Australia is the 8th richest country in the world, but in terms of economic diversification, it’s 93rd in the world. Because of this, our growth rate is projected to stutter along at 2.2% — slower than half of the world’s economies.

Australia has what’s known as a ‘primitive economy’. Several years ago, we were 57thin the world, but we’ve slipped to 93rd. The lucky county, with so many natural resources, has focused on growing, extracting and exporting such resources. We’re now discovering that it’s not the product, per se, but the value added to the product that creates long-term wealth.

Australia has an economic imperative to grow its companies, diversify its economy, and focus more on value-adding.

Diversifying our economy

Why aren’t more Australian companies scaling? Why is it that only 3% of companies have more than 20 employees and only 5% have revenues of $5 million or more?

In Germany, 50% of companies are medium-sized companies; in Australia, only 2% are. We say that Australia is a nation of small business, but surely that’s not our goal. We must figure out how to support the growth and development of more ‘new economy’ companies.

Companies in the new economy need a different ecosystem — not the same one used by traditional extractive industries. Software companies, for example, don’t need large tracts of land, expensive equipment, extensive lines of credit, worldwide supply chains, or lots of workers. They need a few brilliant programmers, computers and high-speed internet!

Australian companies can go toe-to-toe with the best in the world in algorithms, digital platforms, and artificial intelligence and could grow quickly — but only if the chief executive or founder knows how to do more than code. They need to know what to do, when, why and in what order to build the product, then market, sell, plan, select and retain people, finance, grow and scale the company.

Adelaide startup Ping is a strong example of this. Specialising in acoustic analysis for wind turbines, the team spent six years working on R&D before applying for and receiving a $170,000 Accelerating Commercialisation grant to help trial, upscale, connect and launch its device in domestic and international markets. Six months later, Ping did the first major rollout of its technology, in a large, three-month pilot.

Scaling companies in the new economy

There are five things that chief executives of new economy companies need in order to grow and scale. First, teach them how to lead and manage growth. This includes how to assess risks, evaluate strategies and develop plans. Secondly, they must learn what the differences are between marketing and sales, and how to find and sell to ideal customers.

Next, access to people with the right skills is crucial. Funding has been announced for school-age STEM initiatives which is a great start, but we need more people with programming, analytic, and project management skills now. Skilled visa schemes can assist with this, but the government needs to do more to actively attract people to Australia who will build new economy companies. Scholarships or subsidised tuition for degrees in STEM can also attract candidates — especially women. This is a long-term play, but we must begin now.

Another approach is to consider standardising payroll taxes across all states, while avoiding taxing companies who are growing and adding employees until they are medium-sized (over 20 or more employees).

Finally, enabling fast internet in the regions is vital. Software companies can start and grow anywhere but they must have high-speed internet. Many people would prefer to live in regional areas, and it would be easy for national and multi-national companies to set up regional offices in Australia if they had access to a steady stream of great programmers.

Australia needs a more diverse economy, with companies that are growing faster than the projected 2.2% per year for the foreseeable future. Our economic imperative is to start more new economy companies on their growth journey and provide them with the necessary support through ecosystems, government policies, program and financial assistance — to enable them to scale quickly. This is vital if we are to future proof our standard of living.

Dr Jana Matthews is the ANZ Chair in Business Growth, Professor, and Director of the Australian Centre for Business Growth at the University of South Australia’s Business School.

This article was first published by Smart Company