Economist Brian Gaynor’s recent article on why we will never “catch up” to Australia was another sobering reminder of the hard road that New Zealand has ahead. Invoking a sporting analogy by beating Australia may be a popular rally to arms, but it focuses public attention on completely the wrong set of goalposts.
Another sobering occasion was when we sadly learned of the passing of Sir Paul Callaghan, one of New Zealand’s most passionate science communicators and technology entrepreneurs. Sir Paul lived every moment and notably even turned his cancer treatment regime into an experiment. More importantly he was one of the most ardent promoters of science and technology commercialisation as a means of growing New Zealand’s economy.
“Sir Paul was a true public intellectual who earned the respect of everyone, including those who disagreed with him”, stated the government’s sternly worded Ministerial press release reporting news of Sir Paul’s death. Curiously, outside of Cabinet, I can’t name a single (intelligent) person who actually disagreed with his thesis that New Zealand urgently needs to ramp up economic growth through more investment in research, science and technology commercialisation, rather than continuing with an over-reliance on flogging unprocessed, environmentally unsustainable dairy commodities to the world.
To its credit, the government has finally moved to increase research funding and there are more frequent mutterings along the lines of “doing something” about uncovering intellectual property locked up within our many publicly funded institutions. But those of us who looked on frustrated over the last decade as the “Knowledge Wave” withered on the vine, are becoming more and more concerned that the opportunity to fully promote science and technology as an economic driver is disappearing.
Beyond pumping more cash into research, we need a huge cultural shift involving both governmental agencies and the public mindset. As clean-tech entrepreneur Nick Gerritsen stated at a recent seminar, “we need more millionaire scientists and fewer millionaire sportsmen”. With the loss of Professor Callaghan, I’m left wondering who will be brave enough to pick up the mantle.
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We live in interesting times. Last month I attended a seminar looking at productivity in the New Zealand economy and how we can improve. The most overwhelming aspect of the event however was that most of the attendees were white, male and aged 50 or older. Furthermore, much of the focus was on making changes to macroeconomic settings, rather than making an attitudinal shift. If we are to address this issue in a meaningful way we need to engage with a far broader church, including politicians, scientists, entrepreneurs and investors from across the spectrum who are committed to change – not just economists.
With our over-dependence on high volume, low value food commodities to generate income and an over-investment in non productive assets such as property, we have seen per capita income dropping rapidly over the last decade. The flow-on effect has been a return to net outwards migration at levels unseen in the last thirty years. New Zealand is close to entering a death spiral, in terms of an inability to pay for social services in the future, if we don’t fix this right now! Within the next thirty years we will reach a tipping point at which a minority of the population is working to support the dependent majority.
Each speaker at the seminar was tasked with presenting a simple, yet radical idea that could move the goalposts on productivity, in an effort to stem the flow of emigrants and ensure we can fund our future. Some of the ideas were downright batty, but at least people were thinking and talking – which is more than successive governments have achieved so far. In fact, perhaps the single biggest issue is leadership inaction in the face of political expediency. It will take more than speeches and a cup of tea to solve these problems. So here’s my ten cents worth.
It seems we can easily find $10 million to build a temporary booze hall for rugby patrons on Auckland’s waterfront, yet we continue to struggle to provide a coordinated approach to identifying and commercialising world class science in New Zealand. If the government lacks the gumption to look beyond a three year electoral cycle, then the private sector must take a stronger leadership position on the matter.
There’s plenty of cash sloshing around in superannuation funds, but if it means accessing foreign capital and connections to get on with the job, so be it. Endeavour capital see the opportunity, why not others? We should aim for 100+ Lanzatech or Endace type companies. That requires making project opportunities transparent and going big, whilst retaining a NZ Inc. stake in the intellectual property. It means identifying top talent to lead commercialisation. It will also require a complete change of mindset in some of the more conservative knowledge silos around the country.
A winter retreat for scientists interested in medical research and biotechnology is bringing some of the world’s finest science researchers together for a week long convocation.
Queenstown has for many years played host to a number of research meetings across a diverse range of topics from molecular biology to neuroscience. Now these meetings are being clustered into a knowledge fest being labelled as Queenstown Research Week. It’s an opportunity for local researchers to mingle with and learn from some of the world’s leading minds from within the medical and biotech arenas.
It is also an opportunity for investors to hear about opportunities within biotech and to promote science commercialisation in general. No doubt there will also be some quiet analysis during the coffee breaks on whether or not there is any substance to Craig Venter’s recent pronouncement that life had been created in a test-tube.
Irrespective of one’s position on that particular topic, one thing is certain. Medical and biotechnological science is advancing at a rapid rate and such fields create wonderful opportunities to improve human quality of life, address environmental problems and deliver economic gains – provided these technologies are viewed with a robust ethical overlay.
The government’s recent report examining funding and strategic governance of New Zealand’s Crown Research Institutes (CRI) echoes what has been known for years by most participants in the nation’s technology innovation system. The existing funding model is broken and there are too many stakeholders, resulting in inefficiencies. But restructuring the bureaucracy alone will not be sufficient to ensure better returns from State investment in science.
The CRIs are tasked with a variety of social and economic objectives that range from enhancing and protecting the value of our primary sector through to identifying and managing environmental risks. A profit based model and traditional business metrics clearly does not work. The convoluted bidding process for funding of limited duration also does not ensure good science gets done; in some cases it actually impedes the process.
There is certainly no shortage of excellent scientific research being done within these institutions right now and there remains potential to spin off more baby companies in the future. Here’s a few examples.
- There are two existing spin-offs involved in high temperature semi-conductors and cable technology, an area that has huge economic returns and is largely untapped.
- Last year’s New Zealand young scientist of the year (and W2W event speaker) John Watt is working with CRI staff to look at the commercial applications of nano-particles in reducing motor vehicle emissions.
- Government owned companies are sitting on huge amounts of seismic data that has the potential to attract oil and mineral prospecting, with comcomitant economic benefits.
But the CRIs encountered problems in the past through attempting to self fund the commercialisation of new science. Attracting smart money and building linkages offshore must surely be the key to growing our knowledge based companies faster. The CRIs will have to find a new business model that reaches out globally, whilst balancing the need to retain some control of intellectual property and return value to NZ. They also need to make this process happen a lot quicker than in the past.
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The New Zealand Prime Minister’s chief science advisor, Professor Peter Gluckman, recently released his report into the challenges facing the nation’s science innovation system. Addressing technology transfer is one of the most important tasks that lies ahead, he says.
For many years we’ve been hearing about the intellectual property that remains “locked up” within the Crown Research Institues (CRI) and universities. But precious little work has been done to actually identify and illuminate such material. Gluckman alludes to a dysfunctional national research environment in his report that pits researchers against one another and discourages collaboration.
But the pathway to real transformation will most likely arise from creating better business models early in the innovation process. That requires change agents with the skills to identify and extract marketable technologies and build sufficient value that will attract investment. It also requires strong linkages into the capital and consumer markets of the Northern Hemisphere, without which we cannot rapidly scale new technologies.
Intuitively these seem like very sensible ideas, so why do we appear to struggle to enact them? Until we recognise that building social capital is a critical part of the technology innovation and commercialisation process, it is likely that we will continue to fall short. Teens and online game junkies have highly resourced virtual spaces to connect and collaborate, surely we can do the same for scientists, entrepreneurs and investors.
It has taken almost a year, but the government is finally addressing the mechanisms and priorities around the funding of research, science and technology in New Zealand.
The government’s policy approach to funding science research hinges on maximising the economic and social benefits, building international linkages whilst protecting the natural environment. Better utilising the “scientific value chain” seems to be the chief driver behind the funding shake-up. Science leaders have long complained that they spend too much time doing paperwork and competing for funding, when their time is better spent doing actual science.
The draft policy document indicates that sectorial funding priorities will largely be governed by the interests of existing Crown Research Institutes (CRIs). That is not a bad thing, but it underlines what we have suspected for quite some time – ICT is no longer seen as a primary driver of value-added economic growth, despite its obvious importance as an enabler.
ICT is now bundled within “high technology industries”, although it is not clear what proportion of this funding will be dedicated to information technology. In fact “transformational manufacturing” seems rather to be the focus for this area. It seems odd that the government would allocate $1.5 billion to a broadband rollout without a simultaneous commitment to strengthening ICT research and commercialisation in order to capitalise on the opportunity.
You can read about and make submissions on the proposed policy here.
I enjoyed Fiona Rotherham’s recent article in Unlimited magazine featuring the scientist who is inventing red-fleshed apples. But local venture capital investor Stuart McKenzie’s comments in the same article about the lack of science investment are a chilling reminder that New Zealand continues to underperform in terms of raising capital for technology commercialisation.
Hitching our economic success to agriculture is a sensible strategy in some respects, given our natural assets; but it should not be the only strategy. Agriculture alone cannot improve our economic fortunes; especially since the added value component remains tiny. Considering the deleterious effects of pastoral greenhouses gases and waterway pollution from farm run-off; if we are to enrichen New Zealand with more knowledge intensive businesses there simply must be a diversity of approaches.
Even more troubling is that there is a perfect storm brewing. As local VC funds begin to mature it is not entirely clear where the new funds will emerge from. Existing venture capital funded projects are looking for their next funding rounds to take those businesses to the next level. So, in the current economic climate, investors are naturally more inclined to look after the projects already on their books. It is harder than ever to get a true “start-up” company funded.
The government has set an aspirational goal of catching up to Australia by improving economic productivity, but it has confused business productivity with GDP per capita. Productivity is not the problem. The problem is we need to be exporting knowledge not farm commodities. Securing sufficient capital to commercialise and scale up our portfolio of intellectual property is the only way to achieve this.
The Prime Ministerial advisor on science, Prof. Peter Gluckman is hoping to facilitate a better dialogue both within the science community and between scientists and the New Zealand government. He may have an uphill climb ahead of him.
In a recent radio interview Gluckman made it clear that his brief was simply to provide advice and to act as a translator to both government and public on science issues, it was not his role to become involved in politics. But when pressed on the subject of why the National government killed both the Fast Forward initiative and the R&D tax incentive scheme, he refused to comment. This suggests that (at least in public) he will be obliged to moderate his tone on some topics.
Professor Gluckman said better scientific literacy was required across the whole of society because we were having to deal with more complex issues such as climate change and the ever increasing impact of technology on our personal lives. He also indicated that it was his view that the science funding system was overly competitive and that this was dampening creativity; perhaps foreshadowing some much needed change in this area.
Prime Minister John Key recently gave a speech on economic direction. It was clearly signalled that, in terms of science research, the government is now primarily interested in supporting the agricultural sector as a bridge to greater economic prosperity. Unfortunately that confines us to a future of increasing pastoral pollution, high carbon output and enslavement to commodity prices that continually devalue in real terms.
But Gluckman agrees with his colleague Paul Callaghan that science must remain “an integral part of the innovation system” and that we need more high tech companies like Navman, Rakon and Weta Digital. If we are to improve economic productivity then science needs to connect with business, both within New Zealand and abroad, he stated. It will be interesting to see if he can similarly persuade the Prime Minister.
I get a lot of ideas across my desk and I’ve learnt the hard way that you need to question everything before offering to back someone else’s idea with your own reputation. One of the first questions I ask aspiring technology entrepreneurs is – what is the problem you are trying to solve?
This may seem like an obvious question but you would be surprised how many projects are launched on the basis of a good idea rather than upon a soundly researched market. It pays to question the market data as well because, after spending hundreds of hours on development, an enthusiastic technologist will do just about anything to justify their emotional investment in a product.
Many great ventures began as a personal point of pain for the founder. But the ones that survived were those that actually identified a mass market and then went on to execute well. A good idea on its own is not enough and the fact that there is “no competition” is not a selling point either. You need competitors for benchmarking and to validate that a market really exists.
For example at ideegeo we made a conscious decision to build a domain registrar site that rejected traditional norms of presentation because we observed that a lot of people really disliked having to grapple with poor navigation and invasive advertising found on other sites. Although the product caters for a design-centric niche user base, it turned out to be a winner because other companies approached us to help them improve their own offering.
Before you write a line of code or partition off your first protein molecule, ask yourself – where is the point of pain? What is the problem that you are trying to solve and are there a million other consumers out there who are suffering the same pain? If you can answer that question objectively and in the affirmative, you might just have a successful product on your hands.