By understanding how we think and behave around innovation and how we engage with our customers we can lift our performance and create a whole new value stream for our firms and the nation.

“It was actually New Zealand's Richard Pearse, not the Wright brothers, who was first to fly. The quintessential 'mad scientist' inventor, he didn’t realise the historic importance of the event and so didn’t bother to have any photographs taken.”

Nor did he or any of those around him recognise the commercial importance so, unlike the Wright brothers, Pearse never commercialised his invention. Which sums up New Zealand’s approach to innovation perfectly.

Kiwis think and behave in a very special way that makes us very good at inventing things and very poor at identifying, valuing, protecting and developing our own discoveries and intellectual assets, and turning that IP into profit. Intellectual assets can serve two purposes. First, they are the means of production that we apply along with physical and financial capital to transform raw 'materials' into the goods and services that we sell. Second, they represent business opportunities in their own right. That is, the knowledge, systems, expertise etc that we use to make things can also be turned into high value business opportunities, possibly worth more than the goods and services they are used to make. This may be one of the two greatest opportunities to rapidly transform our mediocre economic performance. The other is learning to overcome our profound reluctance to give and receive feedback. That would allow us to listen properly and learn what our customers truly want and value about our goods and services instead of relying upon what we think they want and value.

A quick reality check
For decades New Zealand has been sliding down the OECD per capita income rankings ladder. In 1951 we ranked number three. By 1955 we were eighth and we currently stand at 22nd out of 30 in the OECD and 50th overall. Many rationalisations have been offered for our decline. The innovation statistics are informative.

• The aggregate quality of New Zealand’s formal research, based on publications and citations is sound (ninth out of 19 countries measured).
• We are good at solving problems and inventing things.
• Our 'innovation linkages' are surprisingly good, second of 25 in 2001 (OECD Main Science & Technology Indicators Volume 2003/2).
• Our adoption of innovation in both manufacturing and service firms is well above the international average.
• Yet our level of triadic patenting is low (21st of 30) and our exports of high and medium high technology manufactures ranks 19th out of 19 on the OECD STI Scoreboard 2003.
• According to the GEM Study (2005) we rank second in the world for early stage entrepreneurial activity but 30th out of 36 for high growth business. In other words we are good at initiating businesses but not at creating growth and wealth.

So, we do good formal research and make the results of that available to the world. We have good channels for two-way exchange of knowledge through our contacts (although our naivety probably means that we give more than we receive). Yet, despite producing an abundance of novel IP, we have an endemic failure to recognise, protect and commercialise it. This is revealed in our abysmal performance in the export of medium high/high technology manufactures.

That’s just unacceptable for a country with so much potential. We can do much better!