The final report of the Innovation Summit Implementation Group (ISIG), Innovation-Unlocking the Future, has sought to make the complex subject of innovation in Australia simple and manageable.

It proposes three straightforward themes of creating an ideas culture, generating ideas and acting on ideas. There are twenty four recommendations with a price tag for the Federal Government of at least $2.6 billion over 4 years. Responsibilities for action are identified which go beyond governments to require efforts by business, educational organisations and research bodies.

This report represents a credible effort to harness, prioritise and operationalise the intellectual firepower, working party reports, consultants' studies, brainstorming, energy, breakout sessions, doubts and self-interest that emerged from 500 people spending 2 days on how Australia can become more innovative and prosperous.

David Miles and the Innovation Summit Implementation Group have produced a result that recognises the urgency and the challenges, without crying wolf. Their report does not retreat from seeking substantially more resources for Australia's national innovation system. And to their credit, they have not avoided the political hot potatoes, like R&D tax concessions and government purchasing.

But to call this report a blueprint for change through innovation is nothing more than hyperbole and poetic license.

It is a credible, journeyman effort with its recommendations generally explicit, realistic and capable of implementation. But, the report is not visionary – neither inspirational and imaginative nor potently argued. It was not intended as such.

The Miles report was intended as a map through the maze created by the energy and expectations of those involved with the Innovation Summit.

It is a prelude to an Innovation Action Agenda, in which the Federal Government, I suspect, sees itself as a team player rather than the umpire of a new game (to paraphrase David James in a recent BRW article on the Innovation Summit).

And, here in lies the danger in the Innovation Summit Implementation Group report.

The danger is that even if every recommendation was actioned, Australia might still miss the boat in turning innovation into new, lasting capabilities that will take us onto a path of higher growth, productivity and community-wide prosperity.

Sure, the ISIG report puts innovation on the radar screen, especially the political imperative and sense of urgency. It also provides us with a starting point for action. Even if the recommendations won't do the job completely, the 80:20 rule serves to push Australia further up the innovation food chain.

But, is this enough? I fear we are in danger of missing the forests for the trees. Let me illustrate with three examples.

Firstly, the report over-emphasises the contribution to innovation from formal R&D and research infrastructure, from generating and commercialising breakthrough ideas and scientific advances and from leading-edge technologies or high tech start-up firms.

Unquestionably, these are all part of the innovation story and they are all areas where Australia is under-performing and needs added effort. So, attention by ISIG to these areas is justified. But, don't make the mistake of equating them with innovation.

Innovation can come in a variety of other forms – from adapting and gradually improving the way we work and how we organise; doing old things more intelligently; rediscovering where the real value to the customer is in your business and reflecting this in your business strategy.

The ISIG report is essentially silent about harnessing innovation in traditional, mature and even, declining sectors by incremental improvements, technological upgrading, superior marketing and more intelligent managerial and work processes in response to market place pressures and demands.

By concentrating on ideas that are generated and acted on from business, scientific, research and educational institutions, insufficient attention is paid to other methods of knowledge creation and diffusion.

High performing sectors can be research-poor but knowledge-rich. Like the example of Norway's seemingly low-tech wood and timber products industries cited by Keith Smith, an OECD economist to an innovation conference in Sydney in 1998, as one of that country's high performing growth industries.

A closer examination revealed that these industries, not known for their formal R&D, enjoyed strong growth due to high levels of innovation based on other more informal means of transferring ideas and knowledge.

Norway's wood and timber industries had regular, deep and substantial linkages between the industry, scientific researchers and marketers that served to ensure the very latest market intelligence, consumer preferences and scientific problem solving were all brought together to aid production and business decisions in real time.

These arrangements were informal, but systematic and comprehensive, owing much to the level of personal relationships and to the opportunities to meet and talk and to pass on tips or solve problems collectively.

It may be beyond the scope of the ISIG report to recommend on how to foster these forms of innovation, but it remains a challenge for all of us committed to pursuing the Innovation Action Agenda further in Australia.

My second example of where the ISIG report needs to do more to unleash the animal spirits of innovation, rather than the purse strings of Commonwealth Treasury, relates to the recommendations about clustering, linkages and diffusion of technologies.

The report's diagnosis is correct when it quotes the DISR Innovation Summit framework paper: "….. our national focus on innovation remains highly fragmented, frequently operating at a sub-optimal scale with too few linkages and active coordination."

The report's approach recognises and seeks to build on existing successful efforts at collaboration – technology parks, CRC's, the BITS program, international business alliances and the like. But its central recommendation to boost industry collaboration and critical mass is a national technology incubator program with a focus on high technology firms.

In my view, this won't do the job. While I am a supporter of incubation, we know it takes a lot more than this to foster the right blend of strategic collaboration and competition that drives business productivity and performance and successful global reach.

I draw your attention to the findings of two recent studies commissioned by the Australian Business Foundation that throw light on this subject.

They are the report by John A Mathews of the Macquarie Graduate School of Management, entitled "Encouraging Knowledge – Intensive Industries: What Australia can draw from the industrial upgrading experiences of Taiwan and Singapore"; and the study by Professor Ian Marsh and Brendan Shaw of the Australian Graduate School of Management on "Australia's Wine Industry: Collaboration and Learning as Causes of Competitive Success."

Both these studies demonstrate that collaboration is critical in an age where continuous innovation, access to global markets and intangible assets like knowledge and skills are increasingly decisive in sustained superior business performance.

From different examples - Taiwan and Singapore on one hand and Australia's successful wine industry on the other - they demonstrate the institutional arrangements that foster collaboration and serve to put companies in touch with the know-how, resources, technologies, skills and motivation that pushes them along a strongly competitive, productive and high growth path.

Both studies suggest various effective tools and strategies – collaborative planning mechanisms like the wine industry's Strategy 2025; the deliberate systematic technology scanning, diffusion and deployment partnerships between the public and private sectors in Taiwan; opportunity and supply chain audits by industry associations; and alliances for global marketing and export promotion.

The point is that there are many more potent tools at our disposal to share visions and risks and to build scale, capability and critical mass across all industries than just a national incubator program for high tech firms.

The final illustration of a gap in the ISIG report between means and ends comes from its recommendations on innovation awareness and on encouraging innovation best practice by SME's.

For some actions suggested by the Group, they start from the wrong premise – namely that there is a lack of awareness or recognition of the value of innovation, requiring a public relations solution in the form of advertising campaigns, best practice stocktakes, case studies and demonstration projects.

I query whether people think differently or change their behaviour because of "show and tell"; not unless there is a clear cut, life and death message and considerable money spent on getting that message across. Witness the anti-smoking, road safety or household recycling campaigns.

People generally learn by doing, not by case studies. So programs to assist businesses to adopt innovation management practices are unlikely to work unless they transfer real skills in a timely fashion by trusted advisors and produce speedy results in terms of business returns.

These must become the attributes of such programs if they are to be a worthwhile use of taxpayers funds.

Before concluding, I must single out two recommendations for which the ISIG must be applauded.

Firstly, action to measure Australia's innovation performance as part of official national statistics, because we value it when we count it.

And secondly, rare in government reports, they did not squib in recognising that governments being demanding purchasers can bolster innovation in firms, create new business opportunities and strengthen Australia's industrial capability. (Even though there could have been a few more red-blooded recommendations, like making industry impact an equal criteria to value for money in government purchasing and outsourcing decisions.)

Notwithstanding the critique I have made of the Innovation Summit Implementation Group's report, it is a job well-done by David Miles and his Group.

While I can claim no involvement in this report, beyond being an active participant in the Innovation Summit and its lead-up, I admit to a sense of pride and achievement on behalf of the Australian Business Foundation with the release of the Miles report.

That's because it was on a spring day just three years ago that the Australian Business Foundation launched its inaugural research study, "The High Road or the Low Road" by Professor Jane Marceau and her team, which pioneered ideas that competing on the basis of innovation and know-how would create greater growth and prosperity, than a focus on cost-cutting and efficiency reforms alone.

This thinking and research may not have been entirely unprecedented, but it was novel and it provided one or two of today's political and intellectual leaders with that "ah-ha!" moment that came to be reflected in party platforms, policy shifts and media interest.

David Miles and the eminent members of the Innovation Summit Implementation Group have added further value, suggested areas for priority attention and invited all of us to pursue the Innovation Action Agenda.

If I can use a sporting analogy, we have made it through the heats, but our performance in the gold medal finals is still to be tested