Harnessing disruption is not just an appealing ideology, it’s an absolute commercial necessity.
At Morgan Stanley’s annual Australia Summit, the leader of CSIRO’s future industries team, Kirsten Rose, provided an interesting perspective on the fundamental need for companies to harness disruption – likening it to Darwinian evolution. The corporate world is not dissimilar to the biological world where it’s not the strongest but the most adaptable that survive.
And she pointed out that financial markets have an important role to play in disruption and adaptation by facilitating the natural selection that determines which companies thrive.
As Australia’s national science agency, CSIRO relishes the opportunity to steer the development and commercialisation of innovation by allocating funding and driving coordination between the three sectors it sees as fundamental to success – industry, research and investment. To achieve maximum success, there must be interaction between the industry impacted, the research bodies generating solutions and the investors who will fund the transformation.
The most successful innovations deliver against a trifecta of objectives – environmental good, social good and economic good. At CSIRO, these are the three criteria used to plan investments.
Kirsten spoke at length regarding CSIRO’s missions – broad collaborative research programs designed to address the biggest challenges facing Australia and, in many cases, the world. Included in those challenges are:
- Food security and quality.
- Energy and resources.
- Health and well-being.
- The resilience of our environment.
- The innovation in our industries.
- Security in the region.
These missions are co-led by government, research and industry. The sheer size of them means they can’t be solved by any one party – government or private – working alone.
Kirsten provided a number of examples where exciting progress is being made.
- Driving the development of a clean hydrogen export industry for Australia.
- Objective is to reduce the emissions but not the profits from our exports.
- Bring down the cost of hydrogen to less than $2 per kg by 2030.
- Collaboration with Fortescue, Toyota, Hyundai, Swinburne University and the Australian Hydrogen Council.
- Already meeting key milestones and fostering international collaboration.
- Trialling and demonstrating new technologies such as hydrogen refuelling stations and next generation energy storage.
- Reduce the impact of drought on farmers and regional communities by 30% within a decade.
- Shift from treating drought as a crisis to being prepared.
- Empowering farmers to choose drought resistant seeds that best suit their conditions.
- New feed varieties being trialled by farmers right now. Early modelling suggests yield increases of up to 20%.
- Global projected population of 9.8 billion people by 2050 requires a fundamental shift in the plants and animals we consume.
- There will be a surge in protein demand. Australia is well-situated.
- Future protein mission aims to capture this opportunity and deliver $10 billion in revenue by 2030.
- Animal based protein will continue to play a vital role – how do we make that industry more sustainable and get more value from the meat we produce.
- Processing that takes lesser cuts and turns them into high-value, shelf-stable products.
- Growing need for other sources. Investing in establishing a new plant protein industry for Australia. Expected to deliver $4 billion in value.
- Advanced bio-manufacturing.
- Sustainable white flesh fish industry fed on commercial food waste and insects.
There is enormous commercial potential in these missions and many others being tackled. They are backed by a diverse group of industry collaborators as well as federal and state government and leading universities. These are prime examples of Australian science delivering impact in partnership with industry and delivering on the trifecta – environmental, social and economic objectives.
Kirsten concluded by highlighting the existential challenge facing many companies today. Darwin’s theory of biological evolution states that species arise and develop through the natural selection of small inherited variations that increase their ability to compete, survive and reproduce. Today we are in an era of necessary industrial evolution. Those companies that adapt with variations will survive the natural selection that financial markets will enforce and gain an advantage that will help them compete, survive and grow.
There are tremendous opportunities for Australian industries to thrive, but we must evolve in the face of this disruption. This can’t be considered a stretch goal or a nice-to-have. It is a commercial necessity.
For more from Morgan Stanley’s Australia Summit and insights into disruption, speak to your Morgan Stanley financial adviser or representative.