Category Archives: Opinion

Opening the Door to Economic Wealth

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Nick Willis, the Auckland inventor who developed the cellphone lock opener, says that if you “make success your dominant thought” that is where you will gravitate towards. His story has captivated the business media and looks like a PR person’s dream come true. Not only has the guy made a lot of money for himself by licensing the technology, but he’s intelligent, articulate and has a highly photogenic family. The fact that he’s on a first name basis with both Sam Morgan and Stephen Hawking is just the icing on the cake.

Willis is very much the poster boy for the government’s economic development strategy right now, illustrating that a little intervention can be a good thing. He benefitted from publicly funded business training and startup programmes and also secured financial backing through the government’s Seed Co-Investment Fund. That’s good news. But we need 100 more companies like this.

Frankly the government needs some good news on the economic front right now! The departure of “iconic” Fisher and Paykel to Thailand came as no surprise, given the current economic settings. However the news that Australia’s GDP per capita is now a huge 38% more than New Zealand is somewhat more alarming. This startling fact received scant coverage or analysis. Where it was reported on, the media got their numbers wrong.

I know F&P have a proud history in New Zealand, but if the global price for an assembly line worker has dropped to $20 a day, do we really need that kind of industry? Wouldn’t it be better to grow some more high value, low density industries such as electronics, optics, biotechnology and software? For that to happen there needs to be a complete remodelling of the culture around research and development. That includes tax treatment, education and incentives on the government side. But it also calls for businesses to underwrite risky ideas and good people like Nick Willis.

Perhaps we need to take Nick’s advice and make success the predominant thought for the national economy.

[tags]globalisation, export, technology, New Zealand, innovators[/tags]

Distilling NZ’s ICT Exports

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The recently released  New Zealand ICT Supply Survey may not be everyone’s idea of bedtime reading, but  bear with me, because it does give us a useful snapshot of growth patterns within the industry. Up until 2004 Statistics NZ compiled a slightly different set of figures, but the new data set has now been realigned for easier comparison to figures from surveys in other OECD nations. So this years figures (2005/06) are the first by which we can draw any meaningful conclusions under the new regime.

Perhaps the most significant change is that data from the electronics industries is now included. Consequently, nearly a third of all ICT exports fell into the “electronic devices and equipment” category, comprising over $500 million in export returns. So sales figures from high growth hardware exporting companies like Rakon, Endace, Tait and 4RF may have actually inflated the figures somewhat. Whether you consider them to be manufacturers or ICT firms, it doesn’t really matter – it’s all good news.

Notwithstanding this, the value of ICT exports still only equates to about 5% of our total commodity export trade or about the same value as our (declining) fruit and vegetable exports. New Zealand remains near the bottom of the OECD ladder based on ICT export value and (like most nations) we are a net importer of ICT. Interestingly, two comparably sized exporters, Finland and Ireland, are amongst a small number of nations who actually export more ICT than they import. This demonstrates that agility has more to do with being successful at selling technology than does size.

ICT export revenue grew almost 20%, compared to a growth rate of 7.9% across the entire industry, but 90% of New Zealand’s ICT revenue comes from domestic sales consisting largely of telecommunications and sales of computer hardware. An optimist would say that this shows there exists a huge growth opportunity. A pragmatist might suggest we have done a poor job of articulating our value proposition globally.

Why aren’t we exporting more of our good ideas?

Going Global from New Zealand

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Rod Drury, a well known New Zealand technology entrepreneur, runs a great weblog talking all about the challenges and rewards of taking NZ technology to the world. Rod is passionate about the subject and is committed to adding value when he works with technology ventures.

Drury has also become a self-titled “digital socialist” because of his strong views on how the current digital communications network model is failing New Zealanders and why we need to open our digital trade routes. There was also a recent discussion on his blog about the role of mindset in overcoming the challenges of geographical separation.

From an organisational researcher perspective, I agreed that the discourse/mindset, within which an organisation frames its global strategy, does make a difference to how it projects itself. But I also thought that we should not downplay the challenges of small size and geographical isolation. For example, if we truly aspire to increasingly become an exporter of digital knowledge, then we need to sort out some fundamental structural issues like bandwidth and network peering – and fast. 

As a nation I think we tend to lack a collective sense of self esteem. Outside of rugby and the haka, we don’t quite seem to know what we stand for – it’s cringeful at times. On the other hand, I’m fascinated by the biographical accounts of people like Peter Jackson, Burt Munro and Bruce McLaren. All examples of hero innovators from our recent history who (in some way or another) crossed the Valley of Death and went on to build dominant positions in a global niche, based on their creative talents. We don’t give these role models nearly enough public exposure at home. 

There’s a funny TV ad for theft insurance running here at present that implicates “foreigners” who swipe all our Kiwi icons eg. Dame Kiri, Split Enz, Coutts and Butterworth etc. It sums up our current inwards looking mindset. In fact these iconic characters saw opportunities to go global with their talent and were cocky enough to do so.

[tags]globalisation, export, technology, New Zealand, innovators, organisational discourse[/tags]

Entropy and Entrepreneurship

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I was, at best, only an average student of physics much to the disappointment of my professors at Victoria University. They were however sufficiently benevolent to award me a pass at 100 level. I wanted to understand, but it seemed to be mostly about calculus and less about actually describing the (more interesting) theoretical physical models that define our universe and that I later went on to explore in other courses.

One foundational concept that I do remember (ok I’m a wee bit hazy) is that of ‘entropy’. It came up in a conversation with my son recently after we had been sharing a book about space and time (little boys love stars and planets).

I recalled that entropy relates to the distribution of energy throughout a closed ‘system’ and that it tends to increase throughout the universe over time. This has significant implications for thermodynamics. I think it has some philosophical implications as well, especially when you consider that the universe is apparently expanding. Sociological research often draws upon parallels in the natural world, which got me thinking about some possible analogies.

One way of looking at the problem is that, in nature, systems have a tendency to move from uniformity to chaos. By systems we could mean our universe, a refrigerator or even a glass of water falling onto the floor. Mathematicians call it ‘system complexity’.

I explained this to my son by asking him to consider his own bedroom. After Dad does the housework, the bedroom is in a pristine state. However, over time the room becomes gradually more disordered until chaos finally ensues. He seemed to be able to grasp this concept. It then occurred to me that we could also apply this idea to social systems such as business organisations, marriage and political parties. Think about it.

Of course this thought occurred to economists a long time ago, especially when a fellow called Schumpeter wrote something about “creative destruction” and the role of the entrepreneur in disturbing economic equilibrium through innovation.

[tags]entropy, entrepreneurship[/tags]

Ramblings from the West Island

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I managed a (much needed) short break to Oz last weekend to help my little sister celebrate her birthday. We are often reminded how closely related we are to our Australian “cousins”. But I was at once struck by how rapidly Australian society is diverging away from NZ like some Darwinian form of speciation. It depends on your personal value set as to whether or not NZ is being left behind in the wake of Australia’s headlong rush to consumerism and globalism. Perhaps it is not a bad thing that we retain our differences.

One only needs to spend an hour on the (new) motorway from the (new) airport to notice that the majority of motorists over there are driving late model vehicles. Fuelled by the biggest economic boom in many decades plus access to easy credit, Aussies are not shy about spending a dollar to reinforce their status. Indeed, the chief topic of conversation over drinks with friends was their annoyance at having to join a three month waiting list for a brand new, $70,000 SUV.

Also unlike in New Zealand, Australia’s relationship with Asia is constantly in the media spotlight. Several of foreign minister Alexander Downer’s entourage were killed or injured in the tragic Yogyakarta air crash. This resulted in public outpourings of sympathy as images of a badly burnt journalist were flashed across news screens. Primed by the response to the Bali bombings, a well oiled machine swung into action. The government dispatched an aircraft with medical personel to retrieve the dead and injured and Australian investigators elbowed their way into taking over control of the crash site.

The reason for Downer’s visit was completely lost in the resulting uproar. He was visiting Indonesia to chair a regional security forum and to sign off on a contribution of more than $300 million in aid. In the face of this, how ironic it would have been if the air crash had been the result of terrorism. Much to everyone’s relief, it soon became apparent that foul play was not involved.

The point of all this is that Australia is investing heavily in its regional relationships. It can’t afford not to, with the world’s most populated nation of Muslims sitting on its back doorstep and a sizeable chunk of its economy invested in the future of Asia. The wealth that allows my sister’s friends to purchase their new car (and the Federal government to invest taxes into huge amounts of new roading infrastructure) is largely grounded in the enormous trade in minerals that the “lucky country” undertakes with its neighbours to the north.

New Zealand is somewhat less blessed geologically than its near neighbour, but still relies heavily on its trade in edible commodities with Asia. Perhaps the fact that “Asia” is ten or more flying hours away has made us a little apathetic. But instead of debating the issue at length and paying lip service to engaging more fully, shouldn’t we be doing something serious about it? I’d quite like to upgrade MY 14 year old car this decade!

[tags]New Zealand, Australia, Asia, economy[/tags]