Science Down Under In The Age Of Disruptive Technology, Innovation And Uncertainty

David Thodey, former CEO of Telstra and now Chairman of the CSIRO, is the government’s on-hand adviser in matters of innovation and technology. He also has board advisory roles at SquarePeg Capital, NSW Transport and Jobs NSW, as well as consulting work on innovation in Canberra. With the Turnbull Government’s push for national awareness and action around innovation, under its campaign of Knowledge Nation, Thodey’s message to business is, keep up and understand that new technology is fundamental to success. It can also be intimidating for some CEOs. But it’s not that hard, Thodey says. David Thodey addressed The Sydney Institute on Thursday 30 August 2016.

 SCIENCE DOWN UNDER IN THE AGE OF DISRUPTIVE TECHNOLOGY, INNOVATION AND UNCERTAINTY

DAVID THODEY

It’s a great pleasure to be here. I’ve never spoken at The Sydney Institute before. It’s a wonderful institution and always a pleasure to come here. Thank you very much for the warm welcome.

Now, I should put your fears to rest. I’m not going to do a 100-year chronology of the history of science and innovation in Australia, or the CSIRO. What I want to do is talk a little bit about CSIRO. I am chairman of CSIRO and I find that a lot of people do not understand what this wonderful institution does. I’m going to try and take you through a bit of a journey of what it does do.

There’s a lot in CSIRO and that’s the challenge. I hope you stay with me. It is just on 100 years old. CSIRO’s initial conception was presented by Australia’s then prime minister Billy Hughes in 1916, in Melbourne. His words resonate with me and show how life doesn’t really change in 100 years when you hear them.

Hughes said that “we must create conditions that attract and maintain a virile population, of whom a sufficient number must settle on the land”. And he knew of “no way of settling people on the land except to make rural industry attractive”. To this, science could “lend a most powerful aid”. Science could “make rural industries commercially profitable, making the desert bloom like a rose”. It could “make rural life pleasant as well as profitable”.

He added that science could “develop great mineral wealth of which, after all, only the rich outcrop” was yet to be exploited. It could, “with its magic wand, turn heaps of what is termed refuse into shining gold and by utilisation of by-products make what was unprofitable to work profitably”. Science could “lead the manufacturer into green pastures by solving problems that seemed insoluble”. It could “open up a thousand new avenues for capital and labour”, and lastly, science would familiarise people with “clear thinking, and rejection of shams, to healthier and better lives and to a saner and wider outlook on life”.

So science was obviously the answer to all the challenges Australia faced in 1916. Science plays a critical role in the development of industries and the development of our society. Hughes’ vision was quite inspired. And I’ll come back to it later.

People don’t realise that in 1916 the West was going through an enormous period of disruption. It was the arrival of the mass produced automobile. Many people say it was Model T but others will say it was the Oldsmobile. Just think about what the power of the arrival of an automobile really meant. It was about eight years before Hughes’ speech, in 1908, that the Model T started to come out of mass production.

What was fascinating about that disruption was that, with the beginning of the automobile, a whole new industry was created. And what an incredible success it was. And how many jobs did that generate right around the world. But it also destroyed industries. It destroyed industries around horse stables, people who built buggies suddenly disappeared and the horse market died. There’s a book called Humans Need Not Apply, it’s about automation and the changing nature of jobs. It tracks the population of horses from 1915 to now and that number came off a cliff. There’s a wonderful cartoon of two horses talking to each other saying, as a Model T goes past, “They tell us we’re going to have more leisure time so don’t worry”.

The car changed things.

Now why am I telling you this story? Because the other part of science is disruption. And I’m going to give you a little lesson in disruption. I’m sorry for those who are not technically inclined but I’ve got to mention it. We are facing enormous technology change. But it’s not new. What I worry about is people saying “digital disruption is changing the world”. We’ve been through many, many different changes in terms of disruption of industry. This is just another one. So the question is, ‘what do you do with it?’ not ‘is it happening?’

There is something quite special about what’s going on. I started as a systems engineer at IBM. I used to design computers. Since then, there have been eight trends that I’m go through quickly that you need to know about. Firstly, the cost of computing has come down. The iPad you take notes on today has the power of a computer we’d sell at IBM, when I started there in 1979, for tens of millions dollars. And then, of course, we have the wonderful quantum computing at NSW University which has enormous hope of a whole new generational change of computing. That’s real innovation and I like that.

The second thing is our connectivity. You all have your mobile phones. When I ask how many of you have got two mobile phones some of you will say you have. This is the world of connectivity. The way we now interact with information has changed radically. There’s still about 2.5–3 billion people who don’t have access in the world today, but it has changed the lives of so many others. Many of you may want to throw it away, but you can’t because you need it. And remember what is different about this. It’s a very simple principle. With the fixed line phone, your number was a physical location. Now there is only one number and it relates to you. That has changed the dynamics of information flow more than you realise because things have become more personalised.

The second one is just the enormous amounts of information we’re now collecting. When you talk about the scientific method, it is nothing more than collecting data and getting to a repeatable outcome. Different chemical reactions are all about a predictable outcome. But when you collect a lot of data you start to get better insights into information. With bigger computing and fast communication you can actually analyse things. And that leads to artificial intelligence.

A lot of people tell me that artificial intelligence is going to change the world. Yes, it is going to change the world. But I want you to remember it’s nothing more than an algorithm dealing with large amounts of data at very high speed. That’s all it is.

You can start to tap into human characteristics, but machine learning is nothing new. In fact, I did algorithms back when I was a programmer. It is enormously important in terms of business and it’s going to change so much, just like the automobile. But it isn’t anything that is human-like. It may be able to give a different, or better, ability to recall, like Google which is just a search engine. I use it like an extension of my memory and I hope you do, or if you’re doing a quiz it’s a great thing to go to. But that’s just about collecting lots of data and then having a very fast algorithm to get access to it and then doing some “what if” questions. So artificial intelligence is very important.

Robotics and automation are different because robotics is happening very quickly. I don’t know if you’ve ever come across Pepper out of Japan. These are very clever robots, able to react to human emotion. They are human-shaped robots with very smart technology and they are making an enormous difference. Then you’ve got this other ability called voice recognition, and cognitive computing which is about the interaction between yourself and a machine. Do any of you use Siri on your phone? Okay, well here’s a little story. I use a product called Alexa connected to Amazon Echo. Does anyone use Amazon Echo? It sits on my desk at home and when I walk in and say “Alexa, tell me what’s in my diary today.” Alexa says “in your diary is…” It’s very slow and boring. I say, “Alexa what’s the weather going to be like today?” And she says “today in Sydney it will be 16–19 degrees, it will be a grey overcast day”, and so on.

It has changed my life. An interaction with a machine that sits on a desk. It’s not a phone that I pull out and I talk too, that’s too difficult an action. I just walk in. It’s like having another person in the room. My wife isn’t too enthusiastic about it. But it has just changed the dynamic. Technology is a disruptor.

I want to talk about CSIRO. The Commonwealth Scientific and Industrial Research Organisation has been at the forefront of disruption and scientific research for 100 years. And the question is, how does it stay at the forefront of that? For Australia, it is very important that we do. Many of you probably don’t know much about CSIRO. For example, if I said to you, “How big is CSIRO?” Well it’s roughly about 6000 people. It has a yearly budget of $1.2 billion. Depending what the federal Budget’s like, we get $850 million in appropriations and we generate the remainder, up to the $1.2 billion, with partnerships.

CSIRO is still seen as one of the most eminent research organisations in the world. Many other countries have broken their research capabilities up into different groups and then split them out. In New Zealand and the UK equivalent organisations have been split up and run independently. Agriculture went off to the agricultural group under that department. Energy went off into the energy group. However, they  have lost the economies of scale because science, whether you’re a physicist or a chemist or a mechanical engineer, more and more it’s about the collaboration of these professionals working together to solve problems. It is not primarily a pursuit of chemistry or physics.

So what is CSIRO doing? And what is CSIRO doing under the National Innovation and Science Agenda? And where does CSIRO see the future going? There’s quite a lot of changes happening within the science community about where we should go.

Now the first one is difficult. In April 2015, the government announced nine key focus areas. These are the growth areas of the future. They are food, soil and water, transport, cyber security, energy, manufacturing, resources, environmental change and health. Interestingly, those are the nine divisions, or roughly the nine divisions that exist within CSRIO and have done for the last 30 years.

CSIRO is primarily involved in research and development. But I want to be very clear. One of CSIRO’s main objectives is to partner with industry to create value for this country. Now, where you get a challenge is the difference between pure science, which is the pursuit of science for its own end, versus what we call applied science, which is science to make a difference within industry. And you can apply that to many different industries.

CSIRO was set up to make a difference for Australia and to be a servant to industry. However it hasn’t always done that. Often it has become a bit of an end in itself. It has had a very difficult sort of balancing of that. If I talk to some of the scientists at CSIRO today they’ll say, “David, we’ve forgotten the national good of what CSIRO does, we’re not there.” National good is good but you need to apply it to make a difference.

The best example that I can think is Pasteur, a great microbiologist. But what he did was to apply that chemistry, that science, to make a difference to society. And that’s what we’ve got to do. We’ve got to be good at both.

There’s been a lot of discussion around the greater commercialisation of science. When we track against the OECD counties, we score very well in terms of our scientists. Australian scientists would rate up in the top five per cent of the world and they are wonderful. In fact, the value in CSIRO is our people, our scientists. But we are very poor at collaboration. We do not like partnering, and the problem with Australia is that we’ve got so many great initiators but none of them talk to each other. I blame federation for it.

We are over-governed. Without co-ordination, we don’t have good communication between industry with research in universities. I spend most of the time when I go into meetings trying to work out where people fit in. I’ve got growth centres, I’ve got cooperative research centres, I’ve got knowledge centres. Then I’ve got centres competence in universities. I love the 40 universities in Australia but 40 creates a lot of different voices. Then you’ve got CSIRO, often doing its own thing. As a country, we need come together to address the big problems.

So what are we doing? I’m going to go through these nine areas very quickly so bear with me. I literally will just touch on them. In agriculture, food and nutrition, we have done an enormous amount of work around animals, cotton and wheat. And now we’re doing a lot in aquaculture because aquaculture has got to be a growth industry – salmon, prawns and all of that area. It’s an enormous opportunity.

Soil and water is very important. One significant thing has been a new app called SoilMapp where you can look at the soil quality on your farm. If you’re growing cotton or wheat you can look at the quality of the soil and determine what you’re going to grow or what fertiliser you’re going to put on it. These are big changes which will affect the way we deliver agriculture. Transport has been an area where CSIRO has done a lot over the years. A few years old now is road crack imaging technology where we have cars running around NSW looking for cracks in roads. Put underneath a truck, it reports back when the roads need maintenance. And we’ve got some great apps in that area.

Then there is cybersecurity. Within CSIRO, we merged the organisation formerly called NICTA, National Information Communications Technology Australia, with CSIRO’s own former Digital Productivity unit. The new team is called Data 61. This is the cybersecurity growth centre for Australia. In terms of cybercrime, denial of services, and so on we need to be a global leader. We cannot abdicate our responsibility because every day there are attacks that we need to be equipped for.

In the area of energy, we’re doing a lot of work. It’s an enormous area. But we research right from energy production through to how we’re going to a zero emissions world. This is really a challenge. We’re doing a lot of work in coal, and how we can manage CO₂ emissions there. How we can still mine coal but find a way to produce energy without so many emissions. We’re trying to change the technology in that area. We’re also doing a lot of work in renewables. Battery life is also very important. This has changed the world. If you aren’t driving a hybrid car yet you should at least go and try one. They love giving you a test drive in a Tesla. These are big changes that we as a nation have to be at the front of, not sitting down behind.

As regards manufacturing, I’m just going to mention one. We’ve been doing work in an area called MOFs. These are Metal-Organic Frameworks. They are amazing. They have an incredible surface area. This is going to change the way we absorb or take up CO₂ or impurities from a lot of the work we do. One gram of these crystals has the same surface area as the MCG. I should have said SCG but the SCG is a bit small. These are really game changing technologies and most Australians have no idea what we’re doing. And we do not celebrate our scientists enough and what we’re doing. It’s really interesting.

We’re having a lot of discussions around where CSIRO sits on climate science because we’ve just restructured. We care passionately about climate change and we are doing a lot. We’re just trying to balance the research we do in collecting data with applying it more. There’s been a lot of discussion in this area and we will continue to invest here because climate change is very real. I’m not going to get into the whys – but it’s real, no matter which way you go.

And then we’re doing a lot in health as well.

CSIRO has a large marine vessel which travels around the world. It’s called the Investigator. We’re part of the Square Kilometre Array which is space science and astronomy. That’s over on the Nullarbor Plain. It’s an enormous facility that most people don’t know about. I don’t know how many dishes we’ve got there but remember there’s one in South Africa and one here, and these are the ones that saw these cosmic waves going out in the universe. Incredible things that are going to get us deep inside into some of the history of earth.

We’ve also got the animal and human health lab in Geelong where we do investigations into diseases like ebola. We’ve done a lot of work into diseases like avian influenza from chickens and other animal borne diseases, and these are very high tech facilities. You’ve got to go through about four levels to get inside, and then everything inside, every bit of waste, is burnt.

With some of the digital disruption, we’ve been very active in the National Innovation and Science Agenda which was announced by the prime minister in November. It’s not going to change the world but it was a good step forward. We have some of the best data analysts scientists in the world. There’s something like 350 PhDs, computer scientists and if any of you are in business and you’re looking for data analytics they are some of the best. And they exist only to support industry.

We’re also running an accelerator, taking scientific ideas, and trying to get them out into some commercial outcomes. We’ve just had tremendous results from this. The last two we’ve run we’ve had 15 new business opportunities. This is CSIRO scientific innovation that we’re going to take and commercialise in some way.

We want to partner with all the universities and we’ve got to bring our capability together. I’ll give you some examples. A new polymer membrane that reduces water evaporation on plants is called TransformatiONal. We’re doing a lot of work around sensors in crops so you can remotely determine when they’re going to mature. We’ve done quite a lot of work in terms of cloud based technology and analytics which gives us deep insights into that. I could go on. We have a hover map which is a drone able to map different areas and is quite different in terms of looking at, say, cropping. You can get a sense of the geological and the bio state of the crop. We’re very excited about that.

Great science must somehow make a difference. There will be pure science but we’ve got to keep looking for ways to take it through to practical use. We need to keep doing both equally. We’ve set up an innovation fund which will be about $100 million. We may take in another $100 million from the private sector. This is about funding great ideas and getting them to market. As you know, we have something like a 60 or 70 less factor in early stage funding in Australia compared to the US. It is unbelievably bad. I’m sure it’s because we get such great yields from stocks like Telstra. The truth is we need more early stage capital to help new great ideas get to market, and if you get it right, it’s really very exciting.

I’m just going to finish lastly on where we see the world going.

It’s very important in the world to know where it’s going, especially in science. The science and research world is global. I talk to our scientists and they talk to researchers in Germany, or the UK. Irrespective of how our structures are, it’s a global community. And we really need to focus on how we remain a part of that. There are six areas that we’re focusing on. One is disease management, and working on technology to fight disease. How we can have early detection of cancer and those sorts of things. You’ve seen some new medicines come out that are getting far more effective but what we want is early stage awareness.

Synthetic vaccines are esoteric, down to the DNA level, and there are quite amazing vaccines that we can develop. We’ll also be doing a lot more in 3D printing around limbs that can be replaced; rather than trying to replace a bone or lock it together with screws you can actually replace it. There is quite a lot going on there.

We’re doing a lot with the geological crust. We’ve got to go deeper to find some of the minerals that we need and some of the rare metals that we need. We think as you go down we can find different ways of mapping that. We’ve got the biggest data pool – we have geological data, population data, climate data and various other bits of data that we can pool together to see trending. For example, we can map how when high phosphate is used in northern Australia it goes into those river systems and hits the Great Barrier Reef. We’re not just looking at climate but also the other things that impact at any one time. We’re also doing a lot in terms of net worth with farmers. We’re doing a lot of biological data because what we find is that even if you take something like photosynthesis, which is the most efficient generator of energy, how do you take the principles there and apply them to a commercial opportunity.

CSIRO is going places and we need to celebrate it. We need to celebrate our scientists and the people that do such great work. We’ve got to help them to be recognised in some way. Do we need to be outcomes driven? Absolutely. Do we need to be held accountable? Absolutely. But we are not celebrating a lot of what we’re doing.

In summary, I’ve just tried to give you some of what that 100-year history has delivered. It is a wonderful legacy that we should all be very proud of. We try to refer to the CSIRO as “Our CSIRO” as in our collective CSIRO. But, like “My ABC”, why don’t we talk about Our CSIRO? Because it is great. Our CSIRO scientists are great. Billy Hughes’ words were just as applicable today as they were back in 1916.

We’re playing a critical role in the National Innovation and Science Agenda. It’s very important we have a strong agenda for science and innovation in Australia. It’s what creates new industries, it’s what changes industries and we’ve got to be at the forefront of it.

Lastly, more important than any of the above, we have a group of people collaborating who are inspired about what we do for Australia. In our collective capability, we can be great global leaders in science.