KEY POINTS:
Cynics might suggest that an academic is the last person to be preaching to businesspeople about innovation.
And it has to be said, Auckland University business lecturer Ian Hunter has spent most of his career looking backwards rather than forwards.
He was a director of the Auckland Business History Project, and has so far written five books, including two biographies (of Levene retail chain founder David Levene, and Farmers founder Robert Laidlaw), and Age of Enterprise, a study of New Zealand entrepreneurs in the late 19th and early 20th centuries that was shortlisted for this year's Montana Book Awards.
His latest effort also has its roots in history. Imagine: What Wedgwood, Da Vinci, Mozart, Eiffel, Disney (And Many Others) Can Teach us About Innovation is essentially a how-to book about the path to business success.
But Hunter is not about to apologise for wading through hundreds of case studies of successful businesspeople in order to learn lessons from the past.
It was his research for Age of Enterprise that triggered the idea for his new book.
"I'd seen some characteristics that kept coming up again and again in entrepreneurs and innovative companies, and I really wanted to test those and see if those things were just about New Zealand, or had a broader resonance," he recalls. "I went looking, and the more I read about some of history's greatest innovators, the more I found. Whether I was looking at a 16th century painter or a 19th century industrialist, when it came to innovation, key principles kept emerging."
Yes, the i-word just won't go away. While it sometimes seems like every second business writer has their own pet theory on what it takes to beat the competition, at least Hunter has a local take on the topic du jour.
Not that he ignores the marketing hype of his rivals. Like most business books, Imagine distills its wisdom into a handy shorthand. So let's get the "seven pillars of innovation" over with early. They are, in no particular order: vision, creativity, knowledge, timing, resources, focus and persistence.
So far, so obvious. But where Hunter perhaps sheds more light than some is his distinction between invention and innovation.
He defines innovation as "generating wealth from new ideas". And that doesn't just mean making money, he explains.
"Wealth we can loosely define as a range of things: it can be financial, economic, social, cultural, or spiritual. But the point is that innovation is never just doing things differently. Because you might do something differently but you put a blockage in the process. You erode good, instead of adding value."
It is a trap many businesspeople so easily fall into, he believes.
"You think: 'If we just make a change then things will get better'. And the changes come ad infinitum, and the people working for you become stressed and despondent because different does not necessarily mean better."
Ultimately, it is the recognition and endorsement by others that turns an invention into an innovation, he argues. "It's not me saying: 'This is a great idea. I love this product that I've created'. What it is, is you and your friends saying: 'This is fabulous. I'm going to pursue this; use this; put it in my life; employ it; and recognise its value'."
New zealanders, he acknowledges, are particularly inventive. But like many other cultures, we find innovation a challenge, he argues.
Take that classic Kiwi hero, Burt Munro. The inspiration for the movie The World's Fastest Indian was certainly inventive, Hunter agrees.
"He was the classic, brilliant, backyard Kiwi inventor, but he wasn't an innovator. An innovator takes those ideas as he sees them through to the marketplace and they are accepted by society.
"This is why, for New Zealand especially, realising that we have this cultural trait of ingenuity is important, but we must direct our energies and our thoughts and our actions into converting that really, truly into innovation, if we are to remain a player in the world, global economy."
We could do worse, for example, than repeating the success we had developing refrigerated shipping. New Zealand was not the only country trying to tackle the problem of exporting perishable goods this way, Hunter notes. Latin America had the advantage of British capital, scale and proximity to market. New Zealand was more remote and had more challenges to face, and yet within a year we were the market leaders in the field.
"How could we do that? Because we weren't just being inventive, we were being innovative. We needed to take what was a great idea of William Davidson and his cronies in the South Island, apply it right from the start from the farm to the processing plant to the railhead, then across the ocean, make sure the plant didn't break down halfway, then distribute it to the British customer. That's why in the book I make the claim that innovation requires creativity - that's important - but it also requires resources, focus and persistence. Those are the elements that give innovation its life and its dynamism."
However, his book also provides plenty of examples of just how long and exhausting that process can be.
The development of the bicycle, for example, probably began with a Scottish blacksmith who rode a toy hobbyhorse to work each day. Another couple of decades later, the Michaux brothers decided to build the bone-shaking velocipede. When the contraption began being made in an English factory, a worker on the production line decided he could go one better, and developed the penny-farthing.
The lesson for today's innovators, says Hunter, is that you don't necessarily need considerable resources - you can benefit from incremental innovation, or what he labels the "cascade effect".
Another lesson is that it can take decades for creative ideas to come to commercial fruition. The development of penicillin, for example, was a remarkable tale of persistence.
As most of us know, Sir Alexander Fleming's eureka moment came when he discovered a mould growing on a Petri dish in his laboratory. He noticed the mould had killed the bacteria in the dish, and as he had witnessed the devastating effects of septicemia on thousands of injured soldiers in World War I, he immediately realised he had made an incredible discovery.
But Fleming was not a biochemist, and was not able to produce the mould in a pure enough form for it to be used intravenously. The medical establishment all but ignored him, and it wasn't until a brash Australian, Sir Howard Florey, happened upon his research many years later and put a biochemist to work on it, that a useable powder was developed. Even then, it took years before penicillin was made available to the public, due to a lack of research funding and tough economic times. Eventually, however, Florey was able to interest the drug companies who put a consortium together to develop it commercially.
Sometimes, though, breakthroughs can happen almost overnight, as was the case with the invention of pantyhose. DuPont put enormous resources into the invention of nylon, convinced that women would welcome the shift from silk to a synthetic fibre. Largely thanks to well-organised logistics, it managed to sell an astonishing 64 million pairs worldwide in the very first year they were sold, in 1940.
Inevitably, says Hunter, New Zealand will have some breakthrough innovations, but his personal view is that it is more realistic for us to aim for incremental success.
"It comes back to: at what point are you trying to make a contribution in the value chain? And if you think that you are trying to create a DuPont in New Zealand, and take it back to the original discovery in the original lab, to delivering five million pairs of pantyhose in a day, then I think you'd probably get pretty despondent pretty quickly. But if you pick off a particular portion and do that exceedingly well, I believe there's gaps in the market."
In fact the good news, he believes, is that market saturation and tough economic times are already starting to take a toll on large multinationals like Starbucks. Such major shifts in circumstances provide the perfect opportunity for smaller and nimbler innovators to slip in and fill the gaps, he believes.
"One thing David Levene used to say was 'Change breeds success, and success breeds no change'. The ongoing advantage for the innovator is the large firm's complacency. Because when the large firm, hopeful of realising its aims in the market, realises those aims and the profits and the money start to flow, they say 'Well, why change it?' But that change itself, the stability they bring into place around that, inevitably introduces a complacency, and that complacency is the gap for the innovator."
By the same token, says Hunter, there is hope for innovators who don't necessarily see themselves as entrepreneurs. By definition, entrepreneurs usually work for themselves. But innovators don't have to own their own business.
Some of us, he acknowledges, are perfectly happy for someone else to take such risks, but are still capable of seeing opportunities to add value, and create lasting benefits.
"That's why it's a good news story for both those who lead organisations, and those who work in them."
The key, of course, is teamwork, and being willing to take a fresh look at what your customers, or users, truly value.
Again, Hunter can point to a historic example, probably more familiar to Cantabrians than Aucklanders. In the 1920s James Hay was the advertising manager for Christchurch department store Ballantynes, but he could see a gap in the market for a different kind of store that was less conservative. He founded Hay's, which became known as The Friendly Store, and featured such innovative concepts as self-service, a children's club, a children's playground, and social activities for staff.
The store thrived, even though it was in the wrong part of town, and was founded just before the Great Depression.
Nurturing innovators such as Hay can be a challenge for large firms, Hunter agrees, but there is a message for both managers and employees, he believes: "Those creative types, yes we need them, but also they need us. Often in those sorts of circumstances, you've got the creative person with great ideas, but great ideas alone are not innovation - it's the application and translation to the marketplace."
The more recent story of the rise and fall of Navman is possibly a salutary lesson. Navman founder Peter Maire did a brilliant job of putting together technology that customers clearly wanted, says Hunter. But the subsequent break-up of the company has left its future uncertain.
For what it's worth, Hunter is in fact highly sceptical about the potential of technology to transform New Zealand's economy. He wholeheartedly agrees with British academic Richard Barbrook, who argues that we have been duped into believing that technology will deliver us a better future when, in fact, it is simple inventions such as soap, contraceptives and antibiotics that have truly improved our lives.
"I think one of the traps that people can fall into is they think innovation is all about technology, and this is not the case."
Even as a work tool, technology can be over-rated, he believes. Back in 1912, for example, American mail order company Montgomery Ward managed to process something like 75,000 orders a day, using only a card index system. And the turnaround time from receiving the order to dispatch was only two hours.
While there are still high hopes for companies such as Rakon, it is easy to forget that retailing is one of New Zealand's fortes, he notes. Pumpkin Patch might be going through a difficult period, but it's still been enormously successful, for example. And the New Zealand Natural ice-cream chain is rapidly expanding around the globe.
"Starbucks is the same. Selling coffee - is that innovative? No. They have been enormously successful because they have done it in a way that the customer sees as valuable."
As for the idea that New Zealand needs to develop its own huge success story as Finland did with Nokia, it's just not going to happen, he believes.
Instead, we should accept the fact that our competitive advantage is our stable economy, our low cost of labour and our expertise in areas such as engineering services.
"Why are we designing telecommunications systems in Portugal? It's because we recognise we are on the fringe of the global economy, and apply this learning and skill and creativity and focus and resources in a way that fulfils a particular point in the value chain particularly well.
"Why did Philips, even after they closed their manufacturing facility in New Zealand, why did they continue the development part? Because you have this culture that has a history of being a quite inventive, stable democracy, it's nice and cheap, has a high attention to detail, is robust, and has a good work ethic.
"But to try and run a Nokia? You can start a Nokia, or start a Navman, but don't think it's going to stay here. If you're going to run a business where its logical focus of energy is going to be Europe or the United States, don't be under the illusion that this is the place to run it - on the periphery of the world economy."
The real question for New Zealand is not whether our businesses should be sold to overseas owners, he argues. It's what we should be selling.
"That's probably the more cogent question that probably we should have had at the forefront of our minds a decade ago."
Which brings Hunter to another of his hobbyhorses. For New Zealand to be successful, innovation needs to be applied not just to business, but to areas such as education, and healthcare, and how communities are developed, he argues.
Perhaps not surprisingly for an academic, he fervently believes the Government has a strong role to play in investing in infrastructure, where a long-term view of the investment is needed.
As for education, in the knowledge economy in which we live, it's easy to overlook the value of experience, he says. While we all love stories about successful entrepreneurs such as Graeme Hart and Sam Morgan and Steve Outtrim who have become extremely rich while comparatively young, such cases are actually very rare, he notes.
"What we know is while those people will always occur, they are extreme examples. And the great encouragement the genuine, authentic innovator can take is that there is a role for them. That sort of success is the extreme, not the norm. You can have a productive, contributing life as an innovator anyway."
Hunter admits his research, and his own experience as a lecturer, have convinced him that the ancient Greeks had the right attitude to education.
One of the great things about the Greek system was that it focused on building a foundation of facts, he says.
Students were about 17 or 18 before they were encouraged by their tutors to start questioning the world.
"I think we do our children a detriment when we encourage too early the idea of criticism. It's intellectual arrogance and stupidity. A good education system must recognise that the teacher has an important role, and the teacher by definition should always know things that the student never will. And student-centred education can never produce that. There are some things the learner will never know they need to know."
That's not to say that curiosity should not be encouraged in children, he stresses.
"Children have curiosity and we need to embrace that. We value that. And they're highly creative, and they absorb knowledge. Fabulous. But if we talk about innovation, curiosity and creativity are not it. Focus and persistence are actually highly tuned adult traits."
"If you really value and you want the sorts of insights that Alexander Fleming wrought, or Marconi wrought, or Eiffel wrought, you embrace the value of training. Those sorts of new insights and new connections that we so value, they don't come from nowhere. They come from you and I building a rigid foundation of facts from which new ideas can come."
Hunter is also passionate about his belief that education systems need to reward excellence. Mediocrity, he notes drily, does not produce innovation.
"Any education system needs to have standards that students can aspire to, where greatness truly is greatness, otherwise you do two things: you remove hope from those who have the potential for greatness, and you tell others a lie."
However, he is reluctant to get into a political debate, and refuses to be drawn on the subject of the NCEA.
I get the feeling that just might be another book entirely.
