Infotech are reporting that a French firm has been identified as “preferred provider” for an integrated smart card solution across the Auckland region. If NZX listed local company Infratil misses out, it underlines the continuing struggle faced by local technology firms to secure major publicly funded contracts.

The Auckland Regional Transport Authority (ARTA) has been assessing tender responses for a much needed smartcard solution that would provide considerable relief for beleagured commuters in the City of Sails. But ARTA appears to have already flagged Thales as the most likely candidate in the project, which is reportedly valued at up to $100 million. At a time when everyone is concerned about preserving jobs, you would think that local contractors would receive favourable consideration. But – as in the past – local component is not a criteria for assessing public spending.

The stakes are high for the companies concerned. Wellington is considering extending to a region-wide solution and Christchurch is looking for a system that is compatible with whatever technology Auckland settles upon. The New Zealand implementations will also be excellent business case studies to support future export sales.

So perhaps the local technology is inferior? Not so. Last year Infratil, in a joint venture with ANZ bank, developed and launched the Snapper smartcard on its bus network across the Wellington region. Apart from some minor teething problems at the outset, the product has proven a success amongst Wellington’s commuters and usage continues to grow. The swipe cards can be recharged periodically and also used for small purchases at convenience store outlets.

Perhaps the chief criticism of Infratil’s solution involves concerns about monopolistic practices, because only Infratil buses currently have the Snapper technology installed. However that argument seems like a moot point given that ARTA have complete control over the scope of the solution for Auckland. Infratil will also draw upon the experience of it’s Australian project partner, infrastructure giant EDI Downer. So there is little doubt about the vendor’s ability to stay the course. Having eliminated the usual arguments – what is it that stops NZ public agencies from supporting local businesses? Outdated attitudes towards procurement of local technology should be confined to history.

Instead of retrenching, businesses are now being encouraged to use “shaping strategies” to navigate their way forward through uncertainty, so why couldn’t we apply this approach in the broader economy?

I’ve discussed at length the need for a unified national strategic blueprint for research, science and technology innovation. In difficult economic times this is more important than ever, because a ship without a rudder goes around and around in ever decreasing circles. But during an economic downturn is the perfect time to build capability in preparation for the next up cycle. This applies as much to a national economy as it does to  a small business. So we need to look at how we formulate innovation strategy both within our technology ventures and as a nation.

Shaping strategies eschew Darwinian styled adaptation to rapidly changing environments in favour of a vision that inverts the traditional risk/reward pyramid. Shaping strategists argue that by defining the market and offering a compelling case for investment, companies can leverage extraordinary returns.  For example in the confusing world of carbon trading and taxation of emissions, traditional polluters such as energy providers are now investing in disruptive clean technologies as a new source of revenue. The entrepreneurs who saw the change coming and established solar and wind energy technology ventures five to ten years ago are now reaping the rewards.

Shaping strategies are exemplified by involving large and diverse ecosystems of participants but within which profitable niches are established. So in the same way that Apple and Microsoft defined desktop computing, Google is now embarked upon a strategy to reshape how consumers perceive enterprise software. And although not every business has the resources to shape the market, there is lots of space to occupy the various niches that emerge within the new paradigm. For example at ideegeo we are carving out a space through which we can utilise our expertise in domain related technologies to support the transformation from proprietary software to hosted services.

So could we use this model to address strategic deficiencies in our own economy? I say yes, but it calls for a grand vision that previous governments never quite delivered on. A national shaping strategy that includes addressing infrastructure shortcomings whilst simultaneously raising research, science and technology output would create many new niches for businesses and individuals to occupy. Unfortunately politicians and civil servant bureaucrats are somewhat risk averse and therein lies the problem.