On innovation, follow the money

By Bill Kaye-Blake 17/07/2013

As you might have guessed from the light posting, off-line life has been kicking my patootie. I have no idea when regular service may resume. In the meanwhile, I’ll do what I can.

Today’s topic: Callaghan Innovation (CI). This is a new organisation, a Crown Entity, formed from the old Crown Research Institute IRL (Industrial Research Limited) and some other bits. The idea is to improve innovation in high-tech manufacturing by aligning the researchers better with businesses.

The jaded among you might ask, wasn’t that the goal of the CRIs to begin with. to translate research into economic growth? Why do we have to rebuild and refocus a CRI to do what it should have been doing already? And you would have a point.

The thinking, though, appears to be that IRL didn’t deliver on the promise. The thinking is definitely that there is all this potential lying around the place, just waiting to be unlocked and joined up (why does this sound like a Lego video game?). I’ve been reading the Statement of Intent (pdf), and in some respects it’s really good. The primary roles are described as:

  • motivating people to innovate and commercialise
  • connect business with resources and skills
  • deliver research and technical services.

The ‘motivating’ part is a bit twee, but connecting and delivering could help. The economics perspective would be that the innovation is path-dependent, is contingent on access to information, and is a process of learning by doing. CI would help by:

  • linking businesses and researchers and others to increase the number of pathways, thus decreasing the path-dependence. That is, successful innovation might depend on the right scientist and the right funder meeting, but we can make the meeting a matter of course rather than a chance event
  • increasing the visibility of information about capacity and skills, so that it is easier to access the information. By becoming a clearinghouse, CI can be the Trademe of innovation — the go-to place when you want something
  • reducing the cost of learning by doing by sharing lessons learned, so that each individual innovator doesn’t have to learn in isolation.

I thought that — in principle — CI could be good. The whole point was to focus on what these businesses needed. Even if you thought of it just as a straight subsidy to R&D, it should still improve the sector.

Then I looked at the budget.

CI has five ‘output classes’, the areas in which it is working. Let me re-interpret the names of the classes and tell you the budget:

  • Rah! Rah! Inn-o-vate! = $6m
  • Actually working with businesses = $17.5m
  • Same-old, same-old IRL = $18m
  • Replicating FRST = $6m
  • Underpinning Standards work = $6m.

According to the budget, only one-third of the focus is business-centred innovation. One-third is maintaining capacity, which is science-speak for giving smart people money to do whatever they want, and most of the other third is replicating governmental functions. For all the lovely talk about change at the beginning of the Statement of Intent, the budget makes clear that CI is actually pretty conservative.

0 Responses to “On innovation, follow the money”

  • I’m not sure if you have followed the money quite far enough… its worth pointing out that Callaghan Innovation’s projected annual budget for the next three years is around $240 million. $141.5 million is specifically R&D grants and business R&D development funding – so it gets dished out each year to numerous businesses and scientific institutions. What you have outlined above is just CI’s regular activities to promote and facilitate R&D. And therein lies the major change CI represents – a shift towards encouraging the private sector to do more R&D so that it accounts for over 1% of GDP. So it is actually a big chunk of money (too big, some in the science system would say). The big question, as raised by Deloitte in its demand side report on CI, is whether there is actually demand for the type of brokering role CI will play between science and business. Deloitte suggested that the companies in NZ looking for specific scientific expertise already know where to go. So who will be CI’s clients? They’ll need to answer that crucial question and serve them well if they are to succeed.

  • I wonder whether NZ R&D for industries are passive responses to industry demands. Perhaps it will be beneficial for scientists to understand the end-point user market and provide innovative solutions for emerging trends to prevent future issues for the export industry, for example. Or to tailor innovation to suit particular markets. Something for CI to facilitate?