The third strata matters more than we often admit

In recent weeks, we have written about the three strata of Australian innovation and the importance of the missing middle. This week, we focus on the third strata: the stay-ups. These are the larger, more established organisations and institutions—corporates, government agencies, universities, research institutes, and other enduring players that bring scale, infrastructure, market reach, purchasing power, and system influence.

Stay-ups matter because they are often the organisations through which innovation spreads, sticks, and scales. They are not simply background institutions in the ecosystem. They are often the channels through which ideas are adopted, operationalised, funded, procured, regulated, standardised, and diffused into the wider economy and society.

But stay-ups do not stay up by default.

Established position is not the same as ongoing relevance. Size is not the same as adaptability. Legacy is not the same as renewal.

If stay-ups do not continue to innovate, they do not really stay up at all.

From start-up fascination to scale-up reality

Last week, we wrote about the three strata of Australian innovation: start-ups, scale-ups, and stay-ups. The point of that article was simple. Australia’s innovation ecosystem is broader than the start-up scene, and it only becomes stronger when all three strata are recognised and connected.

This week, we focus on the least understood of the three: the middle.

Because while Australia has become relatively comfortable talking about start-ups, founders, accelerators, and early-stage momentum, we still pay too little attention to what happens next. We are good at celebrating emergence. We are less disciplined at understanding scale.

And that matters.

A strong innovation ecosystem is not defined only by how many ideas are generated, how many start-ups are formed, or whether one of them becomes a unicorn. It is defined by whether enough organisations can move through the harder middle stage where innovation is tested by growth, customers, talent, systems, execution, and market discipline.

That is where the missing middle comes in.

Australia’s innovation conversation is still too narrow.

We celebrate start-ups. We run pitch nights. We talk about founders, venture capital, and disruption. We treat innovation as if it is primarily the domain of new entrants.

That is only the most visible part of the system—not the largest, and not necessarily the most consequential.

A serious innovation ecosystem is not made up of start-ups alone. It has three strata:

• start-ups that create new options,

• scale-ups that turn those options into growth,

• stay-ups—corporates, public sector agencies, universities, and research institutions—that must keep renewing or they simply will not stay up.

That last category matters more than many people realise. Because if established organisations stop innovating, they may still exist on paper—but they stop being strategically relevant.

That is true for companies. It is true for government. It is true for universities. It is true for research institutions. In a world shaped by technological change, geopolitical volatility, talent competition, and shifting business models, standing still is just a slower form of decline.

Australia needs to start talking about innovation accordingly.

The Australian Bureau of Statistics (ABS) business counts tell part of the story. At 30 June 2024, Australia had 2,662,998 actively trading businesses. Around 1.66 million were non-employing, and another 693,558 employed just 1–4 people. Only 68,214 businesses had 20–199 employees, and just 5,189 had 200 or more employees. In simple terms, Australia has a very broad base of very small businesses, a thin middle of scaling businesses, and a relatively small pool of large incumbents.

That matters, because an innovation ecosystem is not judged only by how many businesses are created. It is judged by whether enough of them grow, whether enough institutions adapt, and whether enough ideas actually move through the system into productivity, competitiveness, and impact.

Innovation only creates impact when it is commercialised, adopted, implemented, or diffused. Until then, it may still be an idea, an invention, or a capability in waiting.

A country can have start-up energy and still have a weak innovation system.

That is the risk Australia needs to confront.

Most organisations talk about innovation as if it is an event.

• A workshop.

• A challenge.

• A sprint.

• A pilot.

• An offsite.

• A hackathon.

These can all be useful—but none of them, by themselves, create a repeatable innovation system.

What makes innovation repeatable is not just strategy, funding, or talent.

It is cadence:

• the rhythm,

• the recurring routines,

• the review moments,

• the decision cycles,

• and the learning loops.

In short: the operating discipline that turns innovation from ad hoc effort into managed practice.