The Commercialisation Imperative

Oxford

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.

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.

When Will CellTech Disrupt Our Economy?

What do a vegan Middle Eastern prince and a Singaporean cheese maker have in common? Not a joke. In fact it’s a rather serious question for New Zealand. Earlier this year Saudi based KBW Ventures invested over US $3 million in a “seed” round backing a company that claims to have developed a proprietary technology for producing milk from bovine mammary cells, by hosting the live cells within a laboratory bioreactor. The long term implications of this technology for the New Zealand economy are obvious.

This was the second tranche of funding for Singapore based TurtleTree Labs within six months. It is probably no coincidence that the first round was achieved just prior to lock downs due to the global pandemic. The increasing interest in lab raised food comes at a time when food security is under the spotlight more than ever. It has now become clear how easily global supply chains can be impacted in a crisis. No doubt these emerging technology stories are also of great interest to the food obsessed and security conscious residents of Singapore who currently import the vast majority of their food resources, due to very limited space for agriculture on the island.

Consumer preference is also tipping towards food sources that are less impactful on the environment. TurtleTree founder Fengru Lin claims that their future product will achieve 98% less carbon emissions than regular cow milk (and that’s without even considering other bovine greenhouse gases). With waterway degradation and groundwater quality under threat from a bloated and insufficiently regulated dairy industry in New Zealand, there’s a pent up demand for greater product sustainability. This only goes one of two ways. Either agricultural nations clean up their act and get on board with new food tech or they suffer enormous losses when the basis of global protein production gets hugely disrupted.

Celltech may not yet be scalable or widespread yet – but it’s only a matter of time. There will no doubt be many more cellular technology companies to follow TurtleTree and eventually technologies for growing lab based food will be licensed widely and become ubiquitous and more acceptable to consumers. That poses an existential threat to nations such as Australia and New Zealand for whom a very large section of the economy rests on animal based protein production.

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 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.

Photo Credit: Renea Mackie

The Unjust Transition

Environmentalists, social entrepreneurs and green politicians have been warning of the need for a “just transition” to a low carbon, less damaging and more socially inclusive economy for as long as I can remember. Unsurprisingly those who advocate for radical change in how we do business, have been quick to point the finger of blame and to frame this unique moment in history as an opportunity for re-imagining society. In fact change was already underway before the pandemic arose. But it takes a long time to turn a large ship around. Redistribution of wealth cannot be at the expense of wealth creation. Blowing the ship out of the water is not the answer.

The dark stain of social inequity has often formed the basis for arguments against our prevailing economic system. Yet even the most ardent critics of capitalism agree that proportionally less of the global population live in (extreme) poverty than a century ago. The looming spectre of climate change has increasingly emboldened demands to discard capitalism and move beyond GDP as a measure of progress. Yet the already emergent transfer of capital away from polluting industries into regenerative, more socially responsible activities possibly offers the greatest hope of a cleaner, more equitable economy. Innovators and entrepreneurs are an important part of the solution. But this will not be enough on its own.

Today’s global public health crisis is symptomatic on every level of how political structures have failed to distribute the benefits and reduce the risks of a globalised economy. The highly corrupt and distorting nature of political systems in China, Iran, Italy and the United States created the breeding ground for this disease and allowed it to take hold worldwide. But plagues and looming environmental disasters are agnostic when it comes to politics. It is how we respond that is most important. Unfortunately failed governments, autocratic leadership and internal competition for resources do not allow for an informed and timely response.

Instead of tearing down the existing economic model, we first need to adapt political systems to a new way of working. There is no place for confrontational and divisive politicking during a global crisis. The lack of a coordinated response to the pandemic has been most notable in federations such as the United States and the European Union. It also illustrates the reasons why we are failing to address the problem of climate change. Self interest and exceptionalism by the militarily most powerful are materially inconsistent with wise stewardship of a globalised, highly interconnected economy.

Paul Spence is a commentator and serial entrepreneur, a recently exited co-founder of New Zealand based technology venture iwantmyname,  a co-founder and director of Creative Forest 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.

Has Britain Gone Mad?

cowThe United Kingdom seems to have become infected with another case of “mad cow” disease, if the events of the past few weeks are any indication. Prime Minister-elect Theresa May’s appointment of Boris Johnson to the post of Foreign Secretary seems designed to maximise offense to Britain’s neighbours, already reeling from the extraordinary Brexit campaign, of which Johnson was himself a prominent supporter.

May’s appointment of Johnson should be no surprise however. Three days into the job, she has already been accused of pandering and being inconsistent in her position on foreign investment, amongst other issues. The Boris appointment is either an awkward misjudgement or a clever ploy to undermine the entire Brexit process – which she quietly opposed during her time as a senior cabinet minister.

The new Prime Minister also seems in no hurry to start the exit negotiations and who can blame her. The Brexit debacle has plunged the UK into it’s biggest political and economic crisis since World War Two, say some commentators. Furthermore the exit vote was not exactly a landslide. There might yet be more water to flow under the Euro bridge as Britain stares down the barrel of an estimated 5-10 year recession as the full implications of Brexit take hold.

In a world of uncertainty, now is not the time for isolationism and petty parochialism. Britain has benefited enormously from its previously close relationship with the Continent, but the stayer camp failed to make this case sufficiently strongly. May was complicit in this, in her efforts to appease all sides and pave the way for her own career development. That in itself is a clear illustration of why the British government is failing its people at present. The vested self-interest of a minority of over-puffed political personalities has overcome common sense.

Paul Spence is a commentator, technology entrepreneur, a co-founder of iwantmyname (a New Zealand based global Internet venture) and a mentor with Startup Weekends. 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.

Will The Real Wellington Please Stand Up

wcc2Our Prime Minister laid bare his regional biases when he implied recently that our Capital city is a hopeless economic case. But Mr Key would do well to remember that the regional economies are subsidising the infrastructure build up elsewhere.

Wellington may have lost a few corporate head offices, but its economy is a lot more diverse and robust than that. Let’s look at what’s really going on in Wellington in the context of high value, export oriented, knowledge based business activity. According to economic think tank Infometrics, in 2011/12 the overall number of businesses in Wellington actually grew slightly, whereas in Auckland the number dropped considerably. More importantly, Wellington has the highest GDP per capita of any New Zealand region. This is hardly surprising when we look at the emerging economic players.

Activity in the screen and digital sector grew twice as fast as the New Zealand economy generally, with film, animation, gaming and software delivering a billion dollars to the region annually. Wellington has the highest intensity of knowledge based businesses per capita, a busy port, two universities bursting with fee-paying foreign students and an enviable and growing tourism profile globally. Wellington also boasted the highest number of New Zealand companies in the Deloitte Asia Fast 500, an international benchmarking initiative that identifies high growth ventures across Asia-Pacific.

The only business types that decreased in Wellington were insurance and financial services. That is hardly surprising when you consider that insurance companies have little interest in the Wellington market post Canterbury earthquake and finance companies have been dropping like flies everywhere anyway. No great loss. It’s also no secret that government services have been operating with sinking lid staffing policies for some time amidst austerity measures. But despite fear mongering by public service unions, the actual number of staff affected has been minimal. Government sector makes up only about 10% of the regional economy (about the same as tourism income).

Many of us have invested a huge amount of effort into building creative communities in our region that have underpinned the growth of high value, knowledge based businesses. In the context of a sluggish global economy, Wellington has held its ground relatively well, so it is certainly unfair to make comparisons with the other main centres, which have entirely different contexts at present. The government should also be reminded that the growing tax take in the regions is supporting spend-ups in other parts of the country.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

 

Shaken and Stirred

Politicians and dignitaries emerged in a sombre mood from the meeting house at Waitangi earlier this month, after a local kaumatua stood up and pronounced that a major city would soon be destroyed by an earthquake. This week New Zealand experienced its worst natural disaster of modern times when Christchurch, our second largest city, was badly damaged by a devastating quake. After a tough year in 2010, this event is likely to have severe repercussions for the entire nation both in economic terms and for morale in general.

It was bad enough that Christchurch took a hit in September, but this event is much worse. Officials are already talking about the possibility of a final death toll in the hundreds and over $6 billion in repairs being needed for the stricken city. Residents must be shocked at how their lives have been turned upside down. For the rest of us, the situation seems surreal and we feel powerless to assist. But this is the scenario we’ve been taught to prepare for all our lives. We just never expected it to happen in the garden city.

Seismic and volcanic upheavals are a fact of life in a country like ours; we sit astride two very active tectonic plates. The forces that built this land can also destroy it. In the short term, the remainder of the nation will need to step up to support our southern cousins. That could mean some form of additional taxation. It will almost certainly mean a dent in our fragile economic recovery. Apart from the pure financial cost, it is hard to focus on productive work when friends and family are suffering and horrifying images of destruction are being broadcast into our homes. If we are to help Christchurch rebuild, we must ensure economic growth continues throughout New Zealand.

* We’ve compiled a list of web-based resources on the iWantMyName NZ blog, for anyone who is worried about missing persons or is keen to help in some way.

100% Puree

The recent media clamour criticising Tourism New Zealand’s new campaign threw up some intriguing responses from a seemingly random selection of  “marketing experts” who had been canvassed for their views, but who completely missed the real problem with the new approach.

With New Zealand already ranking as third strongest “country brand” for tourism last year, you would think that Tourism New Zealand might think twice about giving up on their successful twelve year old promotional style that focuses on New Zealand’s natural attributes such as landscapes, flora and fauna. 100% Pure New Zealand has evolved into 100% Pure You. I’m not sure if that is a reflection on our increasingly tenuous environmental credentials or the fact that the next generation of global travellers are more self-absorbed. Perhaps both.

The new campaign is obviously a response to the Aussie battle cry “where the bloody hell are you?”. All of the actors in the video clips are youthful, white, middle class, which not only belies the multicultural nature of Australian society to which it is targeted, but also politely ignores the fact that the fastest growing inbound tourist sources are in fact other places like China and India. The new campaign strengthens the message that New Zealand is all about hedonism and short term gratification – a message that resonates with young backpackers.

Unfortunately backpackers have the lowest per diem spend of any segment in the market. Shouldn’t we be focussing on attracting more of the upper end of the market? Don’t get me wrong. I’ve backpacked all over the world myself and it was character building and great fun at the time. I’m not for one minute suggesting we limit access on the basis of disposable income. I’m simply suggesting we revisit where our tax dollars might best be spent for greatest return.

Tourism is a huge part of the New Zealand economy, but it has a considerable environmental footprint and creates little ongoing value. It’s all about extracting short term gains from renting as many seats as possible. Jobs in the tourism service sector are generally amongst the least well paid. Perhaps we need fewer “freedom campers” pooping on our roadsides and more doctors and their families from Bangalore enjoying our sparsely populated geographic beauty. Dare I suggest it, but maybe we could also get them thinking about investing in New Zealand, whilst we have their undivided attention.