Innovation has become a bit of a cliché. The word has graced the spine of one-too-many books in the business section. As someone who researches and writes about innovation I find this painful to say but, if I’m honest, there was a whiff of the naughties about it in 2012 when Paul Callaghan and I wrote Get Off the Grass. Today we disrupt, we reimagine, or sometimes we rekindle.
So this week we’ve partnered with Figure.NZ to take another look – we want to reframe New Zealand’s conversation about innovation. This is not so say that innovation is no longer important in New Zealand. New Zealand’s research and development spending – one of the traditional proxies for innovation – has grown significantly over the last decade, especially in the business sector.
Yet we still lag behind many other countries in our spending on research and development, as you’ll see below. As a proportion of GDP we invest about half that of Australia and Singapore, a third of what Denmark and Finland do, and one quarter of what Israel does. This was essentially the story I told in Get Off the Grass, that we simply need to invest more in research and development, more in knowledge, if we wanted our economy to match those of other small advanced countries.
I’ve had many conversations about this since, and while many people agree, others find this statistic misleading. Some people tell me that we are more innovative than proxies like this suggest; that I’m just not looking in the right places. So our goal this week is to take a broader perspective. We want to look for innovation in unusual places.
In this broader sense, innovation is the creation and realisation of ideas that make people’s lives better. In some circumstances, this might be facilitated by businesses competing in markets to deliver better products or services. But at other times it will be about organisations in the voluntary sector challenging themselves to find ways to deliver better social services – or a not-for-profit finding new ways to encourage public discourse.
Indeed, there will be a second experiment underway this week. This week we are putting Figure.NZ’s platform for public display of data through its paces. Both the figures I’ve used above are built form data held by Figure.NZ. As the conversation develops you can follow the data our bloggers are using through their shared lists: my data board is here. I am really looking forward to seeing whether we can use these to enrich the types of conversations that are possible on social media using Figure.NZ’s portal to our data.
About
Professor Shaun Hendy is the Director of Te Pūnaha Matatini. Shaun teaches in both the Department of Physics and the Centre for Innovation and Entrepreneurship at the University of Auckland, and has a range of interests, including materials science, innovation, science communication, and the use of evidence in public policy.
In 2012 he was elected a Fellow of the Royal Society of New Zealand, and in 2013 he was awarded the E. O. Tuck medal for research in applied mathematics. Shaun tweets (@hendysh), blogs, and has a regular slot on Radio New Zealand Nights as physics correspondent.
In 2012, Shaun was awarded the Callaghan Medal by the Royal Society of New Zealand and the Prime Minister’s Science Media Communication Prize for his work as a science communicator. His first book, Get Off the Grass, co-authored with the late Sir Paul Callaghan, was published in 2013.
View Shaun’s Figure.NZ data board.
Join the conversation
Join the conversation by posting in the comments below or follow #innovationNZ on Twitter. Comments policy: play nice. Comments containing profanities, offensive remarks or spam will be removed.
Want to start your own conversation?
Search for figures, data charts and maps compiled by Figure.NZ using the search box or Figure.NZ business guided search. Sign-up for a FigureNZ account to save content of interest to your very own data board and tell us about it on social media:
| Twitter: #innovationNZ | @FigureNZ & @PunahaMatatini |
| @FigureNZ & @tepunahamatatini |
It would be interesting to drill down into the figures a bit more. In my previous career as local MP I used to visit farms and factories in my electorate and saw a staggering array of innovation. How much of that is captured in the figures I do not know. However, it is a bit of a worry although the evidence is mixed on how effective government policies are at stimulating investment. We used to have all manner of investment incentives, but by using Kiwi ingenuity our local accountants and lawyers managed to turn these into tax dodges far removed from innovation.
Hi David, yes, the idea is to get into the data a bit more this week. Nonetheless, there are real challenges in measuring innovation – as you say, it is likely we are missing quite a lot. This makes it hard to evaluate policies rigorously, although if we presume other countries have the same problems with dark innovation then the inter-country comparisons still tell us something.
Thirty years ago, as the science correspondent for the National Business Review I became captured by scientists who were banging the drum for research and development. I was young and wet behind the ears but I wrote some interesting stories. Thirty years later I see scientists are doing essentially the same thing again but with (oooooo big difference) social media. Unless scientists wake up and smell the coffee they will be doing the same thing again in 2046 because they are not listening.
Here’s what scientists need to know:
Science and innovation is fundamentally attached to manufacturing (agriculture is ultimately manufacturing too – nobody wears raw wool or eats unprocessed food) or services. Manufacturing is not something people do for fun, they do it for profit. The profits from manufacturing (and agriculture) in New Zealand as a return on capital are not great. .
By contrast the profits from Auckland real estate have been over 10% p.a since 1986. Government migration policy keeps the demand spigot cranked up high while red tape suffocates supply.
Why doesn’t “industry” invest in innovation? Simple. Compare these stories:
Firm A is a factory making foldable electric bicycles for global commuters. It’s a growing market, the firm has a great looking design, dozens of patents and has won lots of awards and prizes. The company has worked hard producing new models and designs.The firm has 2 million shares mostly held by friends and family. It has not disclosed a share price but the staff count and premises haven’t changed much since 2010. Exactly how many bikes have been sold is also not disclosed.
Firm B is a private investor in Auckland real estate. He started with half a million dollars in equity. He invested in five houses with a $100,000 deposit each. He owed the bank 2 million. Five years later his five houses have doubled in value. His equity has increased from $500,000 to $3 million and he’s borrowing more to buy more houses. Firm B has cleared a few blocked drains and painted a roof.
Where Firm A has asked politicians for moral support Firm B is donating to politicians re-election funding.
So here’s the challenge. Instead of scientists indulging in mutual ego masturbation they need to put their brains to work on the main problem. Working out policies which deprecate real estate investment in favour of real industrial investment (like Singapore now the world’s wealthiest nation) PLUS (and this is the kicker) political support to implement it. Because until that changes you are going to be wasting your breath for another 30 years.
PS the answer is not a capital gains tax. Firm B can easily afford to pay it and still make more money than Firm A. What is needed is a much more integrated approach to money supply rules, banking regulation, immigration and taxation. You also need politicians who will pick up this ball and sell it. Without them nothing changes.