Could innovation be the key to getting us out of the recession?

We could choose to view innovation as an opportunity to grow our economy by doing things differently.

New Zealanders have always been great at solving problems and inventing things. Ernest Rutherford attributed much of his success to his far from prosperous background in rural New Zealand: “We don’t have the money, so we have to think”.

But while we have talent for coming up with good ideas, we aren’t so good at converting them into commercial reality. Compared with other OECD countries New Zealand does poorly at growing wealth from innovation.

Successful innovation is not measured by the number of patents produced, but by the wealth it creates. Take the Industrial Revolution – most of the inventions occurred in France, but it was the British who implemented and derived value from them.

Where could we start to leverage our intellectual property to help grow our economy?

The primary production sectors would be an obvious choice. We are considered world leaders in dairy, meat, wine, forestry and fishery production – but we are not recognised for the commercialisation of the intellectual property in these sectors.

Here’s a great example of New Zealand missing an opportunity. Rick Christie, when chair of AgResearch, visited a Chilean forestry company and noticed New Zealand production manuals on the bookshelf – upon enquiry he was told that they were “The Bible”, and were essential reading for any new recruits to the industry. In other words, the Chileans were profiting from Kiwi ingenuity without us even knowing about it – never mind being recompensed for it!

The good news is that we are in a strong position in the global knowledge-based economy. We have a vast pool of IP that is a great untapped resource – we just need to exploit it.

So far, we have only been reaping half the reward – the production revenue, but not the value of the IP itself. Imagine if the Beatles had missed out on all their royalties.

In the longer term, we need to develop a national innovation ecosystem that is uniquely suited to New Zealand.

It’s important to note here the work of TechNZ – the Foundation for Research, Science and Technology’s business investment programme. In the last decade it has supported around 4,500 firms producing new products, processes or services. It does a great job in keeping these companies globally competitive.

Innovation in New Zealand needs to be exploited more widely.

In the first instance, we have to nurture the brilliant minds that think of the original ideas to create the IP. This requires attention to all levels of the education system – from early childhood through to undergraduate study and the workplace.

Other elements in to the economy-boosting innovation process could include:

· Making sure patents are well defined, to minimise litigation and maximise the scope for subsequent innovations

· Access to good quality help and advice for businesses

· National innovation priorities – consulting with industry groups and businesses around the country to identify specific areas that would leverage New Zealand’s economy

· Promotion of high-value-added knowledge-based businesses

· Innovation programmes to help firms build the capacity to incorporate new knowledge

The last point is important, since not all innovation is linear. Much of it evolves within businesses as they engage with their customers and markets. The greatest benefits of innovation happen when firms create a competitive advantage by discovering a solution someone is prepared to pay for.

Looking beyond the gloom of the recession, let’s focus on the hidden opportunities. Innovation has the potential to support New Zealand’s economic growth out of recession and beyond.

Phil O’Reilly is Chief Executive Business NZ www.businessnz.org.nz