Five key sectors have been chosen for initial investigation and focus by the Innovation Unit.   These sectors have been selected as a result of Dr Jonathan West's paper.

Find out more about these sectors, the drivers of innovation relevant to each of them and how the Innovation Unit is addressing innovation opportunities:

• Financial Services
• Creative Industry
• Manufacturing
• Logistics
• Resources (coal)

WHAT ARE THE DRIVERS OF INNOVATION IN THESE SECTORS?

Profit related drivers

• Customer demands: the drive to meet consumer expectations are common drivers of innovation.  Companies increasingly need to respond to consumer buying decisions influenced by such factors as fashion, convenience, indulgence, functionality and 'conscientious consumerism'.
  

  Innovation projects often begin with the consumer, rather than as a consequence of research and development.

  According to Professor Jonathan West, "Companies usually start by leveraging their understanding of particular customer needs to identify a potential new product (this does not imply that it simply 'listens to customers'; often firms understand potential needs better than do customers). After conceiving the potential product, the company initiates an innovation project."¹

  
  
• Competition: the need to differentiate one's product or service from the competition often results in process, product, packaging and/or supply chain innovations.
  

  In the competitive travel industry, NSW firm and Australian Technology Showcase member DigitalDM has commenced trialling of digital technology to promote holiday options.

  DigitalDM and its partners TIAS Technology Pty Limited and Talpacific Holidays Pty Limited have developed the Dynamic Pricing Digital Brochure.  This is an e-brochure that travel consumers can use to quickly and easily compare prices for various travel destinations. The e-brochure downloads to the desktop and can be customised to the consumer's itinerary details.

  As a result of their participation in the ATS Technology Demonstration Program, DigitalDM has received an order from Air Caledonia Holidays to create a customised version of the e-brochure, while Talpacific have received an increase in direct bookings and receive regular feedback from consumers and resorts which are listed in the e-brochure.

  
  
• Research and development: a stable and well-funded base for building knowledge and capabilities, which in turn results in the development of new, more advanced and more profitable services and products. The ability of manufacturers to access research and technological developments is crucial to driving innovation, as is the dissemination of enabling technologies that support production flexibility.
  

  The Government supports manufacturing research through funding to Cooperative Research Centres including the CRC for Intelligent Manufacturing Systems and Technologies, which focuses on Future Generation Machines and Equipment; Sustainable and Environmentally Friendly Manufacturing; Information Systems in Manufacturing and Advanced Processing of Materials. 

  Another example is the ARC Centre for Complex Dynamic Systems and Control, which develops advanced control and optimisation techniques for production processes, working with companies like BHP Billiton and Matrikon.

  The Office for Science and Medical Research supports upstream research to provide a foundation for future applications in manufacturing.  For example, National Collaborative Research Infrastructure Strategy Fabrication supports infrastructure and expertise in fabrication of semiconductors, superconductors, organic electronic devices, optical fibres and micromachining.

  
  
• Enabling and platform technologies: major advances in enabling and platform technologies have opened up opportunities for new products and services, and operational efficiencies.
  

  Major advances in platform technologies such as secured transaction methods, mobility and real-time access of financial services have created value in the Financial Services sector.

  In the Logistics sector, there is increasing take up of Radio Frequency identification Devices (RFID), including transponders and active and passive transmitters.  Electronic tags are attached to consignments which allow real time tracking of movements and reduce the time needed to move, load and unload products.  Increasing demand by major supply chains is leading to reducing costs per unit of introducing the technology and the emergence of global standards.  RFID is being used by the Australian Department of Defence, Airbus and Marks and Spencer (UK).

  Nanotechnology is giving rise to a new generation of customised high-performance materials, resulting in new applications.  For example, NSW firm CAP-XX develops supercapacitors which are high-power, high-energy storage devices that enable manufacturers to make smaller, thinner and longer-running products such as mobile phones, PDAs, medical devices, AMRs and compact flash cards.

  
  

Market related drivers

• Major projects: the awarding of major projects to companies in NSW attracts new investment and drives innovation by suppliers and contractors.
  

  In the Logistics sector, high quality infrastructure and intermodal terminals encourage the movement of goods into and through NSW and support investment in innovation.

  For example, the Minto Intermodal Terminal has developed a special container with a number of unique features including an automatic lid which allows grain to be loaded directly from the silo into the container on a moving train, reducing loading time. The container is able to be integrated into the broader general freight task enabling full train loads to operate, improving on current empty container traffic².

  
  
• Investment attraction: attracting global companies that bring new technologies and innovative labour skills.
  

  The IBM Business Innovation Centre is a purpose-built environment for creative thinking, incubation and implementation for a wide range of e-business solutions.

  The centre was established in Sydney following a competitive analysis of alternative locations throughout the Asia Pacific region.

  Key services include e-business systems and solutions, networks, systems management, e-business application software and application development. Many innovation programs have been developed since the centre opened including a Bank Branch Transformation system which delivers increased productivity, extended self service, increased business-to-business opportunities, infrastructure enablement and network convergence.

  
  
• Globalisation: results in increased levels of competition, the aim for best practice and brings foreign business to Australian markets. All of these elements have a flow-through effect on the development of systems, practices and products.
  

  Sydney is one of ABN AMRO's four worldwide hubs for foreign exchange trading in G7 currencies. Global trading is conducted on a rotational basis out of Sydney, Singapore, London and Chicago and the system enables electronic trading 24 hours a day across one platform.

  
  
• Industry trends: trends which occur in a local market or globally, have a significant impact on how business is carried out and how businesses plan for the future.
  

  In the Manufacturing sector, world trade in manufactured goods has been liberalised through multilateral and bilateral trade agreements.

  The emergence of low-cost manufacturers and service providers in countries like China and India has changed the practices of competitors seeking to maintain market share for their products or services.

  There is also an increasing level of consolidation and rationalisation amongst multinational corporations and a move towards global supply chains in many industries. Trends in a specific subsector, such as food processing, include the trend towards retailer private brands and regionally-branded foods.

Legal drivers

• Regulations – these drivers can take the form of environmental, security and safety regulations, amongst others.  For example, across sectors, the regulations associated with occupational health and safety issues have led to innovations which have improved safety in workplaces.
  

  Major environmental regulatory developments such as mandatory emissions and energy consumption reporting, emission targets and trading systems will be facing businesses in the short term. The National Greenhouse and Energy Reporting Act 2007 is expected to mandate disclosure from some 700 Australian companies and 1,700 individual facilities.

  Companies will need to develop processes to measure and monitor carbon emissions, forecast emissions and set reduction targets.  Innovative activity will take place as companies pursue carbon management opportunities and use these measures to compete in the marketplace.

¹ Professor Jonathan West, A Strategy to Accelerate Innovation in NSW Outline for Policy Development (2006)
² SAHA International, Freight and Logistics Council of NSW: Path to Innovation: Innovation in the NSW Freight Logistics Industry, January 2008.