Yesterday was a sad day for entrepreneur Tim Pethick as he closed the Australian office of innovation company Whatif!
The founder of Nudie had joined Whatif! as managing director six months ago and had high hopes that he could not only grow the innovation consultancy but also to use the agency to spearhead an innovation agenda in Australia.
Whatif! employs about 300 people across more than 40 countries, working with clients to increase companies’ innovation capability through developing skills, organisational structures and mechanisms, and identifying and developing how to lead for successful innovation.
But while the Australian arm had revenue of $4 million to $5 million a year, the business was not viable. “We had 26 people and if they are all working 260 days a year and charged out for every day, it would be very profitable.” He says he could have changed the business model and cut back on costs. “I could have brought in a raft of freelancers but in the end changing the business model wasn’t the issue.”
He says the issue was that the global board deemed Australia not exciting enough as a marketplace.
“There are more buoyant markets for innovation. “New York and Shanghai are the fastest growing markets: there is almost a queue at these offices. Shanghai has just put on 12 people,” he says.
In Australia the marketplace is fundamentally different.
“We have a small marketplace and we are risk adverse. We also have a lot of large companies headquartered offshore so the ideas are developed there and implemented here,” he adds
“Australian companies also expect to get half a million innovation projects for $50,000. The innovation ambition exceeds their willingness to pay.”
He also believes that Australians do not focus on innovation output. “They think of the cost not the new lines of products and services or the new revenue.”
He says a number of companies in the innovation space have approached WhatIf! to cherry pick the staff. “They are all saying the same sorts of things: how hard it is to sell innovation in this country.”
Pethick says there were six staff members left when he closed the doors yesterday. “They went out for a big night but I had to go home and write a speech.”
Pethick was on a panel on a CEDA conference into innovation today that also included the Minister for Innovation Kim Carr. “Kim Carr gets it all on an academic level so talking the talk is good.”
And what next?
“It’s small and medium business that gets out and makes innovation happen in this country so I can feel another start up coming on.”