The Press, November 2011

“It could be a billion dollar opportunity” said the businessman on the other end of the phone, with a breathless tale about an academic who had come to him with a revolutionary piece of technology.

Five minutes on Google revealed it as a con. The ‘academic’ in question had a history of fleecing people to fund various grand inventions that came to nothing.

Why did a successful and experienced businessman fall for this conman?

We are all vulnerable to the allure of brilliant technical innovation, the world-beating idea that will change an industry and earn its owner billions.

New technology is like ‘P’ for business people, offering the chance of quick hits and a fast payback.

With the promise of earning more foreign exchange and the creation of high value jobs, it’s a drug politicians find highly addictive too.

Innovation isn’t sexy enough to be a big election issue, but John Key did recently announce an investment in the tech sector, creating a ‘high-tech HQ’ called the Advanced Technology New Zealand (ATNZ), out of an existing crown research institute called Industrial Research Limited.

The new entity will be focussed less on pure scientific research and more on commercialising high tech ideas.

“High-tech sectors could contribute substantially more to the economy than they currently do. We already have successful companies in this sector, particularly in areas like ICT, biotechnology and medical technology, but we need more of them and we need them to be bigger,” said Mr Key announcing the move.

Key’s statement was underlined by the recent release of Technology Investment Network’s top 100 index, which showed New Zealand has 30 tech companies earning over $50 million in annual revenue, a fraction of the more than 2000 companies in our ICT sector.

Forming ATNZ was actually a key recommendation of a high-powered government report with the catchy title “Powering Innovation: improving access to and uptake of R&D (research and development) in the high value manufacturing and services sector”, that was commissioned by the Ministry of Science and Innovation.

It is an excellent analysis of the innovation ‘system’ in New Zealand, and identifies the need for the various research entities to be better coordinated and more focussed on market demand.

‘Powering Innovation’ has detailed suggestions for improving research and development, including the development of programme similar to the successful ‘Better By Design’ scheme, this time aimed at encouraging research and development (Better by Design helps exporters be more customer-oriented throughout their business).

While the report received a lot of positive response from science and business, it ignores two fundamental questions that hang over any new innovation.

Who will buy it? And how can we sell it to them at a profit?

This sounds ridiculously basic, but it is amazing how often these two simple questions aren’t answered until after time and money has been spent on developing new innovations.

There’s an inherent danger that underlies our approach to innovation in New Zealand - we keep reinforcing the view that success is just around the corner. If only we could invent the better mouse trap export earnings await.

Here’s the real challenge for New Zealand tech – if we didn’t invent one more thing how big could we get?

The stark reality is that we struggle to actually sell all this innovation to the world as it is. No matter how efficient and effective our innovation system, it matters little if we are not finding profitable market opportunities for them.

As well as continuing to strengthen our innovation system as recommended by ‘Powering Innovation’ we need to improve our ability to build international distribution channels, build strong brands and attract premium pricing positions.

It is these sorts of skills that technology exporters themselves say they are most lacking.

In the 2011 Market Measures study, tech companies rated themselves strongly on their ability to innovate. Marketing and promotion, protection of intellectual property and selling were cited as their weakest areas of commercialisation capability.

Perhaps what is needed is a “Better by Design” type programme for improving the sales and marketing skills of our innovation sector - a way of matching our world-class technical capability with a world-class ability to find and develop markets.

Last week the latest Flying Kiwi award, a hall of fame run by the New Zealand Hi-Tech Trust, was conferred on Brent Robinson of Rakon Limited.

Robinson had the audience spellbound with his story, which was as much a tale of courageous and relentless selling to multinational companies as it was to technical innovation.

Many other Kiwi innovators show Robinson’s talent for innovation, but too few have his company’s ability to locate, secure and grow large customers over a long period.

Flying Kiwi’s like Robinson don’t get addicted to technological innovation.

That’s because they have been treated with a serious dose of commercial reality, where selling innovation to the world is as hard as coming up with it in the first place.

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