Recently I wrote a short article about the OECD assessment of the status of NZ’s national innovation policy. Now Fujitsu Consulting have published a piece of commissioned research that purportedly measures innovation levels within organisations in Australia and New Zealand.
I have to confess that I’m still struggling with the mere concept that you can actually measure innovation, let alone draw any scientific conclusions on the subject from polling a bunch of potential clients for your consultancy offering. However, I’m not saying we can’t learn something from this industry study (or others), because it does at least provide a useful benchmark for a number of key organisational issues.Â Unfortunately there are almost as many “innovation matrices” as there are innovation commentators.
The Economist Intelligence Unit (EIU) describe innovation as “the application of knowledge in a novel way, primarily for economic benefit”. The Economist publish a global innovation survey involving 485 mainly large corporate firms and which results in country comparisons of innovation output. Japan, Switzerland, the United States and Sweden lead the pack on this basis.Â However this survey is heavily weighted towards using numbers of patents issued as a lead indicator. Some would argue that patents actually crush innovation.
To their credit, the EIU alsoÂ produce a composite index by including other innovation drivers such as educational levels, regulatory framework and broadband penetration. They alsoÂ observed that the rankings in the composite index closely match the patent output index. To my mind, these indices are simply a guide to innovative potential because intangibles like creativity, knowledge and effects of organisational cultureÂ are either difficult to measure or simplyÂ not considered.Â Furthermore, manyÂ patents never see the light of day, let alone generate any economic wealth through commercialisation.
An interesting observation to emerge fromÂ the Economist survey is that “small countries with clusters of world class companiesÂ in research intensive sectors” outperform on the innovation index.Â I hope thisÂ important pointÂ does not go unnoticed. New Zealand’s ranking of 22nd out of 82 countries survey, is forecast to remain static over the next 5 years according to the EIU. But bootstrapping smaller technology firms around a number of emerging core industries could easily put paid to this forecast.
My pal Simon Young reported on last year’sÂ FujitsuÂ innovation reportÂ for an Idealog article and he noted thatÂ a number ofÂ academics had questioned the intention and methodology behind the annual survey. The Fujitsu research samples 175 New Zealand firms, but no doubt mainly medium to large firms were hit because that isÂ their target client base. That only leaves about 350,000 small NZ enterprises that were left out of the study. So I think we need to be a wee bit careful about making overly general statements about the state of innovation in New Zealand business.
Oddly, the Fujitsu reportÂ suggests that increased spending on innovation related activities appear not to improve a firm’s overall standing in the innovativeness stakes. That might not be quite the result Fujitsu was hoping for.