Archive October 2011

Honey deal not so sweet Peter Kerr Oct 27

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Sometimes it takes somebody else to bring to light the reason you’re uncomfortable with something.

In this case, Wellington’s Vantage Consulting Group director David Miller has unearthed the nub of the challenge underneath the proposed buy-out of manuka honey (and other products) producer Comvita by overseas-owned Cerebos, in turned 83% owned by Japanese liquor company Suntory.

‘Do we really want to expose one of our most promising high added value primary industry based sectors to the whims of offshore managers,’ Miller asks?

‘The thought of flogging offshore the value chains associated with icons such as Mt Cook, the Waitomo Caves, the kiwi or the All Blacks would be beyond the imagination of most New Zealanders. Why on earth would we do it for manuka honey derived health products, which are based on another national icon?’

Miller (whose press release can be found here) makes the point that, like Fonterra and its brands and Zespri, the country would rightly question whether someone making a bid for those entities would be considered to be acting in the best interests of New Zealand. Yet, neither dairy cows nor kiwifruit are native to New Zealand — but manuka is.

Like Chalkie in yesterday’s Dominion Post, Miller says that shareholders and directors may simply be looking for the best deal, now, that they can out of potential buyers. Chalkie (see the article here) is also asking whether there mightn’t be a white knight NZ buyer who would help operate the business, and by default, the wider manuka products industry, in the best interests of the country.

sticK’s in agreement with them both. The recently launched Manuka Research Partnership (a 50:50 deal under the Primary Growth Partnership fund) is looking at how to produce 16 times the current production of manuka honey and crack $1 billion in sales over the next few years. Much of its focus is on improving the yield from swathes of high country that increasingly may only be suitable for what was once considered a weed.

Comvita’s a cornerstone component of the MRP, but quite how a change of ownership would affect the research programme is problematic.

Miller’s right.

This is ‘our’ product, and though it is over to Comvita shareholders to decide whether they are prepared to be patient and execute a long-term strategy, there’s a great potential for yet another New Zealand industry to merely end up being pawns in somebody else’s game.

If NZ Inc, in this case strongly led by Comvita, doesn’t control its manuka value chain, efforts such as MRP risk being still-borne before they’ve really even started.

Key man in innovation role? Peter Kerr Oct 25

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Well, whew, that’s the Rugby World Cup out of the way with a win, and National’s presumably looking to see if it achieves the same at the election.

Though it will be talking the talk of how it still has to front up on November 26, National’s expecting victory and therefore the jockeying for cabinet positions is going on in earnest.

Last week the rumour going round was that John Key’s going to take the role of Minister of Science & Innovation.

Obviously he’s too busy doing the rest of his Prime Ministerial role to be able to carry it all out by himself, so the talk is that he’d have a couple of associate ministers to assist, with two female MPs touted to do the heavy lifting.

From the country’s point of view and cranking up the economy, if Key’s serious and uses the position to really drive the ‘I’ (as in innovation) part of the equation, it could only be a good move.

When the Denmarks, Switzerlands and Singapores of the world have made similar moves, and the country’s leader has led an innovation council and in turn driven initiatives from the top, the whole economy has really got a kick along.

The (almost moral) example of the country’s boss driving change through innovation and helping bring about change is one of the key factors in boosting economic performance.

John Key has the potential to underpin his time at the top with the ‘innovation’ sobriquet , much as David Lange had ‘education’ and Helen Clark ‘arts and culture’.

Given that science and innovation is essentially the only lever that provides some flexibility, and the ability to quickly back a technology/company that can rapidly go to scale (another LanzaTech for example), let’s hope and see if Key does come through in the role.

However, a week’s a long time in politics, and rumours remain just that.

No harm in spreading them though, especially one that could be of such benefit to us all.

A Wellington and Auckland commercialisation hand-holding proposal more than it seems Peter Kerr Oct 20

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It’s flown a bit under the radar, and the two organisations will in theory have identified their preferred collaboration model by the end of the year.

But, the announcement earlier this month that Industrial Research and UniServices (the University of Auckland’s commercialisation company) are to team up is a very interesting move.

Both organisations are in the business of turning ideas into income, with IRL’s focus over the past five years being clearly on helping NZ businesses grow through better use of its physics, chemistry, engineering and applied mathematics capability. UniServices manages all of the university’s intellectual property, and turns some of this IP into new products and companies. It makes most of its money from contract research however, as well as licence royalties from others’ using the university’s ideas.

The Kiwi Innovation Network, Kiwinet, which counts IRL, Plant & Food Research and AgResearch as its Crown Research Institute members, and the commercialisation arms of Otago, Canterbury, Victoria, Lincoln and Waikato universities, as well as the Auckland University of Technology is one attempt to share knowledge, resources and expertise across New Zealand. In other words, to be less silo, less solo, more synergistic.

Whether it has been Auckland wanting to do its own thing, or the rest of NZ being slightly wary of its big brother success, the Queen city’s never been part of the group hug — even it politicians would like it to be.

So, IRL, which makes no secret of the fact that it should be expanding its capability in Auckland and Christchurch as well as building a new Wellington (Gracefield) campus, is looking to do exactly the collaboration that as small a country as New Zealand should and must do.

There’s sure to be areas of expertise and understanding where IRL and UniServices dovetail together very well. IRL in particular has IP which is best suited to a use-by-licence basis. Rather than try to invent what are usually lengthy legal documents from scratch, using UniServices skills (and templates) could save it a power of time and money. Conversely, the applied nature of IRL’s skills is sure to be complementary to the base from which UniServices draws its IP.

Equally, the contacts and connections that both parties bring to the table are invaluable. There’s nothing quite like a “you should talk to this person,” comment to help move a new initiative along.

Undoubtedly too, there will be a bit of bluff and bluster as both organisations show their cards while working out a collaboration model. That’s to be expected.

For the sake of the country, from two of very few organisations able to help deliver innovation into the high-value manufacturing sector that Sir Paul Callaghan has been championing over the past few months, let’s hope they get it right.

It is much better for these leading organisations to plot their own partnership path, (as is Kiwinet) than the Ministry of Science & Innovation’s attempt to do so under the National Network of Collaboration Centres. The NNCC was touted as an important exercise by MSI late last year, and attempts were still being made earlier this year to get its conceptual model off the ground. Lately the NNCC appears to have died a death however. Arguably, Kiwinet and the IRL/UniServices tie-up is the naturally bred alternative.

Teaming up IRL and UniServices, under circumstances that aren’t a forced marriage, will provide outcomes for New Zealand that are much more beneficial.

Without doubt too, there will also be serendipitous benefits.

That’s what happens when you get clever people paddling the same waka.

Go hard and get on with it you two.

Where there’s a wool there’s a way F212 presumes Peter Kerr Oct 18

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Perhaps the most remarkable thing about the four new product ideas for use of coarse New Zealand wool that Fahrenheit 212 has come up with is that, as such, the core ideas aren’t new.

F212 (see earlier blog here about the company’s success fee based model) have, however, reworked 14 coarse wool products (neps, noils, batts being some of them) sent to the New York headquartered, Kiwi headed product innovation company.

F212 has outlined, and demonstrated, four mostly coarse wool based materials, that reconfigure some of those 14 wool products in a baby, an apparel, a bedding and a cosmetic application. All participants in the ‘show and tell’ held in both Christchurch and Auckland have signed a non-disclosure-agreement, so that’s as much detail as can be divulged at this stage.

For F212 it has been a case of firstly understanding the drivers and motivations of buyers in these different market segments. For example, driven strongly through blogging, American mum’s almost overnight became totally put off EVA (ethylene-vinyl acetate) foam in their babies mattresses because it has formaldehyde in it. The association of synthetic fleece with oil is another reason F212 perceives that wool can easily be the best possible material for contact with babies.

The apparel proposition is a way to provide a layering (and hence warmth) effect without layers, while the sleep-oriented wool product is to provide what F212 calls body responsive bedding that enables users to have a more restorative and deeper stage of slumber. In the USA alone, consumers spend US$23 billion a year on functional solutions for a better night’s sleep — so there is obviously a demand for what ails many people.

The cosmetics use for wool is perhaps the most intriguing and left field. To say anything more would be to give away too much information on a promising value proposition — to say the very least if the idea comes off.

But first, F212 must pull together what will probably need to be a number of industry participants to manufacture the four new products.

F212’s managing director, Timaru-raised Geoff Vuleta envisages that the four licenced wool-products will be bulk-manufactured, and other manufacturers would use the products to sell to consumers. There were a number of value propositions already inherent in these products that should command a market premium Vuleta says — much like Goretex, used by many manufacturers under licence.

The products’ manufacture could, ideally, take place in New Zealand. But, scaling up and taking to market new uses for wool is even more important. By retaining the ownership of the idea’s intellectual property, NZ coarse wool would have a new strategy that’s completely unrelated to its current main use of carpets.

Vuleta described the four new ideas as being a re-purposing of the values inherenet in wool as a natural resource. He’s going to have to hold a fair-few hands to get any, and hopefully all, of the four branded materials off the ground as consumer products.

When he and the industry do make these concepts commercially concrete (lets be optimists here), coarse wool will join its sexier merino cousin in moving beyond a commodity. Instead, it will become a sought after natural resource, and in doing so, command a greater price and premium. Which will be a great outcome for a wool consortium that’s taken a different, brave, tack to looking at ways to use at least 10% of the coarse wool clip in new, value adding ways.

Can’t happen soon enough really.

Fahrenheit 212 turns up the heat for NZ wool Peter Kerr Oct 13

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The guys who presented some new wool innovation ideas last week in Christchurch and Auckland are an interesting bunch, with an extremely interesting business model. (More, generally, about some of these wool ideas in another blog – all participants have signed a non-disclosure-agreement).

Fahrenheit 212, formed by New Zealander Geoff Vuleta five years ago in New York, is the only company of its kind in the world he reckons. Sure, there’s many product development firms, coming up with new ideas for corporate clients.

Where F212 is different according to the Timaru-raised, ex Saatchi man, is its commercial and pre-market focus – plus the fact that a large proportion of its commission fee is embedded with and dependent on the commercial success of the ideas they explore and eventually pitch to their clients.

These clients are, at the moment, mostly large USA entities. So far, so what’s different?

Vuleta’s business model somewhat turns traditional thinking on its head when it comes to new product development. It’s not that consumers aren’t important. But, consumers are relatively easy to convince of a new product’s attributes and ability to enhance their lives.

The ‘trick’, and given a large percentage of F212′s fee is based on successful market adoption, is to convince the myriad internal components and people of a corporate, that a new product (and not just a line extension or variation) is worth pursuing.

Two thirds of F212′s staff (last year it received over 3000 applications from people wanting to work there) are loosely what could be called deal-put-togetherers. (sticK’s description, not Vuleta’s). These are people such as investment bankers or commercial strategists who put together and develop the argument(s) that what are often quite risk-adverse companies should have a go at what is effectively a new enterprise.

Vuleta must be doing something right. Fortune magazine among many have profiled F212 extensively. Not surprisingly, it made the phone run even hotter than ever!

Vuleta says the realisation of the need to internally persuade companies of new product development has been the fundamental change to what has become a hugely ramped up expansion of the business – with a European office recently being opened.

The job he is carrying out for a government/industry consortium Wool Industry Research Ltd, (WRinc), is an interesting challenge for Vuleta, who retains much of the advertising exec confidence and charm inherent in the profession.

Part of the role is to help stitch together the deals and players needed to pull off what is expected to be a model similar to that of Goretex. That is, other manufacturers to use and market products with the branded mostly coarse wool products.

The pulling together of participants will be, to put it mildly, a challenge. The wool industry isn’t particularly cash rich, and those in it have historically been more combatants than collaborators.

In a sense, internally persuading a corporate that a new product is a great idea may be simpler.

However, Vuleta and his team do have one advantage.

In spite of wool’s current price surge, no one is under any illusion that the price to farmers or for those in its value chain are anything like what is needed to maintain a thriving industry.

There’s still a backs to the wall aspect to the fibre, and this initiative may come just in the nick of time.

So, good luck to F212 and the wider NZ wool industry.

If nothing else, the exercise has the great potential to reposition coarse wool as something other than something you walk on. The ideas presented are anything but a flooring material; and represent wool as a natural enhancement to peoples’ lives.

Success would also be a tick for bravery on the consortium’s part on attempting an exercise that has never been tried before.

Will science and innovation ‘Get Carter’? Peter Kerr Oct 11

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It may be drawing too long a bow, but was David Carter hinting he might have the ministerial portfolio role following National’s (expected) election win?

Speaking at a NZ Institute of Agricultural and Horticultural Science forum in Wellington last week, the current Minister of Agriculture and acting Minister for Economic Development is one of at least half a dozen MPs putting their hand up for the role.

What is fantastic is that following the implementation of many of the CRI Taskforce Review’s recommendations, there is now intense competition among senior cabinet ministers for the role. Carter is known to be one of those putting their had up for what is now a pivotal component of the government’s economic development strategy.

For the record, when four parties different MPs were asked what the appropriate NZ investment in R&D should be, Carter said that given the upcoming election, he wasn’t at liberty to announce anything.

“But I don’t expect anyone to be disappointed,” were his words.

Some of the speculative thinking that’s been going on around the place is that National’s been saving up some science announcements for its election campaign.

This is quite possibly going to be with regards to IRL‘s future.

The fact that IRL was given more time by the Ministry of Science and Innovation than the six other Crown Research Institute’s to create its Statement of Corporate Intent is interesting, as is the fact that the high value manufacturing review which begun in March and was meant to be delivered in April has now been buried somewhere.

Given that innovation, in however it is defined, is one of the few ways to crank up the economy in a better and bigger sense, using the applied physics, chemistry, engineering and mathematics that resides in IRL is a clear way to lift performance of our country’s industries, including the biological ones.

Of course, John Key himself might still want to take on the role. The last time a Prime Minister was also responsible for science was Gordon Coates back in 1935, so it wouldn’t be before time!

Even if it isn’t Key, the boss will still want a competent, visionary and active minister who is pragmatic and looks for practical outcomes.

It isn’t the sort of job that a politician can slot into and hope they don’t stuff up by merely coasting.

The government has high expectations for the science and innovation space as a driver of economic prosperity.

David Carter may be the man – though given the CRI Taskforce led reforms, it is a role that other ambitious politicians can see as a means to forward the country and their own ambitions.

Ag and hort forum tries to get off the farm Peter Kerr Oct 06

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The intention is right, the understanding is apparent and the realisation is clear that our primary industries need to be less commodity, more market.

The question remains how.

A forum organised by the NZ Institute of Agricultural and Horticultural Science in Wellington reinforced that our economy is just as much as ever living off our ability to convert sunshine, soil and fresh air into protein products. (Indeed, David Lange was ‘thanked’ for suggesting back in the 1980s that agriculture was a sunset industry – perhaps changing the mindsets of a potential generation of would-be scientists for the sector!). Some audio recorded by SciBlogs Kent Atkinson is here.

But, as Rod Oram pointed out when crunching some numbers for the 120 attendees, agriculture ain’t sustainable. We are not a low cost place to produce milk or meat. Our land is very expensive. Oram said that even the family interests of Fonterra chairman Henry van der Heyden have bought land for dairying in Missouri, USA. Its price is a third that of New Zealand’s and their milk price is higher. (Fair enough to take our technologies over to America, but shouldn’t NZ brand our key comparative advantage – a responsible pastoralism method?)

Oram said that the price ceilings for milk powder and meat are probably being reached. Substitutes such as soy powder become more attractive, permanently given the costs of changing inputs for a manufacturer, beyond current levels. NZ shouldn’t then expect a continued run of ever increasing agricultural prices.
The number of young people studying primary industry science is way below replacement requirements for our major industries – agriculture, horticulture, forestry and aquaculture.

Universally the speakers, from former agriculture minister Jim Anderton to Royal Society of NZ president Garth Carnaby, Fed Farmers vice-president William Rolleston and before-mentioned Oram all said we must add more value to what we produce.

Anderton made an analogy about ‘cracking’ milk (much as crude oil if refined to its constituent ‘bits’). But later, questioner Kevin Marshall and speaker Oram both agreed that Fonterra’s (mostly off-farm) R&D spend of about $125 million a year out of total revenues of about $20 billion is not really enough. It was pointed out that Nestle has just announced an incremental investment in nutriceuticals of US$500 million!
Because, at the heart of what everyone is talking about, is it is only off-farm; more cleverly using the raw materials produced from our land, water and brains, that we can create more value.

We’ve failed, so far, to make ‘invention’ at this level seem sexy. We’ve failed, so far, to show potential investors (including farmers) that there’s money to be made in some of these areas. And we’ve failed, so far, to partner up with those (usually overseas) entities who could help take products to market – and share the value-added component.

The forum n a sense was too stuck on the farm; even while it didn’t want to be.

We’re good, indeed world-leaders at the growing. In spite of agriculture’s current commodity boom, a sustainable economic and environmental future is only possible by becoming world-leaders at transforming the raw materials we naturally produce into products that manufacturers and consumers need or desire.

We have a long way to go – though such a forum is at least a place to start airing such concerns.

Become an ‘authority’ to maximise the benefits of social media for your business — Sisson Peter Kerr Oct 04

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Social media may seem to many like an over-hyped mess of ceaseless and senseless chatter.

But understanding when and how its immediacy and intimacy can and should be part of an integrated marketing strategy will be key to many future business successes – like it or loathe it.

Natalie Sisson, founder of, a sometimes Wellingtonian, but mostly global-based Kiwi traded in her corporate job a few years ago, and many adventures later has re-invented herself as a bit of a social media expert. Well, other people pay her for her opinion and knowledge – and in today’s world that’s as good a guide as anything.

Anyway, Sisson’s clear that no matter what your skill, or technology, social media such as Facebook, Twitter and LinkedIn are useful promotion tools; used the right way.

“It is all about pull, compared to other types of marketing push,” she says. “The trick or art is to draw people back to you. You do that by being or showing a lot of value.”

To this end, what is required is not so much selling says Sisson, as becoming an authority. Particularly from a business blog point of view, or discussing technology trends, “become the go to blog or website,” she says.

“That’s easier than directly trying to sell. If you provide useful, credible information, people come back to you and you also get word of mouth referrals.”

Over the past four years, Sisson has gained an understanding (albeit in a rapidly changing and moving field) of the different strengths and audiences of the various social media.

Among her observations are that though Facebook is perceived by many as being the preserve of the younger generation, its biggest target-able users are women in the 45-50+ age group. For this segment, Facebook is an extension of how many women socially interact on a one to one basis.

Twitter is a favourite for those in the media and marketing worlds, as well as public figures. Businesses and brands can use it wisely, with its largest market being the 35+ age group.

LinkedIn has a 35+ age group profile as well, and particularly in North America, most of its users earn over US$80,000 a year.

Sisson gives two recommendations for those dipping their toes in the use of social media for their businesses.

The first is to download her free e-book, ‘The Entrepreneur’s Social Media Workout’. (From sticK’s POV, a very useful ‘how to’). It demonstrates a lot of best practice concepts, as well as how to integrate social media into a wider marketing strategy.

Sisson’s other recommendation is to pick a particular social media platform and test it.

‘Start with one, see how it works, which parties are participating, attempt to master it and make sure you track your progress by measuring the free analytics,’ she says.

‘See whether it applies to you.’

Though generally people can’t go wrong using and interacting with social media (unless they’re an absolute dork), the ‘trick is to draw people back to you, because you represent value,’ she says.

If you can help solve peoples’ problems, ‘so much the better.’

From coaching to consulting, as well as high value manufacturing, ‘look at who their clients are, look at where yours might be,’ she says.

‘Then become the authority.’

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