Innovation: the key to improved productivity

The unprecedented financial market turmoil of recent months has changed that, making 2009 a year in which we need to rethink our approach to productivity growth.

The emphasis needs to be on a tried and tested prescription for sustained productivity growth: innovative science and technology solutions.

New science and technology solutions can only truly be called innovative when they have the affect of increasing productivity. Multi-factor productivity is a  term that has been in common parlance over the last couple of years. This combines labour and capital investment with knowledge and technology to result in productivity growth that enables the creation of high-value products and services that are sought after the world over.

This last point is important and can be illustrated through a comparison of two transportation services: the first a glamorous, iconic yet ultimately financially unviable initiative whilst the other a more matter-of-fact practical solution that heralded in a new billion dollar export industry for New Zealand.
 
The Concorde was the world’s first supersonic aircraft and could fly across the Atlantic in three-and-a-quarter hours. Although it was a truly impressive machine, its government-subsidised R&D programme ran hugely over budget and it took fourteen years from the development of the first prototype until the first tickets were sold at almost prohibitively high prices. Not surprisingly, Concorde remained locked into the niche luxury travel market and  it is generally understood that the iconic aircraft never made a profit.

With the advent of refrigerated shipping,  the first cargo of frozen meat was exported from New Zealand to Great Britain in 1882 where the price of lamb fetched twice what it did in New Zealand. This single voyage paved the way for what is today a $5 billion export industry. The key to this innovative service was the value that it added by gaining access to a new and lucrative market for the product it transported. Nowhere near as glamorous as Concorde, the advent of refrigerated shipping was nonetheless a far more valuable innovation.

Science and technology innovations like this are successful because they are market led. In the current economic environment, the challenge for New Zealand industry is to use science and technology to create high-value products and services that meet the demands of discerning consumers in offshore markets. Industrial Research Limited (IRL) is well aware of these challenges.  In 2009, the company will work even more closely with New Zealand businesses to understand their market needs and assist them to create products and services that are truly competitive in the global marketplace.

It is essential that science maintains a dialogue with business to ensure these advances can be applied to meet the needs of industry. The current economic climate demands that we do better as a country in opening the lines of communication between the two. Only when we achieve this will the economy and ultimately all New Zealanders realise the true value of this country’s proud history of scientific achievement.

Shaun Coffey