Productive thinking

CEO Shaun Coffey

In the New Zealand context there has been much discussion recently on levers to improve productivity. While regulatory reform, better infrastructure, and improved public services can all play a part, their combined potential pales into insignificance when compared with what can be achieved through advances in science and technology.

Where we collectively sit today is not dissimilar to where Finland found itself in the early 1990s. A small export-dependent country with a reliance on primary sector commodities, it went into free fall after its main customer, the Soviet Union, collapsed. Unemployment skyrocketed from 3 to 18 per cent as the country slipped into a severe recession.

While I am not suggesting that New Zealand workers will suffer the same fate, the parallels with Finland in the early 90s remain: when commodity prices collapsed, Finns realised they needed to rethink the way they did business and in the process they revolutionised their economy. What followed was a painful period of ‘creative destruction’ where some companies went under and others were acquired by competitors.

Some, like then wood-pulp producer Nokia, realised they would need to reinvent themselves if they were to survive. Through significant investment in science and technology, the country’s ICT^[?] sector witnessed phenomenal growth.

How did Nokia become a world leader so quickly? Through R&D based on innovative science and technology solutions — Nokia’s phones were smaller, lighter and performed better than competitors’. The key to Nokia’s success was that its heavy R&D investment was firmly focused on market-led solutions; there was very little investigation into technologies that didn’t directly meet a consumerneed. Today, Nokia’s annual revenues are greater than the tax take of the Finnish Government.

Like many in R&D provider organisations and in the private sector, I was disappointed to see our Government scrap the R&D tax credit scheme set up by its predecessor. However, recent developments, including the appointment of internationally renowned scientist Sir Peter Gluckman as Chief Science Advisor to the Prime Minister and a renewed emphasis on improving productivity, are encouraging.

Recently the Prime Minister spoke of “promoting a stronger, interactive relationship between the business sector and our publicly-funded research institutions”. He said that universities and Crown Research Institutes need to be more responsive to the needs of firms and that our innovation system also needs to encourage firms to increase their uptake of research.

A stronger relationship with industry is something that IRL has been firmly focused on for the past 18 months. We are acutely aware that New Zealand’s private sector investment in R&D is well below the OECD average and this must improve if we are to enjoy the living standards to which we aspire.

In an effort to do our bit to raise the profile of investment in R&D by the private sector, we recently concluded ‘What’s Your Problem New Zealand?’, a competition open to New Zealand businesses. With a top prize of up to $1 million in R&D services for the winner, competition was tough. We received more than 100 entries, but one stood out from the rest.

I look forward to seeing how IRL’s chemistry expertise can assist competition winner Resene to develop a new range of paints with up to 80 per cent sustainable ingredients. It may appear that choosing the winner of ‘What’s Your Problem New Zealand?’ is the conclusion of IRL’s campaign to re-engage with industry. In fact, it is just the beginning.

Over the next few months we intend to further increase our engagement with a range of businesses from across the many sectors with which we work. Our efforts will be underpinned by a marketpull philosophy, rather than one of technology push, and we hope this will enable a wide range of businesses to develop exciting new products, open new markets and improve productivity.

Our new publication IRL Solutions is just one of several vehicles we will be producing to enable IRL to communicate better with our many and varied stakeholders. Personally I am excited about helping New Zealand businesses realise their potential through the uptake of R&D and I look forward to bringing you some of these stories in future editions.

Shaun Coffey
Chief Executive