Wellington
At last, some slightly solid thinking about the innovation part of our economy.
Sir Peter Gluckman's under-reported speech on the 'Globalisation of science: New Zealand'sR&D direction' is the first tentative indication of some higher level views on how we turn ideasinto income.
The PMs chief science advisor gives some pretty sobering statistics and examples along the way -shorthand to say, 'this innovation caper ain't easy'.
Speaking at a recent NZ Agricultural and Horticultural Outlook Summit, Gluckman says it isessential we transform away from commodity-based trading, though he didn't mention that the currentboom commodity environment makes this more difficult to achieve than ever.
NZ has lagged behind other small advanced nations which have transformed their economies viagovernment-led basic and strategic research and development because "we have failed to investsufficiently in strategic and holistic scientific research in a manner sufficient to create afully-functional innovative ecosystem," he says.
"A key understanding of those countries which have thrived, Ireland excepted [earlier he pointedout Ireland's success was due to tax breaks to attract multinationals], is that their systems onlywork if there is sufficient idea flow for entrepreneurs and businesses to develop and that in turncan only come through investment in basic science. There is no other way," he says.
Then he gave some numbers.
In Israel it is accepted that only 1 in 100 ideas leaving a university or institute will make itto the first round of commercialisation, and of those, if well managed and governed, 50% willsucceed. Israel's about our size, and reviews more than 10,000 ideas a year, half from theuniversity sector. NZ's nowhere near that.
Meanwhile, there's a global recognition that in an increasingly weightless economy, it is ideasthat generate money. The product can be produced anywhere [cue China], but in the end it is thesource of the ideas that generates the return.
"We need to understand that idea generation is where it starts," Gluckman says. "There are a thena series of steps that transform that into real dollars - at the end it is about scale andmarketing."
NZ needs to think hard and innovatively about scale, with one of our problems about marketingwith this in mind is it takes a very different skill set to that that comes from traditionalcorporate training.
"We have the tradition of thinking that we must own the whole value chain from New Zealand, thentry to sell it to the world," says Gluckman. "In a country with a low capital base and a smallnumber of technologically savvy managers, to try and do it on our own can only have a high failurerate. Too often we end up with clever ideas, undercapitalized, slow to be developed and likely tofail in the market. But there are solutions - we must be innovative and grab them."
He says Israel is the most successful small economy in the knowledge based sector, whose firstrule is to make sure they have enough ideas flow so that the good ideas can be identified andfiltered, and effort is not wasted.
"They insist on international expertise on their boards, on proper scientific advisory boards,and high-quality skilled management with experience in knowledge based industries," he says. Forthem the ownership of the idea is often more important than the site of manufacture."
NZ could develop strategic partnerships at every level in the value chain says Gluckman. Thiswould be both pre-commercial and commercial, generally with small advanced economies, where there isan equity of interest.
"We need partners who can do what we cannot do, be it access to markets, going to scale and/orexpertise," he says. "We are better to own a fraction of something large than stay small."
From sticK's point of view, this is the first real time that the PM's science advisor has givensome indicative thinking about how we might better turn ideas into income. First, start with lots ofideas - and we're nowhere near Israel in the production of those.
Hopefully it is an indication of more to come - though the deafening silence of media aboutGluckman's innovation thinking isn't encouraging.
See a copy of the speech