Can We Stop The Rot?

Posted on Thursday, 28 March, 2024 by Paul Spence

P1080304 New Zealand faces a polycrisis due to decades of under-investment in public infrastructure. Indicative of this malaise are multiple failing infrastructures, over-stretched health services, decaying school buildings and unsafe civic spaces throughout the country. Stopping the rot will require raising our ambition as a nation and improving productivity through a higher value economy.

For too long our economic performance has been linked to an over-dependence on relatively low value commodities and tourism. As part of its quickfire raffle of “first 100 days” opportunities, the government is looking to “deliberately disrupt the system” by fast tracking gold mines, open-cast coal mining, property developments and bigger dairy farms, to name a few. Unfortunately these kinds of projects mostly lock us into even greater dependence on low value commodity based industries that do not generate the returns required to substantially lift productivity. But doesn’t this help us improve our gross domestic product (GDP)? Yes it does, but the benefits are not shared equitably, with returns often heading directly offshore.

Multi-factor productivity (MFP), on the other hand, represents residual economic growth due to factors (other than labour or capital) such as technological advancements, improved management practices, and a better-skilled workforce. MFP illustrates how successful a nation is at innovating and transforming resources into high value outputs. Over the last two decades or so New Zealand performed terribly compared to other OECD nations on this measure. Arguably, MFP is also the slice of the economic pie that allows governments to steadily improve the quality of public services and investment, as real wealth increases and tax receipts grow. Clearly we are heading in the opposite direction at present.

Quidnet Ventures managing director Mark Bregman illustrated the situation in a recent article discussing the innovation gap. We need to move to an “abundance mindset” and get over our hangups such as misplaced nationalism and the current reluctance of research institutions to back science that has commercial potential, he asserts. Important because one of the keys to creating high value economic returns lies in homegrown research that has future commercial potential. But getting these projects off the ground has always been problematic for a number of reasons, including funding constraints, institutional bureaucracy and lack of entrepreneurial mindset. How we approach science commercialisation must change.

With the nebulus “Te Paerangi – Future Pathways” report now mercifully euthanised by the Science Minister a new plan for research, science and technology now needs to be found. This time a sensible discussion about commercialisation must be included. To this end, the freshly minted Science System Advisory Group and University Advisory Group have been tasked with delivering a new strategic plan for transforming the science and university sectors. This will include (yet another) review of the performance based research fund (PBRF), the contentious pot of public funding that tends to favour larger universities with greater output, rather than promoting innovation or supporting the most important areas of research for society.

But none of this will matter unless we eliminate the institutional and financial roadblocks that are preventing research getting out of the lab and into the commercial sphere. The current model is simply not working at sufficient scale or speed.

Like all good researchers, we are testing some hypotheses around disrupting the status quo and creating more value for entrepreneurial science researchers. Feedback is welcome. To find out more about GeniusReFi – please join us here.

Paul Spence is a commentator, researcher and a part-time university commerce and management lecturer. A previous co-founder of a successful New Zealand based global technology venture, co-founder and director of Creative Forest, principal at GeniusNet Research & GeniusReFi and a startup advisor. You can follow Paul on Twitter/X @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events co-curated by him through New Zealand Startup Digest.

Image credit: Renea Mackie

Data source: Figure NZ under Creative Commons Licence 4.0

Bringing Change To The Top Table

Posted on Thursday, 29 June, 2023 by Paul Spence

Lyttleton Harbour, Christchurch

Recently I attended a public discussion delving into “Otautahi Christchurch as an Innovation Hub”. It’s no secret that the city has confronted numerous challenges over the last decade or so. From devastating earthquakes to wildfires and a mass shooting. One could be forgiven for thinking that the place was on its knees. But it’s not. As the central city was being rebuilt, a core group of activators played a pivotal role through charting a course with innovation and collaboration at its core. Now the city is thriving. What if we germinated that approach into central government?

A number of the aforementioned group were present at the recent discussion event. Not the least of these was Raj Manji, who convened the session. As a former Christchurch City Councillor and tireless advocate for the city, Manji is no stranger to the challenges of navigating government processes in difficult times. He’s also a global thinker who takes action and attracts smart people with fresh ideas into his sphere of influence.

These are attributes that seem sadly lacking in many of our current politicians, including those who are likely to be in charge once the face of government changes in October. As The Opportunities Party (TOP) leader, Manji has a real shot at securing the Ilam seat at the general election. This would be a game changer because, under MMP, successful electorate winners get to “tag and drag” along some of their party list candidates. Potentially this means TOP could play a huge part in shaping the next government.

Why is this significant? It’s pretty clear that our current government has run its course and the wheels are falling off the proverbial wagon. Not a week passes where there isn’t either a dramatic exit or a revelation of bad behaviour by Ministers or coalition partner MPs. The present incumbents performed admirably during the pandemic, but the world has now moved on. History has also shown that governing parties very rarely secure three consecutive terms in New Zealand. For its part, the Opposition, whilst more disciplined than before, seem unable to generate intelligent policy or outline a coherent plan. Political change of some form is undoubtedly on the way. The question is – how do we optimise that change?

By standing up and supporting TOP I’m putting a stake in the ground in an effort to facilitate an optimal outcome. We desperately need fresh thinking and evidence based policy driven by responsible adults. If TOP fails to win a place at the table, we face the possibility of an unstable coalition underwritten by dogma and driven by the smug, sneering faces of the more extremist minor parties. Parties that do not necessarily have the interests of ALL New Zealanders at heart. This would be disastrous at this pivotal moment in history when society must act collectively to confront significant global issues.

Paul Spence is a commentator, researcher and serial entrepreneur, a previous co-founder of a successful New Zealand based global technology venture, co-founder and director of Creative Forest, principal at GeniusNet Research & SondXF and an advisor at ThincLab. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events co-curated by him through New Zealand Startup Digest.

Our Tech Entrepreneurs Need A Breakthrough

Posted on Tuesday, 20 September, 2022 by Paul Spence

btvic_logo The state government of Victoria has announced the first investments from a $2 billion fund for the commercialisation of research, science and technology. Breakthrough Victoria will focus on life sciences, agri-food, cleantech and digital technologies in a push to reboot the state’s post-Covid economy. The package includes $100 million for co-funding platform services such as research facilities and commercialisation advisory.

It was with this in mind that I attended the Startup Council roadshow event in Christchurch recently with fire in my belly. For context, the New Zealand government invests a grand total of $2.5 million per annum to support incubation and acceleration across the entire country. In June 2022 the existing successful “founder incubators” were all de-funded by the Ministry of Business, Innovation and Employment (MBIE) and the funding was handed over to an elite collection of service providers outside of the universities. In 2020 funding for “deep tech incubation” was allocated to a group of foreign controlled entities. There is currently no central government funding for incubation within a New Zealand university.

The newly formed Startup Council sprung out of some policy initiatives developed collaboratively during the first lock-down through Global Entrepreneurship Network New Zealand, to which I actively contributed. The self-selected Council is comprised mostly of representatives from the investment community, but also includes a serial technology entrepreneur and an accelerator operator. The Council has direct communication with government Ministers.

That last point is important because for a long time our startup ecosystem did not have a voice in government. Over the years we have been reliant on pleading a case to gatekeepers at MBIE who seem to have little or no global context for decision making. Up until recently, the government focus has been upon kick-starting the venture investment sector. This ignores the issue of curating a pipeline of deal flow however. Translational research does not magically become investment ready without a lot of background support.

Not investing in our startup ecosystem is not just an existential problem for those of us that work with founders. It is also an impediment to progress in meeting our carbon zero commitments. In 2021 around US $1 Trillion in capital poured into funds targeting investment into environment, social and governance (ESG) focused projects and ventures, including cleantech, sustainable food and renewable energy. Areas in which we already have capability. Investment is expected to grow to $4 Trillion per annum, as the global economy decouples from carbon. If New Zealand is to have a chance to participate, we need to be building sound innovation infrastructure right now, especially within universities!

The cold, hard reality is that (up until now at least) the government has not seen the value in supporting a vibrant startup ecosystem. This is despite the fact that our neighbours across Asia-Pacific have literally invested hundreds of millions over decades. If nothing changes and with the world open for business again, it will be no surprise if some of our scientist entrepreneurs and tech startup founders start looking towards the West Island. Or perhaps even further afield.

Paul Spence is a commentator and serial entrepreneur, a previous co-founder of a successful New Zealand based global technology venture, co-founder and director of Creative Forest, principal at GeniusNet Research & SondXF and an advisor at ThincLab. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events co-curated by him through New Zealand Startup Digest.

The Art Of The Sale

Posted on Friday, 26 August, 2022 by Paul Spence

niro1 This week I conducted a small experiment. I really want to play my part to reduce emissions, so I’m in the market for a plug-in hybrid electric vehicle (PHEV). I’ve also been doing a couple of papers at our local university for interest recently and have just completed a marketing course at Masters level. So I’m up to speed with marketing tactics and sneaky selling strategies. This is where the fun begins.

I headed into town to work my way around a few car sales yards – just to see how I would be treated as a potential customer. Here’s what I found.

1. KIA – The receptionist introduced me to a very young salesman who looked like he had better things to do. I asked if he could take me out for a short drive and introduce me to the vehicle I was interested in. No, that was not possible. But please sign this $5,000 waiver and feel free to take her out for a spin yourself. I asked a basic question about whether the vehicle had anti-skid. He said he needed to go check on this. Really? Aren’t you selling these vehicles? I was also informed there was a 6 month waiting list. Slightly bemused, I signed my life away. After a 2 minute familiarisation, he left me to it. 5/10

2. Subaru – Bubbly young lady waltzed up to me. Very positive attitude, but admits that Subaru do not offer what I seek and not likely to in the future (they do in the U.S.). Things got better though. She asked if I’d considered a Peugeot. I had not. Her colleague under the same roof looked after the franchise, so she kindly took me over and introduced me to him. 7/10

3. Peugeot – We had a good discussion about European vehicles and the sales chap mentioned that he would have a demonstrator vehicle arriving next month that would fit my needs. He gave me a business card and showed me where to find useful info on their website. At all times he showed an interest in the customer needs and was looking to find a solution for me. Not bad. 8/10

4. Hyundai – I currently drive a Hyundai. It has been a wonderful vehicle with minimal running costs. I also love that Hyundai is sponsoring the Pinnacle Programme that offers scholarship opportunities to high achieving students. The current television campaign is the best ad on tv in my humble opinion. I dearly want to love Hyundai – but they keep disappointing. At last year’s service, the car groomer conspired with a rude receptionist to turn the stereo volume to maximum, resulting in an ear blasting when I turned the key. Funny joke. So it was with some trepidation that I set foot on their car yard. I need not have worried. The salesman completely ignored me whilst having an animated discussion on his mobile phone. 1/10

My point is this. There was a time when sales people knew their products and they knew the art of converting leads into actual sales. As a customer, I want to feel valued and respected, no matter where I am in the pipeline. From walk-in to first sale to post-sale service. Sales people used to build lifelong relationships with customers who would often return for their next purchase. What went wrong? Attention deficit?

I’m not sure if this is a localised cultural problem, but service ethic no longer seems to be part of our business DNA here in New Zealand. I’ve lost count of the number of times I’ve walked into a shop or cafe this year where the young staff were either chatting amongst themselves or texting their friends on phones whilst completely ignoring customers. Since when has this ever been acceptable? It reflects badly on business owners who are failing to train teams in customer service and also failing to monitor performance. At a time when businesses are desperately trying to recover from sales lost during the pandemic – why are sellers failing at that most fundamental task called customer service?

Oh… and I still haven’t found my PHEV. Any suggestions?

Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of a New Zealand based technology venture, a co-founder and director of Creative Forest, principal at GeniusNet Research and an advisor at ThincLab. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest.

Where Talent Wants To Live

Posted on Wednesday, 22 June, 2022 by Paul Spence

FFA overall winners SuperPro with advisor Paul Spence.

Over a decade ago MacDiarmid Institute founder, renown physicist and technology entrepreneur the late Professor Sir Paul Callaghan proclaimed that we needed to make New Zealand “the place where talent wants to live”. This week’s result from the Food, Fibre & Agritech Supernode Challenge suggests we have reasons to be optimistic.

During the last few weeks it has been my great pleasure to be mentoring some of the teams involved in the 2022 Food, Fibre and Agritech Supernode Challenge accelerator programme, in my capacity as an advisor with ThincLab Canterbury. The Challenge, supported by ChristchurchNZ, KiwiNet and the Canterbury Mayoral Forum seeks to uncover innovative ideas with commercalisation potential from across research and business. Notably environmental sustainability has been a key theme that we asked applicants to address. 36 applications were whittled down to 24 participating teams, of which 12 finalists were selected.

Canterbury has a long and rich association with agricultural and is home to two universities and numerous land based research institutions. So there is no shortage of talent on offer. It has been an absolute thrill to see our young skilled migrants strongly represented among the participants in this programme. For many of them it has been a steep learning curve stepping out of the research lab and grappling with the fundamentals of business for the first time. But in every case they have grasped the opportunity and run with it.

Challenge overall winners Mahnaz Shaverdi and Associate Professor Ken Morison are food process engineering researchers from the University of Canterbury with big plans for turning plain old pea protein into a more desirable food source. Shaverdi moved from Iran with the aim of studying and raising her young family in New Zealand and Morison is a research engineer who returned to work in the dairy industry after completing his doctorate at Imperial College in London. Commercialisation of their research is timely. Plant-based ingredients are one of the fastest growing food categories globally, as witnessed through the recent investment by Khosla Ventures in Canterbury plant protein processor Leaft Foods.

Some commentators have been worrying lately that our technology startup ecosystem lacks diversity. But at a time when the world needs many bright minds to be working on solving a myriad of social, economic and environmental problems that confront us, it is exciting to know that our skilled migrants are making an increasingly significant contribution. This is a success story that we rarely hear about and that needs to be told more often. I’m sure Sir Paul Callaghan would be encouraged by this progress.

Free the 99

Posted on Sunday, 3 April, 2022 by Paul Spence

akaroa3 They called it the slap that reverberated around the world. A wealthy and privileged, angry man arrogantly displaying his lack of respect for a long established institution and the faithful community that had blindly supported him. No, I’m not referring to the infamous Oscars night incident, I’m talking about Grant Dalton’s acceptance of an offer from the city of Barcelona to host and fund the 2024 Americas Cup yacht race.

In 2017 a glowingly optimistic report from the Ministry for Business Innovation and Employment (MBIE) estimated that delivery of the Americas Cup event would bring in $600 million to $1 billion in benefits to the New Zealand economy. A more recent post-event report estimated that less than half of the $348 million public investment was returned in economic benefits during the 2021 event. The New Zealand government share of the funding was $133 million.

In fairness nobody forecast that the event would fall amidst a global disease pandemic. It is a testament to local organisers (and the success of the government’s pandemic response) that the event ran at all in fact. It is claimed that 68 million global viewers watched the televised component of the event and almost 39,000 (mostly domestic) visitors provided a much needed boost to the Auckland regional economy. But the taxpayer investment in the event came with no guarantees that Team New Zealand would opt for the 2024 challenge to be held in New Zealand and despite a further $99 million offered by the New Zealand government, hard man Dalton predictably followed the big money elsewhere.

That’s a shame for Auckland. But in light of some commentators complaining about the elitist nature of the sport, perhaps it is not worth throwing more good money after bad. In the meantime, about the same time the report on outcomes of their $133 million stake was being released by MBIE, the Ministry was also taking a decision to actually reduce their $3 million annual investment in the local innovation ecosystem. Founder incubators will be disestablished from June this year and it is already known that some will receive no further government funding.

Founder incubators were once at the heart of the innovation ecosystem, providing a basis for entrepreneur capability building, a channel for investment flows and a pipeline of high tech startups that added long term, high value jobs to our economy. Not as glamorous as yacht races or movies, but creating sustainable value that persisted long after the initial public investment. Last month I explained how our neighbours and competitors across Asia-Pacific have begun to reap the rewards of long term ecosystem investment amounting to hundreds of millions of dollars.

Which brings me back to the $99 million already budgeted for the 2024 Americas Cup investment. Would it not be more valuable to now allocate those funds towards developing our local innovation ecosystem? New Zealand is finally beginning to gain some traction in attracting foreign startup investors and we have a wealth of homegrown entrepreneurial talent ready to take on meaty global problems in areas such as climate, food and health. We need to capitalise on this opportunity as quickly as possible. Surely it is now time to invest in creating sustainable economic opportunities, rather than one off vanity events?

2021 – A Political Retrospective

Posted on Monday, 27 December, 2021 by Paul Spence

This year has been remarkable if for no other reason than the pandemic has resurfaced some ugly divisions that continue to bubble away behind the easy-going facade of New Zealand society. We are doubtless challenged now more than ever on numerous complex topics, including environment, poverty, crime, health, immigration and race. So the need for change is absolutely genuine. But the manner in which change is now being enacted is both contemptuous and potentially self-defeating.

2021 firmly reminded us of the fragility of the social contract. In an otherwise generally compliant nation, a vocal minority held out against vaccinations and wise public health measures on the basis that their “freedoms” were being threatened. There was of course little discussion by these lost souls about the freedoms of thousands of elderly or unwell who would have very likely lost their lives, had we caved in to the views of the misinformed. I had several respectful but somewhat disturbing conversations with individuals this year invoking thinking from my recent article on why science is more trustworthy than their deranged social media feeds.

At the other end of the political spectrum, hand-wringing social purists doggedly continued to promote the longstanding policy of shutting down any debate that appeared to challenge their well meaning, but at times misguided ideologies. Consequently institutions that had been previously hotbeds of intellectual debate and where ideas were once challenged and tested in open fora, have latterly become hotbeds of conformity and intolerance instead. Nowhere was this more apparent than the embarrassing public skewering of celebrated evolutionary biologist Professor Richard Dawkins, for daring to question why a group of science academics were being villified in a Galilean inquisition by the very body responsible for promoting science discourse in New Zealand.

Of course the danger in shutting down the intellectual debate of good ideas is that bad ideas from across the political spectrum similarly do not receive proper analysis or exposure to the sunlight. This appears to be part of the strategy currently being invoked by the government as it pursues a programme of social reform aimed at centralising control of some of the most important assets and resources in the country. With convenient distractions provided by the public health crisis, our servants in the Capital have quietly set about executing a quite radical socio-political agenda that the majority of voters actually did not yet sign up for.

History has shown however that rapid, ideologically driven reforms are quite often not very successful and ironically may even disenfranchise the intended beneficiaries long term. Unfortunately, many of the idealistic and bright-eyed policy wonks busily designing the new order from Wellington were not even born when we last fundamentally overhauled our economic order and thus have little lived experience to draw upon. Worryingly, much of the reform model is based on a flawed legal premise around the nature of our important responsibilities under the Treaty of Waitangi. The interpretation of this precedent perversely constrains governments to take a narrow, binary and transactional approach in an obviously highly diverse and increasingly complex world.

The other difficulty here is that this reform programme received little exposure at the last election and therefore suffers from what some have termed “democratic deficit”. Worse still, in the absence of a properly informed and curated public debate, the attitude of some of the critics has turned from fearful to venomous with some unpleasant personal attacks containing racial overtones. That is unfortunate and sad. But it also illustrates that sidelining large sections of society is not the way to pursue important social reforms. Instead of stifling open public debate around big ideas, we must encourage it.

Stop The Grievance Virus

Posted on Monday, 27 September, 2021 by Paul Spence

The number of pandemic “experts” seems to be growing by the day. Now with a former Prime Minister wading into the murk, it has opened the floodgates allowing a wave of discontent to infect the nation. But actively demonstrating a partnership approach with business could deliver better outcomes and bring some smart minds to bear on the gnarly problems that confront us.

In recent weeks a number of prominent New Zealanders have been expressing their impatience with the government’s approach to managing the pandemic crisis. Curiously the concern is not so much about the travails of extended lockdowns, but more to do with the impact of travel restrictions as a throttle on economic growth. Unsurprisingly, most of the complainants are absorbed with their own particular business predicaments. But rather than be labelled “whingers” (to their credit) some creative solutions have been proposed by them.

In 2020 our government urgently cobbled together an interim response to keep us safe. Controlling foreign arrivals, managing quarantine and rolling out the largest vaccination programme in our nation’s history have been huge, imperfect undertakings delivered under extraordinary and rapidly evolving circumstances. Without these initiatives, I am absolutely certain that several vulnerable members of my immediate family would not have made it through the last 18 months.

One only needs to look at the data from offshore to understand the dire situation we find ourselves in. But perhaps the most telling data point is that investing in snuffing out the virus does indeed result in a quicker and stronger economic rebound, at least in the medium term. Placing our trust in a benevolent State has paid off so far, but patience is waning as purveyors of a wide variety of grievances across the political spectrum become ever more vocal. So openly demonstrating a willingness to have business as part of the conversation would be reassuring to the public, whilst bringing a greater diversity of thinking to the top table. None of this should obviate the need to carefully balance social and economic considerations, of course.

Putting aside the fact that I find sports analogies rather tedious, some of the ideas for getting New Zealand business moving again have actually been good ones. We have a wealth of technical and management expertise in our business community and there are homemade solutions available for improving almost every aspect of the crisis response. I believe where the difficulty lies is that there is a public perception at least of a lack of engagement between government and business. That may not be entirely fair, but in politics perception matters.

Early in the crisis, the government appointed former Air New Zealand CEO Rob Fyfe as a liaison person between the government and business. That was a good move, but very little has been heard since. The Cabinet wisely considers advice from the pandemic technical advisory group who are respected clinicians and academics. But from time to time self appointed media darlings from scientific fields outside of epidemiology have an annoying habit of confusing the public by contradicting the actual expert viewpoints. So we have to be discerning about where we get information. Similarly we should not simply cave in to loud voices from the business sector who manage to get their views published.

Preserving life is paramount. But at present, it’s not clear what the exit strategy will be. There is a strong sense that the business community has not been fully enrolled as a partner in this process. I might add that this includes a wholesale failure to engage the talent sitting in our research institutions and technology incubators. What is clear however is that we will have no choice but to open up again in 2022, because the present approach is economically unsustainable in the long term. Elimination may already be nonviable and everyone (including business) need to deal with the reality of the new normal. The best piece of advice anyone can follow right now – get ready, get vaccinated!

Frontier Firms Follow-On Funding Favoured

Posted on Tuesday, 27 April, 2021 by Paul Spence

The recently published New Zealand Productivity Commission Report on the economic contribution of “frontier firms” predictably rated only a passing mention in local media. However recommendations in the publication could have far reaching impacts if implemented. But is the government listening?

Frontier firms are described as the most productive, profitable and innovative in an economy and generally have scale and global reach. But the report says that New Zealand’s frontier firms lag behind their global peers in terms of productivity. The OECD defines productivity as the ratio of economic output compared to inputs. Nations with highly productive frontier firms have greater competitiveness because of more efficient use of resources such as labour and capital. These nations also benefit from secondary “innovation and knowledge diffusion” within their economies.

Chairperson of the Commission Ganesh Nana, in an interview with Radio New Zealand says New Zealand is already well behind other small developed economies in the OECD in terms of productivity and the gap is growing every year. He says part of the reason is because we do not have many so-called frontier firms to which smaller innovation based companies can anchor. One of the key findings of the report is that the government must invest in developing a deeper innovation ecosystem, including supporting more commercialisation of research, science and technology.

But will the government take on board this message? Many of us currently working within the New Zealand innovation ecosystem have lobbied in the past for vastly increased resourcing and for setting greater aspirations as a nation. But such pleas have largely fallen upon deaf ears over the years. There are sadly also actors within our ecosystem that are philosophically opposed to any kind of government investment on the basis that only wealthy and well-connected players should be allowed in the game. This is despite the fact that our neighbours (and competitors) in places like Australia, South Korea and Singapore identified the value many years ago and have literally invested hundreds of millions of dollars into building out their own innovation ecosystems.

Developing more frontiers firms is not about growing more “unicorns” as some have mistakenly claimed. But it is about building a more interconnected economy that has research, science and technology at the heart of the beast. That’s a big ask for a small nation for which there are many competing priorities and challenges to face such as health, housing and climate change. But the key to motivating the decision-makers involves grasping the reality that having a powerful innovation ecosystem is actually part of the solution to those challenges.

Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of a New Zealand based technology venture, a co-founder and director of Creative Forest, advisor at ThincLab within the University of Canterbury Centre for Entrepreneurship and principal at GeniusNet Research. You can follow Paul on Twitter @GeniusNet or sign up for a free weekly digest of startup, tech and innovation related events curated by him through New Zealand Startup Digest. Paul is a co-author of the Entrepreneurship Manifesto 2020.

The Commercialisation Imperative

Posted on Monday, 22 March, 2021 by Paul Spence

Blue Skies Thinking Needed

Competing and surviving in a highly technological, fast changing and globalised economy increasingly dictates that universities and institutes step up and generate economic returns on their research. But although there have been a few notable exceptions at New Zealand universities, we continue to underperform in the commercialisation of new scientific knowledge into value generating products and services that drive economic growth. So if disruptive innovation lies at the core of economic development, how can we better reconcile commercialisation with the core purpose of our institutions?

Firstly, there are some valid arguments in favour of the separation of commerce from academia. Normative, collectivist elements of academic science as a social system, along with the autonomous nature of university culture, seem to sit uncomfortably with the motivations of profit seeking firms that wish to take ownership of intellectual property. Claims of IP ownership can lead to fears of diminishing the scientific commons, which would be detrimental to the collegial and collaborative nature of science and therefore hinder the very process that will drive future discoveries.

Furthermore, commercialising technology research is risky and accommodating new and developing fields of commercially focused science takes up resources that might be used for other teaching and research, impacting the core mission of universities. We have already witnessed closures and staff reductions within arts and humanities faculties where commercial outcomes are less of a focus. There’s also a danger that high tech institutes established in emergent fields become impenetrable and elitist silos of specialist knowledge open to only a few, at a time when we should be striving for greater equity. Are there other societal factors at play that dampen success?

Patent filings data is sometimes quoted as an indicator of “innovativeness” in the context of economic development. New Zealand sits at the lower end of the table, but not because it is a small economy. Countries with relatively small populations such as Finland, Switzerland and Israel lead the pack. In New Zealand total expenditure on research and development as a proportion of GDP has been increasing in recent years, but continues to lag behind other developed countries. Investment rose to 1.37% in 2018. This compares to an average research intensity figure of 2.38% across all OECD countries, ranking New Zealand 21st out of 34 nations [Statistics NZ — 2018]. So whilst the size of an economy does not fully explain the innovativeness of a nation, the level of commitment to research and development investment certainly plays a part.

Approximately half of that R&D investment originates from publicly funded sources. With government investment comes an expectation that tax payer funded academic research will provide a “return on science” or economic and social benefits to society. The challenge then is to generate meaningful commercial outcomes, that do not undermine the core missions of teaching and research. There are a great many reasons to do so, not the least of which is our ability to fund future health, education and welfare needs. As a nation heavily reliant upon commodity based income we must gravitate towards higher added value goods and services to ensure the future economic wellbeing of our society. Developing an ecosystem approach to cultivating innovation is a key part of this journey.

For example, benefits in cultivating university-industry ties become amplified due to network effects and serendipitous conversations around the humble water cooler (or perhaps kombucha fridge these days). This “innovation ecosystem” approach has benefitted a number of scientific fields. For example the emergence of biotechnology as both a science and business from MIT and other institutions clustered within the Boston area. Commercialisation of new knowledge can also speed up solving complex social, health and environmental problems that might not otherwise be addressed, attracting both government and private sector funding into academia.

The global pandemic has also accelerated the need for scientific innovation. Previous hard won gains against poverty and improvements in social equity have been wiped out by pandemic related economic carnage. In addition, because of growing urgency in relation to addressing environmental challenges, there is forecast to be a vast migration of capital away from polluting industries over the next two or three decades. This green transition will create enormous opportunities for scientific organisations operating at the leading edge of cleantech, renewable energy, low carbon construction and regenerative agriculture, for example.

Embedded within entrepreneurship centres of research, university innovation labs such as ThincLab at the University of Canterbury are important intermediaries in the cycle of innovation and a key part of a vibrant ecosystem that engages with a wide array of supporting players to ensure the success of spin-off companies, whilst at the same time respecting the scholarship that underpins scientific discovery.

This article was first published on the ThincLab blog and formed the basis of my presentation to the Food, Fibre and Agritech Supernode Challenge 2021 cohort.

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Technology, innovation and entrepreneurship in New Zealand.

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