Networking key to harnessing innovation value New thinking needed in our technology-based economy

This opinion piece was published in the DomPost on November 13 2017

The Government intends to be more proactive in developing the economy with new plans for infrastructure spending and a new focus on the development of manufacturing and technology-based exports.

Many small countries have focused their efforts, coordinated their businesses, and developed sophisticated niche export sectors. These include Denmark in food, Israel in military technology, Ireland in agritechnology and Korea in manufacturing.

We have never attempted this kind of top - down planning, and as a result our technology - based export sectors have evolved in a somewhat haphazard manner reflecting the successes of numerous outstanding entrepreneurs.

However, my analysis is that ‘business as usual’ is highly unlikely to deliver a step change in the growth of our sophisticated technology - based exports, and further, the evidence is that they are significantly threatened by new technologies, changing markets and increasing competition.

For example 3D printing technologies enables large multinationals to operate in the very custom-designed and niche markets that our manufacturers compete in. And our advanced food sector, which is the most fragmented and leaderless of all our export sectors, looks likely to be threatened by transformational technologies and completely new approaches to food manufacture.

Further, the Government inherits an economy that has the lowest labour productivity and the lowest rates of public and private investment in research and development in the OECD. Our low productivity reflects that we are not nearly as innovative as we think we are.

One reason for this is the gulf that exists between our researchers and our businesses.

Creating and delivering science and technology that is ready for adoption by business requires complex interwoven networks linking markets, technology, education, design, quality control and capability. A precursor for innovation to occur is therefore a highly networked economy with feedback loops between researchers and businesses that enable knowledge to be shared and boundaries to be pushed back.

Our singular focus on research and development subsidies needs to be replaced with a much more holistic approach to being innovative. Expert after expert tells us that research and development subsidies do not create innovative businesses or innovative sectors.

They argue that research and development investments are an outcome of being innovative and that if you are not innovative a research and development subsidies or grant will have little affect.

I propose that a new network of university-based technology hubs be created. These hubs would become the place where planning for our important exporting sectors occurs - where competitive advantage is sought in production and product design and where knowhow about markets and technologies is pooled. The hubs would also explore ways to better influence or control the value chain to market, identify where the Government should invest in science research to better assist the sector, and encourage businesses to start collaborating on new projects.

I also suggest that to make headway quickly the Government should transfer the day to day management of the science and innovation system from MBIE into a new Innovation Council comprising New Zealand Trade and Enterprise, the exporting community, and the universities. The Council would commence its work by reviewing the state of our export sectors and how they can supported into a new period of innovation.