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.

ION e-Letter Nov/Dec 2007

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Welcome to the ION e-Letter.

Leadership Resource Goes Live

A new multimedia site is offering personal insights from business leaders prominent in the area of technology commercialisation. Supported by the Royal Society of New Zealand, leadership researchers have captured a rich collection of video clips in which New Zealand innovators and entrepreneurs talk about how they built their careers and their businesses. The aim of the Leadership Pathway project is to to take young people on a journey of reflection that, through the use of role models, emboldens them to consider a future in business or technology as an attractive choice.

http://leadership.rsnz.org

Instinct Exports Wikipedia App

Wellington based Instinct Entertainment scored a coup recently by getting their mobile Wikipedia application onboard at Singapore Telecom, the island nation’s largest telco. Instinct director Dan Millard says Wikipedia were happy to agree to the idea which allows mobile users to interrogate the site and receive an abbreviated query response directly to a mobile handset. The company are still looking for a local provider to host the product in New Zealand.

U.S. Firms Looking to Buy Up Kiwi Tech

ION has been approached by an intermediary acting for U.S. companies seeking to purchase rights to proprietary ICT. The contact is well connected through his writing and lecturing on technology and is willing to act on behalf of any company with technology patents to sell. Email ION for an introductION.

Offshoring Opens Access to China Market

A software developer in China is looking to provide outsourcing services to resource constrained industry peers in New Zealand. The Beijing based firm specialises in Java/PHP and .Net development for mobile and enterprise applications. Run by a young Canadian educated Chinese chap, the firm has a sound project track record with a number of multinational companies. The developer is also offering to assist NZ firms by tailoring existing applications to the China market. Email ION to make the connectION.

Vaulting to Success

Emergent business consultancy Vault is leaping to the defence of businesses with big plans for growth. The firm offers a tailor-made service to small and medium sized businesses dealing with financial, strategic and organisational issues during start-up or periods of high growth.  “It’s much like having an oncall executive cheer leading team of business and financial experts at your fingertips”, says Vault director Marie-Claire Andrews. As a former advisor to an economic development agency, she helped dozens of small businesses take their first steps.

www.vaultconsulting.co.nz

What’s Happening at ION

At the start of 2007 we completed the Immigrants Online project and wrote up a report for the Asia NZ Foundation. The project looked at how recent migrants make use of online communities to form networks and garner information. Assisting migrant entrepreneurs was an important part of the project. Flowing on from this we are currently considering developing a proposal to identify migrant investors and channel them toward local business opportunities.

At the present time ION is essentially unfunded, hence there has been less facilitation on offer to the community this year. However we would like to acknowledge the ongoing support of the University of Auckland Business School who provide hosting for the ION website and forum. Also thanks go to Revera who assist with broadband. Greatly appreciated.

Best wishes for a Happy Christmas and a safe and profitable New Year.

Paul Spence – ION Executive Officer

www.ion.net.nz

contact  [at]  genius . net . nz

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.

ICT Minister Pulls out Plum from Pre-Xmas Pudding

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Way back in August I wrote about the difficulties being faced by those charged with developing a unifying industry body for the ICT sector and I predicted that ICT-NZ might continue to struggle to gain traction.

Last week Communications and Information Technology Minister David Cunliffe drove the final nail into the coffin of ICT-NZ by announcing the establishment of an ICT industry super body that will also mop up whatever remains of the Digital Strategy funding pool. No doubt this move will provide fuel for conversation over the tea cups at this week’s Digital Summit. At the very least the industry should feel slightly chastened that the Minister himself has had to intervene to find a solution.

The structure and governance arrangements for the new body will be critical to its success. Without proper buy-in from key industry players it will be doomed to circle like a rudder-less ship on a stormy political sea, just like its predecessor. It will also be neccessary for it to articulate a much clearer value proposition to potential members and partners.

Having the government facilitate and partially fund such a body is a departure from the accepted wisdom generally promoted by the economic development ministry however. The ministry has been opposed to public funding of industry networks for quite some time, although the intellectual rationale behind this thinking has never been made clear.

So the government will certainly want a payback on its investment and the new body is expected to provide sectorial advice, be involved in research and manage the Digital Strategy programme. Precisely how industry growth issues will be tackled has yet to be announced.

On balance this is a good outcome. It creates the opportunity for a fresh start and cements government committment to having ICT as a central plank in economic development. But the proof of the pudding will be in the eating.

Movie Subsidies Need More Analysis

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With the Australian government now offering movie producers a whopping 40% rebate on any local expenditure, New Zealand movie-makers, concerned about an exodus to the west, are looking for parity.But can anyone name another industry that receives such exorbitant handouts?

Peter Jackson and his peers certainly deserve the many accolades they have received for bringing a world class industry to our doorstep, but does that mean we have to heavily subsidise it with public money? The industry already receives a 15% rebate for local spend under the large budget screen production scheme. Post-production work performed in NZ also qualifies.  In addition, the film industry has been the beneficiary of government largesse in the form of large grants towards sound studio facilities in both Waitakere and Wellington. The government funded NZ Film Commission also provides co-funding for selected feature films.

The Film Commission claims that 2 million New Zealanders went to see a locally made production of some sort in the last year, so there is no question that the industry is in good heart. Of course part of the reasoning behind providing this support is that it showcases New Zealand scenery and exports our culture to the rest of the world. But I can’t think of any “large budget” local production that has done this since Lord of the Rings (although there has been several smaller budget projects). Animated productions like Halo or Tintin certainly do not showcase New Zealand, although they do help to maintain the resident skill pool.

The bottom line is that there needs to be a full economic analysis before any increase of public investment in the film industry. I’d love to know how many permanent full-time jobs have actually been created for actors, animators and technical support crews over the last five years. My understanding is that many of the crew positions are sub-contracted to itinerant workers on a part-time basis, some of whom depart the country between gigs. What has been the net increase in the tax base as a result of the growth of this industry? Given the complex nature of foreign controlled licensing and distribution, what is the actual export return from a NZ-made feature film?

Film receives most favoured status because of the perceptions of glitz and glamour and because film producers are very good lobbyists. And what politician could resist an offer of front row seats on opening night?

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.

Research Funding Equity Sought by CRIs

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Outspoken AgResearch CEO Andy West has this week raised the volume level over the ongoing debate on the issue of funding uncertainty for Crown Research Institutes (CRIs).

University based research organisations receive public funding based on periodic review of their output performance and through the Marsden Fund. The current arrangements mean that a university PhD project on “Bogan Westies” can theoretically get funding whilst a three year CRI study on bee mites or biofuel feedstock crops might not. The CRIs argue that this is unjust.

The sometimes humourous and occasionally “ACRI-monious” shouting match between Universities and CRIs spills into the public domain periodically. But the debate has a more serious side. It’s bad enough that universities are competing with each other for funding and students but it beggars belief that our national innovation system pits talented researchers against each other in Darwinian fashion. Inevitably some worthy research projects will miss out on resources.

For several reasons I’m entirely in favour of blue skies research that explores social issues or esoteric science which may have no immediate obvious commercial return. Firstly we need to cultivate a pool of intellectual talent across the entire research spectrum and not just in the physical and biological sciences. Secondly, non-commercial research sometimes has unexpected commercial applications and frequently involves building international linkages with agencies and researchers abroad, which can lead to profitable collaborations downstream. Finally supporting a diversity of research is the responsibility of any open and inclusive society.

But as AgResearch point out in their 2020 blueprint for agricultural sciences research in New Zealand, over half of our national income is derived from exporting agricultural produce. Is it fair then that agricultural research organisations feel so hard pressed obtaining secure and long term funding for research that underpins the growth and especially the sustainability of this enterprise?

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.

Digital Strategy Not Just About Laying Fibre

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A while back I waxed on about how we needed some clear thinking around the Digital Strategy Summit. Now the economic development ministry has appointed a high flying former Telecom executive to manage the Digital Strategy policy revamp and talk up the strategy event to be held in November.

My concern about the summit event is that at $795+GST for registration (plus airfares and accomodation), the consultation process is aimed squarely at large corporate concerns. These firms are likely to be primarily interested in promoting their agendas in terms of either preserving the existing network hegemony or else positioning themselves for any government funded broadband rollout in the future.

The Digital Strategy was supposed to be about building capability around connection, community and content. But it is not clear if ordinary webizens will get access to the online forums and wikis being proposed. So I’d like to know who at the summit will be representing the wider community and the developers of digital content. If the summit fails to engage at grassroots level then surely it is over-looking the fundamental intent of Web 2.0?

There is some relief in sight however. TUANZ members are being offered a pre-summit event early November in order to collate their viewpoints. There is also now a report suggesting that a limited number of discounted places at the summit will be offered to “community organisations and young people”. The summit itself will be webcast, so interested parties and those of us without corporate charge cards can at least adopt fly-on-the-wall status.

Are We Overinvested in All Blacks Brand Culture?

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I’m not qualified at all to comment on the detail of the All Blacks embarrassing departure from the World Cup. In fact I don’t even follow the game very closely. What I do know is that as a nation we are far too psychologically invested in the fortunes of fifteen sportsmen.

The NZRFU marketing machine has to accept full responsibility for putting the team on such a high pedestal, in order to feather its nest with huge sums in sponsorship. In fact I’m surprised the team members have time to attend regular practice sessions given the demands to appear in a wide variety of TV commercials promoting airlines, credit cards, sportswear, food and beverages and even underpants. As an “iconic” brand the All Blacks have over-promised and under-delivered. It all looks rather like marketing hype gone mad.

But what concerns me most is that so much of our national self-esteem hangs on the All Blacks performance. New Zealand has so much more to offer than rugby, hakas and bubbling hot mud pools, but we cannot seem to move beyond these cliches. It’s cringeful at times. 

If our emerging technology companies could secure even a tenth of the media coverage and financial backing that the ABs get, imagine how beneficial this would be to the economy. What if our brightest science researchers could get proper long term funding sponsorship and didn’t have to head overseas to make a living.Then we really would have something to celebrate. We need some new heroes.