Dialogue: Innovators hold keys to growth

PETE HODGSON* ponders what it takes for great ideas to become commercial successes.

The key issue facing small business this year is the one that faces the entire New Zealand economy: how do we improve our ability to innovate?

Innovation is increasingly recognised as the driver of growth in a modern economy. It is the key to more jobs, greater productivity and rising incomes.

The ability to innovate is not confined to big business. Small businesses, in fact, are often better at innovation, being more flexible and more open to change.

Small businesses are created by innovators and innovative small businesses become medium-sized ones, sometimes big ones.

The New Zealand export profile is an unusual shape - the wine glass. We have a few large exporters, many small exporters and nothing much in the middle. We need some medium-sized exporters. Some companies need to step up in size.

So how can the Government help innovation and entrepreneurship? How does it help to create a business climate in which great ideas can become commercial successes?

For two years the Government's economic development policies have focused on those questions.

Industry New Zealand, the Venture Investment Fund, increased investment in research and development, new partnerships with regions and communities - these and other initiatives have been put together with the goal of transforming the economy.

We have learned along the way that growth and innovation have as much to do with attitude and relationships as they do with technology, research and development and capital.

We still have more to learn, of course. But in two busy years our vision of a successful modern economy has crystallised and clarified.

The Prime Minister will shortly set out that vision in a national framework for innovation.

The Government cannot by itself generate the growth New Zealand needs, but it can provide leadership. It can also act in partnership with business, big and small.

The innovation framework is about mapping out the future of that relationship and the economy.

The framework will be followed next month by Innovate, a Government-hosted event in Christchurch celebrating New Zealanders who have successfully commercialised good ideas. The purpose is to inform and inspire a new generation of businesspeople.

The economy is in good shape as we enter this year. Interest rates are low; unemployment is the lowest it has been for 13 years.

Business conditions compare favourably with those in many other developed economies.

Running a small business is still mighty hard work, but an increased and increasing level of support is available.

Technology New Zealand's budget has more than doubled, funding for the Technology for Industry Fellowships is on the rise and the Grants for Private Sector R&D scheme is a new source of support.

Industry New Zealand's Enterprise Awards and the Investment Ready scheme are available to help businesses expand and raise capital.

Business incubators are getting another injection of cash to help them nurture new companies.

The Venture Investment Fund is picking private capital partners for its first investments.

Trade New Zealand is making good progress in increasing its efficiency through e-exporting. And, at the level of the daily grind, the Government is making a determined effort to reduce compliance costs for small business.

* Pete Hodgson is Minister for Small Business.