The Wellington effect

Vaughn Davis

Innovation: what is it, how do we get more of it, and if you find it can you please leave it at the front desk with my name on it?

Each month, The Moxie Sessions brings together a dozen or so thinkers, doers, movers and occasionally shakers to talk about how New Zealand can become more competitive.

July’s topic was innovation. Specifically, is New Zealand a good place for it, and if not, how can we make it a better one?

Appropriately, we were hosted by one of New Zealand’s most innovative companies, Vend. As well as transforming the business community’s perception of what constitutes appropriate facial hair on a CEO, Vend is building and exporting the world’s best point-of-sale software from its Parnell Headquarters.

As always, the discussion kicked off with brief perspectives from three invited guests: Will Charles from UniServices, the commercial arm of Auckland University, Richard Fraser from Alcatel Lucent and Brett O’Riley from ATEED.

After giving an overview of the process UniServices follows to connect companies to innovators and find a way to commercialise that connection, Will talked about the importance of people in the innovation equation. A good idea isn’t enough when making an investment decision. Just as important is the person or people behind it, and their ability to turn an idea into a product and get it to market.

Alcatel Lucent’s Richard Fraser talked about the impact of fast data networks on collaboration and innovation. In his opinion, New Zealand has a high need for collaboration, but it’s not well orchestrated. Richard contrasted this with the US city of Chattanooga Tennessee, where 6,000 jobs have been created by making the most of the city’s new and fast fibre loop.

Richard wrapped up by citing the Intelligent Community Forum’s five indicators that your town is really ready to take economic advantage of the internet: broadband connectivity, a knowledge workforce, innovation, digital inclusiveness, marketing and advocacy. This link gives a good overview and also connects well to last month’s discussion about New Zealand’s rate of broadband uptake:

Our last guest was ATEED boss Brett O’Riley. Brett started by discussing the difference between innovation and invention, and suggested that in this context innovation is a process of making money from inventions. 

Brett talked about the ideal conditions for innovation, and having worked with MIT's Regional Entrepreneurial Accelerator Programme, ATEED's focus in combination with central government, on identifying innovation based enterprises or entrepreneurs ("IBEs") to drive economic growth. From MIT's research IBEs like Vend typically grow rapidly to an average of 35 employees (Vend has about 60), in comparison with SMEs that tend to be focussed on doing business in their domestic market. 

While Brett talked up Auckland’s positives as a centre for innovation – especially its high number of quality tertiaries and big talent pool fluent in both English and Mandarin – he also identified some long term gaps: holding onto talent, growing management capability (especially the ability to take businesses offshore) and our low degree of collaboration despite us all being relatively well connected.

On the connections note, Brett discussed ATEED’s role in bringing people together, and suggested that while medium-term projects such as developing an innovation showcase in the Wynyard Quarter may well pay off, they take time and may not suit all businesses. A complimentary route, he said, might be to also look for short-term ways to connect people.   This could include refitting an existing building as an activation hub for Auckland’s innovative and tech startup companies: for product launches, start-up weekends or company parties, much like the SOMA area has in San Francisco (home to Linkedin, Twitter and the Kiwi Landing Pad).

Other points that came up in in discussion included:

Physical agglomerations versus networked dispersed population, aka The Wellington Effect. While online networking is a great way to connect a dispersed population like New Zealand’s, and is certainly effective in connecting us to the world, some members suggested that innovation works best in conditions where you’re likely to “just bump into someone.” One way to foster innovation, then, would be to “create conditions for creative collisions.” Long-term, a push towards a denser Auckland CBD might help this (and is already being considered as part of the Unitary Plan). An extreme expression of this thinking might be to focus on Auckland at a national level, even if that means reducing or eliminating funding to some non-Auckland universities. (The tipping point effect of a major urban agglomeration has been a recurring theme in Moxie discussions, although it would be interesting to see whether a non-Auckland group had a different take on this.)

Innovation versus just invention. New Zealand has long considered itself a nation of inventors, but as discussed, there’s a big step between invention and innovation. No one denies Burt Munro’s genius, or questions that Richard Pearse achieved some sort of early flight. But Munro Motorcycles aren’t often spotted on the motorway, and most of us fly on Boeings and Airbuses rather than Pearses.

Invention is just the first element in the equation: Invention + customer understanding + business nous + great team + go to market = innovation

Finally, Idealog Editor Hazel Philips pointed out that out entire innovation discussion had centred on turning inventions into ways to make money, and that perhaps we’d been a bit too willing to accept that definition, rather than also consider innovations that lead to positive cultural, societal and environmental outcomes.

Finding common themes to Moxie Session discussions is never easy, but if an idea dominated this one, it was around the importance of physical place in creating the conditions for innovation. While the power of online networks can’t be underestimated (and ex-Pacific Fibre Mark Rushworth was especially insistent on this), location matters.

As our host and Vend CEO Vaughan Rowsell put it, “innovation needs a home.”

Agreeing on a location for that home, then attracting the right mix of people to live there or at least visit, could well be the most powerful thing we could do to turn New Zealand from a land full of inventors, to a nation of innovators.

The Moxie Sessions is an Internet economy discussion group held once a month in Auckland, New Zealand. Its purpose is to bring together a group of interesting technophiles from across the economy to talk about how New Zealand can take advantage of the Internet to improve its economic performance.

Check out the standing invitation, the podcasts and the records of previous events at themoxiesessions.co.nz, and follow @moxiesessions on Twitter.

Thanks to Internet NZ for their generous assistance in making this session possible.


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NZ is essentially a defensive nation. We criticise almost every inititive, bang up reasons why things shouldn't be persued, a country of wowsers
prespetarian in nature, not the free thinkers that make things work/happen.
Could a silicon valley exist in NZ? doubt it!

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I think it could, but it would need a couple of things. The first is for us to make some hard choices nationally about how many cities we can support as tech hubs. Can we afford as many university towns as we currently have? The second is the money. Every dollar we invest in property is a dollar we're not putting into the productive economy.

Hard, but not impossible.

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A silicon valley? You mean carbon , surely.
Oh right , we have absolutely no competitive advantage in the production of clean , green and fresh food for the affluent of the world.

O.K. then.
Why don't we just make lots of powdered milk for the less affluent?
We could be a big player.

Oh that's right; we will never get rich selling to the poor. Silly farmer brown.
Let's just build more cities. Who needs food anyway? We can eat micro-chips.

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Innovation is likely to come from "doers" quietly getting on with it. It's highly unlikely to come from "talkers", who typically are publicly funded - I notice there are a few of them mentioned here.

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I don't know that being a talker means you're less likely to be a doer ... but setting that aside, what do you think we should quietly get on with if we're to become the innovative nation we want to be?

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Now there's an idea: attempt to replicate The Wellington Effect by spending money to try to artificially create it in Auckland, while at the same time suffocating it in those other places in NZ where it was occurring by reducing (NZers') funding to non-Auckland universities...well of course we'd all be better off!

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What should we do then Paul? Despite everything the Internet delivers, there's real power and potential in the creative collisions physical proximity leads to. Is there something more we can do as a country to create the conditions for that to happen?

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Vaughan. I agree we should all do all we can to enhance our environments for 'physical collisions', I just don't see the sense in the quid pro quo being the knobbling of those environments that happen to be more naturally conducive to it than others. New Zealand will struggle if we spend time and resources shifting things around domestically rather than trying to enhance all of our capabilities. I certainly don't buy into the one-city-where-everything-must-happen formula for our collective future well being.

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I agree that innovation is the commercialisation of inventions, however commercial reality is dictated by the size of a market which unfortunately New Zealand does not have.

Which suggests that If we want to become an innovation nation we need to have a high level focus on taking ideas to the global market. Do we?

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Not enough, for sure. I think it's too common for the customer (and in aggregate, the market) to come last when people are thinking of a product or business plan. Marketers, money people, folks with connections into offshore markets all have just as much of a role to play as inventors and entrepreneurs. The government can help up to a point (and is) but I reckon it's a mindset thing. We often talk about bringing the customer to the table. I think that's too late. We need to bring them to the workbench.

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