Category Archives: Innovation

Fast Forward Fry-Up

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The government’s announcement of a $700 million “Fast Forward” fund for the food and pastoral industries is a long awaited boost to the research sector, but does it signal a strategic withdrawal from other technological arenas?

Crown Research Institutes (CRIs) are naturally ecstatic at news of the investment because it provides much greater certainty for their businesses going forward. The CRIs have been struggling with recruitment, retention and planning issues in the face of historically low levels of investment in a demoralised agricultural research sector.

But the Prime Minister Helen Clark, speaking on National Radio, emphasised that without recharging the investment in food and pastoral research, New Zealand was at great risk of falling ever further behind on the global stage. With agriculture still comprising almost half our national export income, it was imperative to invest in areas where we had a sustainable competitive advantage.

Clark then poured cold water on Opposition Leader John Key’s comments that the Fast Forward Fund was a grandiose overstatement of the government’s committment. Industry heavy hitters like Fonterra have reportedly already signed up to contribute matching funding and the plan is to draw down on both the interest and capital over a 10 to 15 year period. This would release up to $30 million in the first year, eventually climbing to over $100 million, said agriculture minister Jim Anderton.

Perhaps the only real downside from the deal is that it confirms a mood swing away from stimulating other technology sectors. Prof. Jeff Tallon, who only last week headed up a group of concerned scientists that wrote to the government pleading for more research funding, said that even after this investment, New Zealand still only has about half the RS&T spend of its high tech competitors. Tallon says that although food and pastoral research is important, we need to continue to diversify away from our heavy reliance on agriculture.

I have to admit, Fast Forward does seem more like “Back to the Future” to a time before the government was championing ICT, biotechnology and creative sector as the three planks for high tech based economic growth. However, on the up side it does show that government is listening; and by using a public-private partnership model it also focuses industry to engage fully in the project. One hopes that this will not be the only research funding announcement come Budget time.

Confusion Over IP Guidelines

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The recently released policy on the treatment of intellectual property rights within government ICT contracts may open up downstream opportunities for New Zealand companies who provide software and services to public sector agencies. But industry commentators cannot seem to agree on whether or not it is a good thing.

A few years back a lobby group called ICTX pressed government to change the rules around onselling of intellectual property arising from publicly funded I.T. projects. ICTX cited replication of effort and confusion over copyright as barriers to further commercialisation of such technology. But now that the rules have been clarified, former ICTX members still appear disgruntled.

Others view the new guidelines as an opportunity because it opens the door to vendors retaining ownership of the technology. Under this scenario the developer effectively gets their R&D funded by a government contract, licences out the application and then has the option of pursuing further commercialisation where a wider market exists. That seems like a win-win situation.

But the State Services Commission (SSC) makes it clear that the guidelines are just that. Government agencies still get the final say on what goes into the contract. That’s fair enough, especially in the case where the technology relates to a sensitive area such as Defence, Customs or Police for example.

It is unsurprising that a diversity of views exist on this topic. The ICT sector has still not managed to solve the representation problem, with a myriad of bodies still claiming to speak on its behalf. Now that the SSC has finally responded to industry feedback it seems a little unreasonable to criticise.

Perhaps the best way to resolve the debate is to test the guidelines. Are there any technology applications currently in the pipeline that can be taken down a commercialisation pathway? Having a successful reference site already operating within a government agency is a great selling point after all.

Funding Commercialisation of RS&T a Balancing Act

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Throughout 2007 we heard from a number of scientists and business-people imploring the government for much greater assistance in funding research and commercialisation of technology in New Zealand. Universities and CRIs have demonstrated the economic potential through generating some modest additional revenue streams and investments from technology enterprises spun out of research projects over the last decade or so. There has been a modicum of job creation, some upskilling through technology transfer and even some export revenue as a result. All good news. But is it the stuff that “economic transformation” springs from? Perhaps not quite yet.

Mindful that resources are scarce, the “Trilateral Engagement Project” (TEP), a joint effort by FRST, NZTE and TEC, has been tasked with boot-strapping a handful of homegrown technology industries judged to have the potential to grow into high value, global enterprises. This inter-agency collaboration marks a departure from the silo mentality noted in a recent OECD report that criticised New Zealand’s innovation policy.

Having identified these key new industries, the TEP has produced an RFP seeking consultants to research the potential economic impact of each. That seems a little like putting the cart before the horse. What if the reports find that the industries concerned are untenable? Notwithstanding that point, I think it’s a great idea to focus where big economic gains are achievable and around which related industries can cluster. In the past there has been a tendency towards a shotgun approach to economic development in which it was assumed at least a few winning ideas would emerge and thrive if supported with public funds.

In fact, there is no shortage of good ideas. The real issue for the NZ tech sector is access to capital. Because global capital tends to gravitate towards the most bankable ideas, it is important to expose our intellectual property to offshore scrutiny in a sophisticated manner. There is simply insufficient seed capital in New Zealand prepared to wager on high risk technology propositions. You could literally count on one hand the number of early phase tech businesses that received substantial VC funding in NZ last year. Besides that, offshore investors tend to bring a useful network of well-connected deal-makers in their wake. Let’s address that fact openly and help our high tech businesses go global with a mix of local and foreign investment. But at the same time if public funds are to be invested in this process, we need to ensure that founders are fully committed to returning some of the economic gains back home rather than selling out for a low return.

It’s a very narrow tightrope to walk across.

Scaling Up Kiwi Tech All About Attitude

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Serial technology entrepreneur Selwyn Pellett makes a strong case for scaling up tech sector businesses in a frank interview posted on M-Net earlier this year.  From humble beginnings as a telco engineer to CEO owner of one of New Zealand’s hottest technology firms, Pellett has lived the dream and survived to tell the story.

Pellett’s company Endace is one of a small handful of high growth firms that have kept faithful to their Kiwi roots whilst building revenues into tens of millions. In fact Pellet has set his eye on $100 million plus in revenue and sees little downside. It’s that kind of focus that makes the difference between enduring a mediocre performance or riding a sky rocket to the moon, says Pellett who wants to see more Kiwi firms reach for the stars.

By setting goals high plus leveraging executive sales expertise in big markets like the U.S., Pellett reckons NZ tech firms can indeed go stellar. But it takes determination, long hours of work and lots of travel, he says. The Endace story revolves around a great piece of technology and some good timing. But it is equally about attitude.

There’s now a new multimedia resource available called the Leadership Pathway that provides videocasts of well known New Zealand technology entrepreneurs as they share their inspirational personal journeys in life and business. Cultivating a highly aspirational mindset amongst the next generation of innovators suddenly seems more important than ever.

Do We Really Need Ubiquitous Broadband Infrastructure?

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The term “build it and they will come” is often quoted in the context of infrastructure investment. But does it really apply in the case of broadband?

Contrary to popular mythology, the phrase did not spring from a recent Kevin Costner film (shame on you Google!). In fact it stems from the economic history around the development of rail infrastructure in 19th Century England. I recently found a most instructive First Monday article on this very topic that explains the analogy between rail and broadband. The theory is essentially that if you build the infrastructure then businesses and consumers will perceive the opportunity and be attracted to it.

It’s a great theory. The emergence of better transport infrastructure was indeed a precursor to economic transformation of post-Industrial Europe and America. But if we are now doing business in the “weightless economy”, then does success neccessarily hinge upon widely dispersed physical infrastructure? After all, clever people have been sharing and selling their ideas well prior to the emergence of the Internet. More importantly do we really need ubiquitous (and expensive) high speed broadband to every home? I think not. You don’t see a bus stop or a train station at every front gate, do you?

A great deal of time was taken up at last week’s Digital Summit conference discussing the various merits of dispensing fibre to node and fibre to the home as a solution to the network speed issue. ICT Minister David Cunliffe also placed a lot of emphasis on this issue in his keynote speech. But if every home has a very high speed connection it simply means easier porn downloads and that our kids spend a whole lot more time indoors honing their gaming skills. I’m not convinced that this is going to lead to “economic transformation”.

Telecom has committed to improving domestic supply and new CEO Paul Reynolds has already won a lot of hearts with his collaborative and open style. A breath of fresh air that should bring change. But the real issue for the New Zealand economy is international connectivity – and that may prove to be a much harder nut to crack.

Callaghan Questions Biotech Focus

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Renowned science commentator, author and physics researcher Prof. Paul Callaghan this month embarks on a nationwide speaking tour, sponsored by the Royal Society of New Zealand. Winner of numerous awards and prizes during his career, Callaghan has a simple message for his audience – we need to build on our investment in research, science and technology if we are to grow a prosperous society.

Callaghan is one of a rare species of boundary spanning scientists both willing and able to communicate to those outside of his field. He understands the importance of encouraging the next generation of scientists as well as connecting researchers to entrepreneurs and investors who can help commercialise new scientific knowledge for economic benefit. He is also part of a growing chorus demanding more science funding and a better process for allocating resources within the national innovation system.

Prof. Callaghan’s passion for science is obvious when he speaks in public and I look forward to attending his Wellington event. He discussed at length the importance of science to the economy in an interview on National Radio’s Sunday morning “Ideas” slot recently and reminded us how improvements in our quality of life have come about through advances in technology. He also said that similar sized nations such as Israel, Finland and Ireland are now enjoying bouyant economic times in part due to substantial past investments in research.

He also alluded to some concerns about where the focus lies in terms of New Zealand’s national innovation framework. Citing a strong track record of commercialisation in the physical sciences and engineering technologies, he suggested there was an unwarranted emphasis on biotechnology, despite its promising global outlook. He says New Zealand has struggled to gain traction in biotech because of the huge capital requirements and long lead times that sometimes overwhelm small firms seeking product accreditation and then sales in distant markets.

Callaghan suggested that we need to keep an open mind about where we invest in research, science and technology because good ideas sometimes spring up from unexpected places. He quoted the example of Peter Jackson and the film and graphics industries that grew around his business. Encumbent government Minister Pete Hodgson stated that he was listening to the views of the science community and he was mindful that New Zealand’s investment, although improving, was still below par. He said that forthcoming changes to the tax treatment of R&D from next year should be of assistance to the sector.

Prof. Paul Callaghan tours the main centres from 13th November.

How (not?) to Measure Innovation

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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. 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. 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 also produce a composite index by including other innovation drivers such as educational levels, regulatory framework and broadband penetration. They also 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 culture are either difficult to measure or simply not considered. Furthermore, many patents never see the light of day, let alone generate any economic wealth through commercialisation.

An interesting observation to emerge from the Economist survey is that “small countries with clusters of world class companies in research intensive sectors” outperform on the innovation index. I hope this important point 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’s Fujitsu innovation report for an Idealog article and he noted that a number of 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 is 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 report 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.

Will NZ Miss the Pacific Cable Boat?

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Apparently Google are engaged in talks over investing in the Unity cable project aimed at spanning the Pacific Ocean with terabits of new bandwidth. It could turn out to be a wise investment on two fronts. Firstly there is obviously a return on the revenue generated by digital traffic. But secondly it ensures that the burgeoning middle classes of Asia-Pacific have ongoing high speed access to applications hosted in America, amongst which Google is aiming to become the provider of choice.

A lot of commentators are talking like Google is setting itself up as a telecoms operator but this is not true. Google may have the cash, but it does not have the expertise to contemplate such a project. The word is that Google are in fact talking to an Australian telco about the new venture.

 Unity is not the only initiative aiming to add capacity across the Pacific. Verizon are working on a project linking to China and North Asia and Southern Cross have just commenced a major upgrade of the cable that links Australasia to North America. All of which is good for consumers because as domestic networks improve, so the demand for international bandwidth increases.

The slow rollout of domestic high speed bandwidth is often upheld as the reason why we will never see a Google or a Bebo spring out of New Zealand. But it looks more and more like a U.S. centric hub and spoke kind of network, everywhere you look now. Naturally providers of innovative global digital content and services then look to the United States as the preferred site to host their offerings. I think that is why we do not yet see anything special built and hosted here in NZ, despite the fact that digital creativity abounds.

In fact there was a visionary project about five years ago called “First Light” that aimed to set up a direct NZ-Singapore cable. The project failed because of difficulty in negotiating “last mile” access at the Singapore terminal. In retrospect it is now clear that New Zealand missed a major opportunity.

Silicon Valley Challenges Auto Makers to Think

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A brainstorming conversation held at Google’s headquarters has led to VC investment in a new kind of electric car. Think, a Norwegian based manufacturer of next generation electric cars, is pitching the project as foreshadowing a paradigmatic shift in the logic around personal mobility and connectivity. Not only does their concept vehicle have green credentials, but it is marketed entirely via the Internet and is itself web enabled with communications and self-diagnostic tools. In an article in Business 2.0, Think CEO Jan-Olaf Willums outlines just how the company intends to compete against the huge car manufacturers.

But the technology is not without issues of its own. One glitch is that the kind of battery you need to provide energy for a small car still comprises about half the capital investment of such a vehicle. To solve this problem, Think plan to set up battery leasing and reconditioning franchises to support vehicle owners. There is also the question of the environmentally sound disposal of battery components when they reach life’s end. With input from other tech firms in Silicon Valley, these and other problems with the batteries will no doubt be addressed over time.

The only real question is about what uptake will be like in the world’s largest car market. But given growing unease over climate change and uncertainties around oil supplies, it seems like quite a good time to be revisiting the electric car idea. Traditional car manufacturers have struggled to innovate around finding greener solutions for transport. In fact they have struggled to redefine their industry at all despite huge financial losses.

But liquid fuels (of one sort of another) seem likely to remain a major part of the mix for a long time yet and electric vehicles may still struggle against the prevailing marketplace until there are further stepwise break-throughs in the technology.

[tags] cleantech, sustainability, technology [/tags]

Free Online Apps: What’s the Catch?

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Microsoft is currently trialling an initial release of its free online developer toolset PopFly. It provides enough kit to get yourself up and running with your very own Web 2.0 site plus an inbuilt social network for the developer community. The hosted application requires a “Flash-like” plugin called Silverlight.

The only limitation on users is their imaginations and the fact that PopFly version 1.0 still has a few eccentricities yet to be ironed out. In time honoured fashion this has not discouraged MS from releasing it to a willing public in order to carry out free user-lead testing on their behalf.

PopFly is a response to other hosted offerings such as Yahoo’s HotPipes which goes by the rather esoteric descriptor of “interactive feed aggregator and manipulator”. That’s geek-speak for “recombining” the assets of other web 2.0 sites and placing them at your fingertips and for others to use.

Microsoft is competing in this space because it doesn’t want to be outflanked by its arch nemesis Google (and others) who are populating the Web with hosted applications as fast as they can build them. But there is another more subtle reason. You simply cannot run PopFly unless you have IE 6 or 7 and Windows XP or Vista.

Upgrading your O/S seems to be less of a cultural imperative than it used to be in the past. Until quite recently I was happy running my basic home office business functions, such as email and word processing, on a Windows 98 platform. It remained reliable and has only once succumbed to a viral infection, from which there was a full recovery of data. Furthermore, “broadband” connectivity is so slow in the suburbs that my experience of “media rich” applications could hardly justify spending my hard earned cash on a new O/S. Hence MS know that they now need to make a much stronger case for late adopters like me to upgrade by providing free toys to play with online – toys that only work with the most recent version of their ubiquitous O/S.

But I’m still nervous about being tied to a single service provider for life. So why doesn’t someone clever make an easily installable Linux based O/S for laptops, complete with a nifty applications toolset? Then I don’t have to be reliant on Microsoft (or Apple) or Google to get my work done. Well apparently Ubuntu has the answer. Ubuntu is a free open source operating system that has its own user/developer community and is now reportedly installed on over 100,000 private and government owned computers.

The downside is that Ubuntu is still evolving. And whilst it performs adequately in a basic setup, it can be a wee bit buggy to install where there are lots of peripherals, sound cards, drivers and other toys involved. Furthermore Ubuntu has not been embraced (yet) by the likes of Adobe or by games developers for example. However support groups are popping up like mushrooms, as are new applications that do work with the Ubuntu O/S. A company called Canonical facilitates the project and offers to provide software support on a commercial basis whilst releasing upgrades and promising to keep the software free of charge. It’s a great example of how crowd-sourced content and user communities can make a difference in the world of technology. No doubt a lot of people are watching to see if this business model can be made to work on a global basis.

If anyone has tried Ubuntu, please do share your experiences.

[tags] Ubuntu, open source software, crowd sourcing [/tags]