Innovation: Ric Sinclair, Forest & Wood Products Australia

i chose this topic because often people in the farm and agricultural sector their only exposure to forest and wood products is actually in the agricultural shows where this wonderful international support of wood chopping is often profiled and we've actually had some true international leaders in this sport like the foster family out of tasmania the australian forest and wood products sector is around 24 billion dollars in turnover and employs directly about 70 000 people that's not excluding the people in the downstream processing such as in the fabrication area and it's a sector that that has actually gone through significant change over the last 10 years we're talking about innovation we're talking about a range of decision making and we often want to jump to innovation as being disruption the reality is that if you actually look at that continuous improvement is part of innovation and it's probably where much of the innovation actually occurs i also would like to point out the one area in the middle which we often don't think about as innovation which is fashion fashion is hugely inter obviously the wool in uh and cotton industry are highly exposed to this but so is the forest and wood product sector and one of the key things that i always when i think about innovation is that innovation is being driven by being unhappy with your current situation if you're happy with where you are then you ain't going to innovate and this is a a from the gardner hype cycle and it's one that one of my personal expressions is about where expectation can lead to disappointment so every year the gardener maps onto this curve and this is the wonderful area here called trough of disillusionment so every of these technologies go get hyped right up then collapse back down and and after time they will go through the slope of enlightenment into the plateau of productivity and so for anyone we're in the big big data session there before i'm not sure where they'd put that on the curve but it goes through all the time so we often keep saying that companies have to invest and invest in innovation well they don't have to they can go bankrupt right they don't actually have to change their ways if they're happy where they are they're happy with declining profitability then that's fine but investing in innovation is about creating opportunities whether it's about revenue or whether it's about reducing costs and it's also about reducing risks risks in market risks and biophysical social and political but i also take the other point that governments should invest in innovation because they're actually creating things around economic growth social well-being changes in society biophysical again market failure and regulatory failure and it's important that as we're going through our whole discussion about the innovation system that we realize that governments have a key role to play here in providing this framework type of innovation now i play to the buyer here this is one of their things that's a great research is turning money into knowledge innovation is turning knowledge into money and we often forget we often want to focus on research um when actually innovation can come from many places innovation can come from the person sitting on the tractor from sitting in the office or operating in the sawmill and it's about capturing all those sources of innovative of ideas putting them into knowledge and creating innovation out of that now you're all probably aware of the horizon one two and three and this is a simple model which is based on products and just if you want to think about it products can be services in this instance but it's about the knowledge of your market is it an existing market you know is it an existing market we do not serve is it a new market versus knowledge and technology and the continuous improvement area most people in our rdc is investing around 70 to 80 of activity in this area in those new generation products or adjacent growth it's only 10 to 20 percent in those areas of disruption the ones that are really exciting that we want to talk about that's not a big area for us um and it's only uh it's well less than five percent probably one to two percent there was some discussion about the rumsfeldness this morning and i it's it's always important when we're trying to understand how to make decisions and innovation in relation to the future we've got to realize and there's a whole science or approach around scenario planning and that's by understanding the things that we do know uh these are the trends then there's the impact of foreseeable disruptions these are the things that we know we don't know and then this is the thing that donald rumsfeld got can for but it's actually quite correct there is the surpri the thing about surprises of disruptions the things we don't know we don't know in the forest and wood products sector there's a number of known trends and that we can we don't know exactly when they will arrive but we know that they are real and they will be arrived australians housing stock continues to grow there's a growth in multi-residential construction there's focus on building systems and pre-fabrication rather than on-site increased usage engineered products these are hard and fast and there is no doubt that that's going to occur unforeseeable disruptions this probably exists across every sector of the economy um i think you could probably create your own list but things that are specific for the forest and wood product sector restrictions on foreign ownership as a possibility green support for the wood products industry this would have been a totally ridiculous idea 10 15 years ago fwpa we have a partnership with planet arc and it's actually showing that sustainable environment focused environmental groups see wood products as part of the solution and not the problem but the critical thing about research is how do we actually know for things we don't know how do we get and this is that little cartoon we'll just get all the information we can and we'll work out what we do with it later and that's a little bit what big data is trying to do at the moment it's about trying to get the decisions out of that for those and most of you are unfamiliar with the forest and wood products sector this is a little uh schematic to try to understand the change that we've gone through over the last 20 years once upon so if you take the situation this is occurs in everywhere in the world there would not be a forest sector anywhere in the world if it wasn't for government intervention most cases all the forests would have been cleared for agriculture and grazing and we wouldn't have a forest sector so australia is exactly that same situation back in the pre-1990 times there was a lot of organizations very large organizations in the sector that had a very strong focus on producing public goods they were universities they were state agencies they were government commonwealth agencies and there was a much more fragmented private sector often small regional companies a very few national sized companies and i've highlighted in orange there you know a schematic this is not so don't take this to the bank but the type of countries that type of companies that were foreign so it was very much an australian organization if you look at the sector now we are largely dominated by international large companies with very few public good organizations left now that plays a very key role in innovation and research into the sector where a lot of the research for the sector was actually provided by government agencies in that glory days pre-90s the sector actually had the luxury of having two divisions of csiro focused on it now we have less than 30 scientists so there has been a significant dramatic change in the sector but just in terms of where the sector ranks its own priorities this was based on a industry outlook survey we did in 2014 innovation new investment and productivity were the three top issues that were identified so if you put that in the context of those private international organizations collaboration is actually quite a challenge if you don't have the glue of publicly focused organizations probably good focused organizations trying to hold that together that makes it a lot challenging but collaboration is not always the solution collaboration is a tool it's not a goal in itself and collaboration to be successful requires you to give up something you have to give up time you have to give up money or you have to give up power and richard pointed out that where we sat on the innovation collaboration scale and often australians are not very good at giving up these things we actually like to compete because competition is actually easier and it's more fun and this is one of the roles of the fw of fwpa and for all the rdcs is that we're actually hardwired for collaboration our whole focus is around collaboration like all the rdcs we try to measure our impact and we measure do that through benefit cost analyses now benefit cost analysis it's not a hard science it's about trying to understand what would have happened if you hadn't done it the counterfactual and that's actually trying to imagine a future that never actually occurred so when you're trying to do a benefit cost analysis it is really just a true economist trying to imagine and trying to create it it's about trying to create a language or a persuasion tool now people in the space know that we're doing good things but people in the central agencies if they're only here want actually hard numbers so we go through this exercise of creating benefit cost analysis and our uh we every year we we do a random survey of our portfolio of research or activities uh and we do that measurement last year we actually did our measurement on our generic marketing activity um which actually demonstrated a return of seven to one which we thought was pretty good so our focus is very much around new markets and new technologies and trying to make forest and wood products the preferred product in the australian market what we have done and was actually announced two weeks two or three weeks ago is we've secured a major change in the building code it's actually the biggest change or market opportunity in the forest and wood product sector for about 30 to 40 years which is to allow for timber buildings to go up to eight stories as a deemed to satisfy solution currently uh this is a market that has we've been haven't been able to access because of the cost of doing the fire engineering so we've worked with a range of professional groups australian institute of architects engineers australia quantity surveyors to actually and fire engineers to develop the tools or rules or specifications that's going to allow timber to go up to this height this actually brings us in line with north america and europe and this will actually take effect on the 1st of may of this year so we're hopeful that you're if you're living in the middle suburbs or the major capital cities that you're going to start to see a lot more timber-based buildings so in terms of our activities going back to the horizon 1 2 and 3 type area the area the blue we do lots of boring stuff but it's really important it's all about continuous improvement it's stuff that's in the mills in the forest growers giving them tools to actually improve in the area of the horizon 2 we are actually the eight story timber building is certainly one that's based heavily on our research activities genetic modification it's gone obviously quite successfully in the cotton industry and in a range of other agricultural sectors there's no very little activity internationally in the forest sector around genetic modification and i think that's going to be one of the mixed areas of activity biorefineries or using wood waste to actually create bio precursor chemicals is certainly an area and there's a recent investment in tasmania for a small pilot plant in this space new technology we've got a research projects with queensland universities around 3d printing with wood fibre we see that as an interesting opportunity space powder coated wood for those who know the technology you can't run electricity along wood so how do you actually do a powder coating we've worked with csiro to create a chemical that will allow electrical current to go down the wood to allow wood to be powder coated uh this is to provide lower maintenance guaranteed life for external uses and then the top corner which is quite a disruptive technology is around nano crystalline cellulose it's a technology that's actually been around for probably 15 to 20 years but it's actually it's creating a lot of excitement in japan industry there has committed 100 million dollars to trying to find potential market applications for this technology so there is a range of activities globally and because we are quite a relatively small organization we try to be very networked and bring technologies to australia where possible so innovation in my mind complacency is the enemy and what we need to do and just in this cartoon instead of risking anything new let's play it safe and continue our slow decline into obsolescence and hopefully that won't happen to us thank you