The government is putting entrepreneurship at the centre of its new innovation strategy, wanting to create an environment where small businesses can grow and succeed.

Australia has been built on a culture of entrepreneurship and has produced some of the world’s greatest innovations. Many would be surprised to learn that these include the black box flight recorder, spray-on skin, the pacemaker, Google Maps, polymer bank notes, Wi-Fi, permaculture and the cochlear implant, to name just a few. We are also a leader in solar cell technology.

However, in recent decades we seem to have fallen behind in the global innovation stakes. According to the newly launched National Innovation and Science Agenda, only nine per cent of Australian small to medium-sized businesses brought a new idea to market in 2011-13 compared to 19 per cent in the top five OECD countries. Unfortunately, the construction industry is one of the worst performers, with the third lowest percentage of innovating businesses of any industry sector.

It is true that national innovation statistics, based on R&D expenditure, do not necessarily reflect the type of ‘hidden’ innovation that occurs in the construction industry. But at the same time, despite representing almost eight per cent of GDP and employing around nine per cent of the population, the average person in the street would struggle to name a famous construction entrepreneur.

People would more likely think of entrepreneurs like James Dyson, the late Steve Jobs, Bill Gates, Richard Branson or Mark Zuckerberg. Yet over the years, the construction industry has produced some great entrepreneurs. The inspirational, visionary, charismatic and controversial figures who built Australia’s global construction industry from the ground up, such as John Roberts and Dick Dusseldorp were big personalities who questioned traditions, shook things up, challenged accepted ways of working, took big risks and had a magnetism which attracted the best people and inspired them to challenge their own boundaries.

However, they seem to have disappeared as the construction sector has become more highly regulated and inward-looking and we are now left with a construction sector which is largely foreign-owned. While foreign investment should be welcomed, it is critical that Australia also creates a conducive environment for new entrepreneurs to emerge who can build new Australian business empires overseas, in the same way that overseas countries seem to have unleashed their entrepreneurial talent on us.

Entrepreneurs play a critical role in the innovation process by creating the critical link between ideas, inventions and applications.

Joseph Schumpeter, the father of entrepreneurship, was the first to recognize the important role that entrepreneurs play in the innovation process. Schumpeter argued that most of the time innovation occurs incrementally through people improving on existing products and services within a well-defined, stable and widely accepted set of social market norms.

Some people manage these rules better than others, but occasionally this framework is dislocated by a major development or event which changes the basic conditions of the market and redefines the rules of the game. Introducing the idea of the entrepreneur into modern management vocabulary, Schumpeter saw this as an entrepreneur’s key occupation. In other words, successful entrepreneurs search for opportunities to upset market equilibrium and by doing so, create unique competitive advantage and excess profits (at least until others enter the market by copying and bring it back to equilibrium).

Since Schumpeter’s early work, the concept of entrepreneurship has attracted considerable attention and we now know the key attributes which characterise successful entrepreneurs. Here are some to contemplate:

1.    Motion - Entrepreneurs often break with routine and exhibit a high level of ‘mobility’ which puts them in the path of unfamiliar situations, allowing them to mix with unfamiliar people, connect unrelated ideas and discover things they weren’t necessarily looking for.

2.    Preparation - While innovation may seem to imply a certain degree of spontaneity, it also requires some level of preparation. Entrepreneurs are prepared for the unexpected to happen and therefore are better able to detect and chase unexpected leads, explore alternative paths, and to see the importance of patterns which others might miss.

3.    Divergence - Successful entrepreneurs are inquisitive, imaginative and willing to change course, challenge path dependencies, chase new ideas and explore unchartered waters. Successful entrepreneurs relentlessly search for new ideas. While they don’t expect every idea to work, it is the variety of options that they explore that increases their chance of a new discovery.

4.    Commitment - Commitment is the sense of dedication, persistence, self-belief and purpose which enables successful entrepreneurs to discriminate between good and bad ideas, to persuade others to follow them and to overcome resistance to their implementation.

5.    Activation - Most people live in monochromic time, living highly scheduled, compartmentalized lives which are dictated by the need to complete tasks according to strict deadlines. Since time is a precious resource, the need to meet targets and follow schedules take precedence over building relationships. A sharp distinction is often drawn between work and personal lives. In contrast, entrepreneurs live by polychronic time. They prioritize personal relationships, are flexible with their commitments, make little distinction between work and personal lives and tackle multiple tasks simultaneously.

6.    Connection - Professional networking sites like LinkedIn and social media like Facebook present almost limitless opportunities for people to connect. Entrepreneurs are masters at unlocking the value in these networks. By ‘positioning’ themselves centrally in these networks they maximize their access to information and control its flow to their advantage.

7.    Permeability - Entrepreneurs build permeable organizations which create an open and ongoing conversation with the outside world. They recognize that effective communication is a two-way rather than a one-way process and that everyone should be engaged in this process from the top to the bottom of an organisation.

8.    Attraction - Entrepreneurs have mastered the art of attraction and are able to draw the most valuable people, ideas, information and opportunities to them rather than to their competitors. Entrepreneurs are like magnets for new ideas. They make themselves irresistible to other people by being clear about their purpose, values and beliefs and by portraying an infectious passion, enthusiasm and positive image. By doing this, they create a “reason” for others to connect to them and draw people to their cause.

While today we tend to associate great entrepreneurship with people who produce transformative technical innovations, there is also a new breed of social entrepreneurs who are emerging, driven by the realisation that business can be an enormous force for good in society and the environment. Their interest is the application of an entrepreneurial approach toward meeting societal and ecological goals. Social entrepreneurs build social enterprises and seek to integrate ideas of sustainable development into the logic and strategy of commercial businesses by demonstrating that firms can earn money through solving social and ecological problems.

Social entrepreneurs are a distinctive and rare breed. While the generic characteristics of entrepreneurs listed above also apply to social entrepreneurs, there is also something unique about a social entrepreneur in terms of their personality, values, motives and sense of accountability for what they do. Recent research shows that social entrepreneurs tend to have a particularly strong sense of right and wrong, of altruism and empathy with others who may be less fortunate than them, of responsibility to the environment or to their communities and of moral outrage against injustice and inequity in society.

For social entrepreneurs the social mission is absolutely central to what they do and wealth is merely a means to an end in achieving it, rather than end in itself. Social entrepreneurs also tend to feel highly accountable to the constituencies they serve and will relentlessly pursue opportunities to address what they see as an unacceptable, pressing and intractable social or environmental problem which adversely affects their interests. While all entrepreneurs have to be well-networked and connected, social entrepreneurs, as a function of their social goals, have to be even more imbedded in the communities in which they do business. To social entrepreneurs, networking and the building of social value and social capital lies at the foundation of their business’ success.

We need to attract more entrepreneurs into the Australian construction industry. However, we face a significant challenge in competing with other industries which have a far better public image, are less regulated, have a more diverse, inclusive and representative workforce, have progressive workplace practices and cultures and which have clients who value innovation and are prepared to pay for it. We need to address these issues and many more if we are to produce the next generation of great Australian construction entrepreneurs.

  • A thoughtful piece. But could it be argued that construction industry innovation has fallen behind because:
    1. The economic imperatives that drove the country's Dusseldorps are not high on the agendas of industry leaders – personal survival and keeping their exorbitant salaries is more important;
    2. Unlike Lend Lease in its early days, they are beholden to institutional shareholders more concerned with short term dividends;
    3. The industry sucks on the government teat and doesn’t feel it has to “innovate” while ever government happily plays along with their rules; n
    4. Neither government or private and public institutions have the in-house expertise to know when they are being 'had' by industry rhetoric;
    5. The industry is no longer capable of creative thinking and simply doesn’t understand what “innovate” means; and
    6. Its leaders are simply too scared to put their heads above the parapet and get their institutional shareholders offside by challenging the status quo.
    Too simplistic? Perhaps. But while its leaders feel the economic, social and environmental pressures to think and act differently are critical to their survival, the investments in innovations the construction industry desperately needs won't happen.

  • "Attitudes and beliefs are the source of dynamism of a modern economy. It is a culture of protecting and inspiring individuality, originality, imagination understanding and self expression that drives the grass root innovation and essentially a good life . " Edward Phelps Nobel Prize winner .

    Where you have a Pioneering end user ( Govt) and a Dynamic Grass roots Innovator (Entrepreneur) you will have success in innovation in construction in Australia. All Governments talk but cannot walk or deliver with innovation. They have to many levels of incompetent advisers and "reviewers" plus a tax office that changes the rules so they do not need to pay out on R/D. Government cannot nuture innovation as it does not understand it.

    There is a disruptive innovation here now that the ATO is killing. This innovation creates advanced manufacturing jobs, reduces construction time and costs, creates an export market. So there is a great Australian Entrepreneur here and now, I guess like Tesla he needs to be dead for this to be recognised.

  • As ex R & D manager of a major building products company, the problem we found was fear and conservatism by architects, builders and owners. No-one was game to try new ideas even though we spent millions ensuring the systems worked, complied with the NCC, were more efficient, more stylish and had better quality and were cheaper than the existing alternatives.

    • Phil, you are totally correct. No one wants to be first, everyone thinks the risk is too high.
      Its a wonder how the Harbour Bridge, and Snowy Mountain Scheme was built, no one built it here before!

      There is a lot of innovation here in Australia, but sadly we will sell it offshore, as there is little time to wait on our culture and governments to change.

  • Good article , pity it is the truth, It appears Australia is run by a bunch of fools . Australia is full of innovative people & ideas but need to go offshore to get any where .