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Posts Tagged Knowledge Economy

Tait Electronics Aaron Small Feb 17

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I read an interesting article in the Listener a while back about Tait Electronics, the Christchurch, New Zealand based designer and manufacturer of radio communications systems who this year turned 40.

The story of Tait Communications, and Sir Angus Tait in particular, is quite a remarkable one. Sir Angus was bought up by his mother in Oamaru, and when his father died in the 1918 flu epidemic, he began working in the local radio shop before going on to become an RAF radio operator in WWII. He came home from the war, set up a company…and went broke. He paid off his creditors, then tried again 2 years later.

Tait Electronics was the result, and today it records annual sales of $190 Million in 160 countries worldwide. They invest 12% of revenue in R&D, which is rare for NZ companies, and as a result have a revenue of $300,000 per employee, making them one of NZ’s most knowledge-based companies.

Sadly, Sir Angus passed away 2 years ago, aged 88. I wasn’t lucky enough to ever meet Sir Angus, but I think we can all learn a lesson from him. He wasn’t afraid to give it a go, in fact he failed the first time he did, but he learned, and he came back to create something so wildly successful. I think there is a tendency in NZ to avoid trying anything for fear of failing. But we must, and we must learn from our mistakes. If NZ has another 50 companies like Tait Electronics, we wouldn’t be worrying about Taskforce 2025.

“Technology is our sword; we must keep it sharp and bright.”

- Sir Angus Tait

The Startup Ecosystem Aaron Small Jan 20

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Fred Wilson, of Union Square Ventures in New York, is one of the more prolific Venture Capital bloggers going around. I frequently enjoy his posts on ‘A VC’, where he covers a range of topics. One that caught my eye recently, was one on Startup Ecosystems.

There has been a lot of talk at the moment around the driving NZ’s knowledge economy, in particluar a discussion paper from the New Zealand Institute, and a report on a recent workshop, ‘Improving translation of publicly funded research for economic benefit’ led by NZ Chief Science Advisor, Sir Peter Gluckman.

In this report, Sir Peter states that we must recognise that the issues we face (there are many – see the report!) are not exclusive to NZ, that other countries have the same ones, no system is perfect, some do it better, some do it worse, but we are a long way behind.

To quote Fred verbatim from his post “Startup Ecosystems Take Time“:

“I think it is good to think about decades when you think about the development of new startup hotbeds.

In the first decade, you are largely making it up, copying what works elsewhere, the VCs and entrepreneurs are largely doing it for the first time, and while you can have successes, they are mixed with a lot of failures. That was 1995 to 2005 in New York City and 1965 to 1975 in Silicon Valley.

In the second decade, you start to get it right. The entrepreneurs are doing it for the second or third time. The infrastructure has developed (lawyers, VCs, recruiters). And it is easier to get talented employees to do a startup. This is where we are in New York City now and is where Silicon Valley was from 1975 to 1985.

In the third decade, the ecosystem is fully formed and producing great companies. That is where Silicon Valley has been from the mid 80s on.”

According to this analogy, it took Silicon Valley 25 years to mature. If you consider New Zealand has seen declining economic prosperity since the 70’s, then that “first decade” has actually been something like four for us! Lets hope 2010 is the year we start getting it right…

No. 8 Wire Aaron Small Nov 23

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There’s an interesting article on Stuff.co.nz this morning about NZ’s No. 8 wire mentality being the thing that is actually hampering our growth as a country.

I blogged about this in one of my first posts on this blog, which you can read here.

As per usual there are some fantastic comments in the comments section of the article, but also some mind-boggling ones that illustrate perfectly some of the themes discussed in the article itself.

I’m glad we have people with drive and vision who are willing to step up and give it a go. Science has a big part to play in all of this, and I know from my experience as both a scientist and a junior venture capitalist that the people I work with and for do what they do because they genuinely believe that they can make a difference for everybody in this country. It angers me that when they succeed or encourage others to fulfill their potential they are labelled as ‘greedy’. I couldn’t agree more with comment #46, by Gareth Chaplin – the person who actually commissioned the report. The same people who criticise are the same people who lament the deficiencies in our infrastructure, health, and education systems.

If this is how the country views its innovators and their role, then the increased standard of living that we all seek, isn’t going to happen any time soon.

Scientists need to be Entrepreneurs? Aaron Small Oct 07

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A few posts back, I posted my interpretations of the remarks made by Chief Scientist Sir Peter Gluckman at a seminar in Wellington on ‘Can Transforming Science Transform New Zealand’. As I pointed out in the post, I agree with Sir Peter on his comments that the boundaries between science and business are blurred. As he said, there has been a shift towards scientists taking responsibility for business in proposals for funding. This leads to confusion and ultimately second rate science from which not much can be achieved. The scientists should be left the research and business should be left to the development.

Last week I noticed that Godfrey Bridger wrote in his opinion piece in the Dom Post that ‘Scientists Must Become Entrepreneurs’ and that money should be spent to train scientists in business on the job. The danger with this approach is that we will lose the fundamentals of basic research if all our scientists are ‘forced’ to conform to some entrepreneurial stereotype. Like Sir Peter, and Simon Upton, I believe that money would be better spent training experts to understand the technology transfer and commercialisation process, and to attract large multinationals to NZ that have money to invest in RST.

Isis Innovations, Oxford University’s tech transfer arm, are one of the most successful companies in the world at commercialising university research. Managing Director, Tom Hockaday, states that Isis will only commercialise an inventors research if the inventor wishes. That is a quite an important point, and illustrates to me that not all scientists need to be entrepreneurs for successful high growth businesses to emerge – we just have to understand the parties involved and the processes a little better. Like the Gen Y Scientist points out, and which I think that Tom Hockaday is saying as well, is that universities are complicated beasts. There are issues around publication vs. patenting, time for teaching etc, all which need to be ironed out or understood a little better.

And while it’s true that a lot of the world’s most innovative technologies have come out of universities, people seem to forget that the private sector has played an important role in innovation in other countries with their huge R&D budgets. Take Finland for example. It trained its population in Finnish universities, that then went on to work for Nokia, which reinvested its R&D budget in Finland. Hence, the universities were focused on fundamental research while transformational research (or more specifically, development) could be done by the multinationals. The same could be said for Pharmaceutical Multinational’s in Singapore. NZ’s private sector investment remains woefully low, and so perhaps in NZ the focus has fallen on public sector R&D to make up for the shortcomings of its supposedly bigger brother. Federated Farmers CEO, Connor English (brother of Finance Minister Bill), has recently questioned the absence of multinational agri-companies like Rabobank, GSK, Syngenta and Bayer Cropscience in New Zealand – I couldn’t agree more.

Scientists will continue to beat the drum for the importance of their work and they will cleverly figure out how to get the most out of the miserly amounts of funding they are given. We do need some scientists with an entrepreneurial spirit of course (just as we need IT professionals, designers and engineers with entrepreneurial spirits also), but at some point somebody must also step up and play a part too.

But hey, that’s fine. Us scientists will just add it to the long list of other things required of us – scientist, problem solver, government lobbyist, environmental protectionist, PR and media guru, crystal ball gazer and now businessman and entrepreneur…

The Blurred Boundary Between Science and Business Aaron Small Sep 25

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The second point from Sir Peter’s talk ‘Can Transforming Science Transform NZ?’ revolved around the blurred boundaries between science and business. The two are very different. Things cannot be easily measured in science that are valued and required by business, for example, profit forecasts, return on investment and other milestones. Science just doesn’t work that way – it is often hard to predict what will happen.

Simon Upton points out in the Dominion Post that “Politicians and managers just don’t know enough about the essentially creative drivers of research to try to manage them.”

Sir Peter stated that the importance of business planning in grant applications has increased over the last decade. And so it should I believe, because scientists should not just get ‘money for jam’ – they must be accountable to taxpayers like everyone else. But because NZ Business investment in RST is so low, this has meant that the role of this business planning has fallen largely with the scientists, and as pointed out above, scientists really have no idea about business and vice versa.

Scientists have confused themselves between technology transfer and fundamental research, essentially trying to fit a mould while being micromanaged via the strict government grant process, which in Sir Peter’s view creates a cynicism that leads to second-rate science.

Second-rate science achieves nothing, and to quote Simon Upton again, “attention would be better expended ensuring that those with the necessary business skills can access and commercialise the opportunities that arise in the ordinary course of research”. In short: in R&D, the scientists should be left to the ‘R’ and the business/technology transfer experts should be left to the ‘D’

I’m not so sure our research is second rate and in my experience traveling to conferences worldwide, I know that we can definitely hold our own. Do we simply not have the volume of basic research to drive innovation? Or is it that we lack the business skills to take great ideas to scale?

Potential solutions mooted here were:

  • Better assistance schemes for matching up science and business
  • Academics on company boards
  • Business Development/Technology Transfer skills as part of career development
  • Cheaper access to university research facilities

I agree with Sir Peter and I think he is creating a much-needed stir in his new role. The onus now lies with Prime Minister John Key and the National Government to make good on claims like “science should be at the heart of Government”, and “RST will be expected to play a bigger part in improving our economic performance“. The recent announcements by Minister Mapp, indicate that things may at last be moving in the right direction.

Collaboration vs. Competition Aaron Small Sep 23

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The first point for improvement from Sir Peter Gluckman’s seminar “Can Transforming Science Transform New Zealand?” is a case of collaboration vs. competition. NZ has the most competitive science funding system in the world via too many funding avenues and far too many institutions.

Basically too many people are competing over not enough money, which has reduced scientists to begging and caused the destruction of logical career progressions in science in NZ (and the departure of top scientists overseas). In a country as small as ours, there will always be competition over funding, and so we must look for ways to maximise benefit from what we’ve got.

Sir Peter believes one answer lies in collaboration. He argues that it is hard to share knowledge in a system with so much individual and institutional competition. Individual competition comes about largely because of PBRF funding, while there are over 20 Institutions in NZ in which “RST is a matter of survival not a matter of national interest.” Surely collaborating more, both domestically and internationally would give rise to more innovation. We need a new approach – we need to become an exporter of ideas, similar to countries of our size like Singapore, Denmark, Finland, and Israel who are capable of taking ideas to scale through collaboration.

NZ is in an excellent place to do this for a number of reasons:

  • We have a good reputation
  • A good education system
  • A practical economic base
  • Strength in other sectors (like the Trade, Manufacturing and Service sectors)
  • We are close to a growing Asia
  • And we are small (which is an asset contrary to popular belief)

I believe the problem NZ will have is that we will struggle to let our ideas go: we like the idea of Kiwi people in Kiwi jobs (blogged about here). NZ has made excuses in the past about being too far away from its markets. The biggest market is becoming closer by the day, and I believe the growth of and collaboration with Asia could have a huge impact on NZ – if we choose to grasp it. The old adage of 50% of something large vs. 100% of something small certainly rings true in this instance.

Can Transforming Science Transform New Zealand? Aaron Small Sep 21

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Sir Peter Gluckman is the Chief Science Advisor to the Prime Minister of NZ. His appointment in early 2008 was a good signal that the NZ government wishes to re-examine the role of science in NZ’s political decision making – something that has been lacking for quite sometime now.

On Monday I saw Sir Peter speak on “Can Transforming Science Transform New Zealand?” He said that in NZ we have missed the boat on the valuation of science research. We were a lucky country until the 70’s, with our commodity exports (meat, dairy, wood, wool etc.) earning us prosperity (until recently), and because of that we’ve valued science only as a nice to have not a must have.

Consequently, we now have a cultural barrier to substantial Research, Science and Technology (RST) commitment, whereas other countries that invested in RS&T in the early days see it as a must have. Sir Peter has pointed out before that we seem to have forgotten the important role science played in making our primary sectors as strong as they once were.

In essence Finance Minister English wants to know what “bang-for-buck” he is getting. Sir Peter rephrased this as a question to the audience: “is science relevant to NZ’s economic growth?” [the answer is yes!], and so how can we shift the attitude from science being a nice to have, to science being a must have.

Changing this view will be incredibly challenging, but Sir Peter is the right man for the job, because he is well respected in scientific, business and media circles, and is not afraid to speak his mind!

Two main areas (of many) he highlighted for improvement are:

  • collaboration vs. competition; and
  • the blurred boundary between science and business

In the next couple of posts I’ll explain what I think he means by these points and add a few of my own.

Stay tuned…

A positive from the Job Summit Aaron Small Jul 22

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I was about to post a few months ago about the cut to $98 Million of postgraduate scholarships in the budget, but the moment seems to have passed. I was amazed with the lack of foresight by the Government – what better way to come out of a recession than to up skill and come out hitting the ground running, but they chose instead to stunt the development of NZ’s next generation of young scientists by cutting funding in this area.
But here’s one positive that’s come out of the Job Summit a few months back. I haven’t heard of many, but I am pleased about this one. It goes some of the way to making up for the loss of the said $98 Million dollars worth of cuts to scholarships.
The Foundation for Research Science and Technology (FRST) has announced a pilot scheme that will see 150 new internships created in industry, with the FRST providing salary contribution of up to $30,000 for a period of 9 months.
This is a great way to encourage industry to innovate and build linkages with universities. I think this is crucial in the development of NZ’s knowledge economy, and the success of the model is evidenced by the emergence of the Finnish powerhouse, Nokia, out of a successful network of inventors who were trained in Finland’s own university system and had strong linkages with industry.

If you are in business, I would love to hear your thoughts on this new initiative. What is your R&D capability currently like, and would you be willing to take on a young science and technology graduate if their salary was met halfway by the Government?