KEY POINTS:
It is widely agreed that New Zealand's future economic prosperity rests on our ability to carve out larger global markets for innovative and technology-driven products and services.
How we achieve this goal has been the subject of numerous talk-fests and reports over the past few years.
With an
election looming, the topic of how to build an economy that encourages innovative development and export success is back on the political agenda.
Internet technology company Cisco is the latest organisation to organise a brainstorming session on the topic.
In Auckland last week Cisco mustered specialists with different perspectives on technology innovation for a roundtable discussion on the topic of "Inspiring New Zealanders to Innovate".
Here are some of the thoughts they shared.
THE IT ENTREPRENEUR
New Zealand has historically had a problem when it comes to funding high-growth companies, says IT entrepreneur, angel investor, and former Intel New Zealand managing director Scott Gilmour.
"That will always be a reality. The size of our economy simply cannot sustain many high-growth companies," Gilmour told the forum.
"Also, high-growth companies need not only money, they need market access and market knowledge.
"So most of our companies should transplant to the West Coast [of the US] or Europe, or wherever the market is.
"That's not a problem. The problem comes when we don't retain any substantive ownership here," he says.
"You can't be a globally successful company based here, I don't think.
"So let them go, encourage them to go - just like our kids go on their OE - but try and retain more and more significant ownership stakes so that as they succeed and generate a capital return to shareholders, those returns are invested into further companies, so that cycle keeps repeating."
Gilmour says our economic development also suffers from a societal issue: New Zealanders' dislike and distrust of business and business people.
"That's very different from the States where the notion of enterprise and ambition is nurtured and encourage. I think we need to get over that.
"I don't think we [should] encourage kids to get into engineering or science unless there's a realisation that whatever they develop has to be sold and marketed around the world
"I don't think New Zealanders appreciate the value and the importance of successful businesses for the functioning of society." THE TECH MARKETER "We don't celebrate our scientists," says Will Charles, general manager of technology at the University of Auckland's technology commercialisation arm, UniServices, which employs 600 staff, turns over almost $100 million a year, and has a presence in 27 countries.
"We don't trust them [our scientists] to come up with innovative R&D ideas. We tie them up in knots when they try to get grants ... As a country we need to value and cherish this talent. We have a distrust of science, a distrust of cleverness," he says.
"One thing we've got to decide, as New Zealand, is where do we want to operate in the value chain, as we grow and as our capital markets grow, in order to retain our talent."
The country also needs to double spending on research and development, and this increase must include a significant investment in "pure" research and development - the type of undirected research which has a track record of leading to the big scientific discoveries.
The people who are spending the money have to be assured that our scientists will deliver, says Charles.
"They don't need to be told what to do. Currently 40 per cent of our top academics' time is spent filling in grant applications." THE THINK
TANK LEADER
This country currently suffers from a 30 per cent income gap relative to Australia and this will blow out to 60 per cent if current growth rates continue, says David Skilling, outgoing head of think tank the New Zealand Institute.
"New Zealand - partly by virtue of income differentials, but partly also by virtue of our size, has quite a line in exporting people.
"The only OECD chart I've ever seen on which New Zealand ranks number one is share of skilled population living overseas."
Skillings' solution for bettering our relative global economic position involves fostering "the weightless economy" which he describes as a model of economic activity not based on physical content, but on high-value creative endeavours and services, with results transmitted globally over the internet.
"Having a clear view that this weightless economy is an area with significant potential seems to me to be something that we, at the very least, ought to be debating," he says.
The key elements necessary to encourage economic growth through this type of innovation, he says, include: developing a world-class tertiary education fostering far more investment in research and development, particularly in the private sector, improving the general business environment and companies' access to our capital markets, and investing in better broadband.
"We've just got to stop talking and start doing something. New Zealand does have great potential ... the issue is how we capture the momentum. That requires action, it requires momentum and creating a bit of excitement," says Skilling.
THE ACADEMIC
Only 5 per cent of New Zealand's tertiary education graduates have qualifications in engineering or related technology fields, says Thomas Neitzert, head of the engineering school at AUT University.
In fast-developing economies such as Malaysia, Thailand, Taiwan and China the figure is 15 per cent, he says.
"A few years ago [global technology company] Motorola wanted to set up shop in New Zealand and they demanded 200 graduates per year in computer science and related fields and we just couldn't produce them. There was no way we could come up with that and Motorola subsequently went to Australia."
Neitzert says as a starting point, New Zealand needs to do a better job promoting technology careers to school students.
"We don't have good career models. People don't understand what science and engineering are all about."
He says while major global factors such as oil price hikes, the international food crisis, and obesity are frightening problems, they present opportunities for New Zealanders. Given our history as innovators, we are in the position to come up with technology-based solutions.
"I'm optimistic that New Zealand will find a number of answers to the problems and the questions that we are all asking around the globe right now," Neitzert says.
THE TECH SALESMAN
One reason it has been difficult to make substantial progress developing New Zealand's broadband infrastructure is that the general population are not aware of what a truly broadband-enabled society would enable them to do, says Cisco country manager Geoff Lawrie.
"They [New Zealanders] don't connect [high-speed broadband] with the kind of economic development that might take place, with the kind of communications advances, the collaboration opportunities that might exist. So we definitely have a communications challenge."
THE VISITING EXPERT
In 2003 the US Council on Competitiveness issued a major report - the National Innovation Initiative - which presented a model for national economic growth based on innovation.
The report says innovation rests on three pillars - talent, investment and infrastructure.
The NII's three-pronged model is one supported by Howard Charney, a Cisco senior vice-president with responsibilities for issues related to productivity, global competitiveness and emerging technologies.
Charney, a trained engineer and a former intellectual property lawyer, was one of the co-founders of 3Com Corporation, which grew to become a significant global force in the technology sector.
Charney told the forum New Zealand needs to consider the three pillars set out in the National Innovation Initiative as it charts its economic future.
"Talent is really important and we don't get to be innovative unless we put emphasis on those disciplines which create positive GDP growth," he says.
"New Zealand has a very serious emphasis on accountancy and lawyers. Now I have nothing against lawyers, I was educated as a lawyer. I practised law for a number of years. But I have to tell you I made a lot more money in technology. And I also created a lot more jobs in technology - thousands of jobs. I could get up in the morning and I could think I did something that was really good. All these people are now employed."
He says New Zealand only invests about half of what the leading OECD nations spend on research and development. And like UniServices' Charles, he believes that is not good enough.
"It's going to come back to haunt you - guaranteed," Charney says.
"New Zealand has to devote more money to R&D - it has to or it will become irrevocably and irretrievably uncompetitive."
But Charney, like the other participants in the roundtable discussion, remains optimistic this country has the potential to overcome the obstacles to becoming an innovation-led growth economy.
"I don't think the problem is insoluble. A lot of research has been done on the subject of innovation. I think you must be very sober about what the message is with respect to how New Zealand becomes more competitive."
