After Sir Paul Callaghan published Wool to Weta in 2009, he embarked on a series of lectures around the country that have, as much as the knowledge he created as a scientist and the jobs and intellectual property he generated as an entrepreneur, come to define his legacy.
In Wool to Weta Sir Paul told us that we needed to wean ourselves off our reliance on the primary sector and diversify our economy through developing more hi-tech and knowledge-based businesses. He also said that we need to stop competing with each other. He wrote:
We have business suspicious of government, engineering suspicious of science, Wellington resenting Auckland, the University of Auckland pretending the other universities don’t exist, CRIs jealously protecting research grants from universities, the Ministry of Research, Science and Technology disjointed from the Ministry of Education, the Foundation for Research, Science and Technology disconnected from the Tertiary Education Commission. We just can’t afford it.
A few years on, Sir Paul is sadly no longer with us. I’m not sure if much else has changed. We do have more export revenues coming from the tech sector and a major re-organisation of the science sector, with the crown entity Callaghan Innovation at the centre of it, could yet encourage the step change in our economy Sir Paul was urging. We have the National Science Challenges attracting $133 million to tackle the country’s big problems.
But those ventures will take time to show results if they do at all and the pendulum has, at the same time, swung away from what Sir Paul favoured – from investing heavily in blue skies research and nurturing the strange and quirky discoveries that emerge into commercially viable businesses, to backing research that has a short-term, easily identifiable commercial outcome. It is easier to improve on what we already do than to strike out into the unknown on riskier but potentially more lucrative ventures.
It is timely then that Sir Paul, in conjunction with his colleague and protege, fellow Sciblogger Professor Shaun Hendy, bring us Get off the Grass.
This book covers some of the same ground as Wool to Weta but is dominated more by Hendy’s theories on innovation ecosystems, climbing the value chain and re-imagining ourselves as a “city of four million people”.
The New Zealand Paradox
The early chapters are a refreshing reminder of where New Zealand went wrong. A graph on page 15 shows how our per capita GDP as a percentage of the OECD fell from around 115 per cent in 1974 to less than 90 per cent in 2010. Meanwhile, Australia’s has remained fairly stable over that period now floating above 120 per cent, while the likes of Finland overtook us in 1979 and has rocketed up since then on the back of the success of Nokia and the electronics industry that sprung up around the mobile phone giant.
The slump in per capita GDP comparative to other OECD countries came even as we did all the seemingly right things to improve productivity and economic growth – a laissez-faire approach to growth, deregulation, privatisation and free trade deals. As a result of all of that, New Zealand is now considered one of the best places in the world to do business, is among the least corrupt, most supportive of free trade, respectful of property rights.
But the economic gulf has widened between us and other countries – a $40 billion per annum earnings gap with Australia.
So what did we do wrong? Hendy and Callaghan argue that he didn’t invest sufficiently in the biggest driver of longterm economic growth – science, technology and innovation. Other countries did during that period in the 1980s when they too were opening up their economies and many are now reaping the benefits in the form of higher GDP per capita.
The heart of Get off the Grass deals with the contribution science and innovation make to economic growth and looks at ways we can re-imagine our innovation ecosystem to deliver better results. Hendy has studied the measures of innovation, including the output of scientific literature and granting of patents, and discovered that tightly integrated networks of researchers and entrepreneurs generate more of both.
Our knowledge gap
The GDP gap with other countries, essentially then, represents a knowledge gap. It doesn’t help that New Zealand businesses tend to favour exclusive development and control of core technologies crucial to the development of their businesses. We are not very good at open innovation – sharing ideas and collaborating for the benefit of everyone in the sector. Hendy and Callaghan believe this is holding us back and preventing us from benefitting from spill-over benefits that result when knowledge can be applied beyond the narrow purpose for which it was envisaged.
One way the authors suggest we could attempt to catch up is to develop more hi-tech companies. They use what they admit is a fairly simplistic model to estimate what would be required to bring New Zealand up to the OECD GPD average:
To catch up in 30 years we can estimate that we would need to start 75 new $1 million technology firms. To do this in 20 years we would need to start almost 300 new high-tech firms.
The way our high-tech sector is growing, exports from this sector will eventually outstrip the dairy sector anyway, but the faster we do it, the quicker we will close the gap with other countries who have a head start in this space.
The outcomes, if we got it right, could be to compelling for all New Zealanders:
The average worker of a TIN100 firm generates annual revenues of more than $250,000, compared to less than $120,000 in the tourism sector.
Get off the Grass is a must read for entrepreneurs, business people, CEOs and policy makers. It goes well beyond Wool to Weta to give a Thomas Friedman style overview of the issues we face but the opportunity within our grasp.
As Hendy asks in the book’s final sentence:
Shall we get on with it?
Get off the Grass, Auckland University Press, RRP $34.99