entrants, and new innovators as long as the remaining eligibility criteria are confirmed. For innovation specifically, the criteria must centre on the viability of the product or service in question and whether it can compete on either a local or global stage assuming an all-things-being-equal path to market and answering the “has this already been done?” question (some of the
R&D tax Incentive criteria could be very useful here).

Also the entity must have been trading long enough and be established well enough to merit co-funding (i.e. it goes without saying but funding should not go to overnight start-ups who are here today and gone tomorrow).

For general improvement leading to growth as mentioned above, the earlier EP guidelines seemed adequate as a start.

 What level of grant matching is appropriate? Should there be a variation for earlier stage Technology
Readiness Levels (TRLs) programs and the size of the grant?

Sliding scale grant funding as long as simple and easy to administer could be optimal. However, the program could not become an “incubator” for example, dealing with early stage concepts that have no substance or grounding within an existing enterprise in the real world.

Eligibility of projects

The whole section under the eligibility heading, and the adjacent questions (page 7) in the draft orients the perspective entirely toward experimental incubator type initiatives which in general seem to have an inordinately high fail rate and rarely lead to real commercialisation.

These more often than not would come from research labs in Universities and/or Venture Capital type funding mechanisms.

 Are there barriers beyond pre-profit stage that the program should consider supporting?

No, anything prior would be incubator (if I’m understanding correctly).

Page 2 of 4
 Should Technology Readiness Levels (TRLs) be used to determine eligibility of a project? If so, what
are appropriate TRLs for commercialisation and/or early-stage growth phases?

Yes but only for strictly innovation projects (as opposed to business improvement). The innovation must be
at proof of concept or even MVP as an eligibility criterion. MVP can be achieved via other incubator type
support services in the market place.

 How should we determine which projects have the most potential for future growth and market impact?

Viability and trends in demand. (Very vague sorry, but there needs to be a logical and reasonable path to market as a minimum, if public money is going to support it).

 Should it be necessary that the applicant has the legal ownership, or effective ownership, of the know-
how, intellectual property or other similar results arising from the project?

Absolutely, the entity receiving funding must have effective ownership of the product and this could only be varied by some negotiated process that sees the program recoup its contribution or does the Federal program become a financial stakeholder in the future commercialisation?

 Is ‘need for funding’ (i.e. why applicants are unable to access sufficient funding for the project from
other sources) a useful merit criterion for assessing grant applications? If so, how should this be
measured?

Yes, there must be a binding transparency obligation on the applicant to declare all previous attempts to access funding and if unsuccessful this may serve to alert the department to a non viable or at least high risk venture.

Diversity and inclusion – Page 8

In general an indigenous and/or minority inclusion criteria (quota, percentage based), plus local industry content as mentioned above. If not enforceable at least a strong incentive that becomes a weighted criterion in assessment and/or potentially leads to increased contribution based on tangible outcomes.

Just on this point, certain funding elements could be performance based, rather than automatically granted, throughout the life of the project. If diversity and inclusion targets are verifiably met then those tranches of the funding package are activated.

Industry Partners – Page 8

General comment: There needs to be more emphasis on general business improvement and capability development beyond just innovation and commercialisation. Facilitation that leads to closing capability gaps, improved efficiency and productivity should be viewed as highly value creating also, and adding to the enterprise through its ongoing evolution, not just in terms of a specific innovation project.

Program design to meet intended outcomes

Financial metrics will also need to be applied.

Size of business and growth over time frame.

Revenue of business and growth over time frame.

Profit of business and growth over time frame.

In addition to those mentioned. If grant funding is not leading to measurable outcomes in financial metrics it’s difficult to demonstrate contribution to the economy etc.

Post-grant period reporting obligations

Project durations of up to 24 months would seem feasible depending on development cycle, nature of innovation and path to market.

Page 3 of 4
In addition to the points mentioned already, presumably, the larger the grant amount the more detailed and long term the reporting requirements.

Apart from this, even beyond the project period, an annual or bi-annual submission via the grants portal just for the key metrics for the respective project, to be able to provide longitudinal results would be light-touch but effective for both the participants and the Department.

Again, the larger the sum, the greater the reporting obligations.

Thanks for your consideration and happy to add further detail if/when required.

Kind Regards,

Russell Wood
Principal/Owner
Continuous Improvement Consulting
Direct: 0408 479592
Email: russell.wood@ciconsulting.com.au

Page 4 of 4