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Tamihere Speech: Supporting Youth Innovation

John Tamihere Speech: Supporting Youth Innovation And Enterprise

Creating Common Wealth Enterprise Development Forum, Queensland, Australia, November 9-13

Keynote address, Tuesday, November 11, 11.30am Theme: "Common – how to ensure collaboration, how to work together and identify roles for government, business, community and young people."

MIHI/WELCOME

INTRODUCTION

As both Minister of Youth Affairs and Minister for Small Business in the New Zealand Government, I have a unique perspective of young people and innovation.

So much policy in the youth sector is driven by negatives. There is a tendency to see only the problems of youth, and define them by their problems: youth offending, youth suicide, youth unemployment, youth drug and alcohol abuse, youth educational failure and truancy, and so on.

While we would not deny that these problems exist, and that the Government definitely has a role in helping address them, at times we run the risk of forgetting that most of our young are in fact not a problem. Most young people are positively contributing members of our communities, actively pursuing educational and career goals, leisure pursuits and lifestyle involving family and friends.

In both youth affairs and small business I am lucky to be in a position where I often see a lot of what is best about youth: determination, optimism, fresh ideas and a willingness to take risks and give things a go.

New Zealand is an entreprenuerial nation. Recent international comparisons have ranked New Zealand highly for its entreprenuership and competitiveness, and have highlighted why New Zealand is a great place to do business.

(slide 1)

The definition of "small to medium businesses" for which I have ministerial responsibility is those with 20 or fewer employees, and these small-medium businesses make up an overwhelming 97 per cent of all New Zealand businesses, employ 43 per cent of all employees and contribute 39 per cent of GDP.

(slide 2)

Small business is often the entry point for many budding entrepeneurs into the business world. Among small businesses, some of the most innovative and dynamic are those founded by and led by young people, and I would like to show you some examples that I think are really exciting:

Innovative youth

Case Study 1 – FlatmatesNZ.Com (slide 3)

FlatmatesNZ.com is an online flatting search solution. Its founder, Dylan Bland, 21, got the idea while unsuccessfully looking for a flat using the traditional, expensive and time-consuming methods of newspaper ads, word of mouth and noticeboards. So he set up FlatmatesNZ.com, a powerful, custom-built search engine attached to an extensive database of listings.

People looking for a flat, flats looking for a flatmate and landlords looking for tenants can search free on FlatmatesNZ.com. It allows people to easily find flatmates who they can get along with because they can ask detailed questions about things such as occupation, gender, ethnicity, religion, dietary preferences, interests and so on – without the time, hassle and embarrassment of interviewing and rejecting unsuitable candidates in person or on the phone.

Nearly a year after it was set up, FlatmatesNZ.com has helped 15,000 people find flats or flatmates, and has about 500 visitors to the site each day. The site enjoys strong advertising support from organisations and companies with connections to the youth sector, such as universities, banks and charity organisations.

Case Study 2 – Natalie Crimp/Composting Nappies (slide 4)

This year Environment Canterbury's Wrybill Trophy was won by 14-year-old Linwood College student Natalie for an extremely innovative solution to the environmental headache posed by so-called "disposable" nappies.

Natalie won the environmental award for her project which worked out how to turn disposable nappies into usable compost within weeks.

Natalie's interest in the issue was sparked by an ongoing row over the cost and siting of a landfill in her area. She knew that landfills were filling up with disposable nappies – 90 per cent of New Zealand babies use disposable nappies, getting through 572 million nappies a year. As nappies would normally take an estimated 500 years to break down in landfills, they cost Christchurch City alone about $400,000 a year.

So Natalie worked out a process in which nappies were shredded and composted – producing good quality compost within six weeks. Lab tests showed that any dangerous bacteria were completely removed in the process – the compost was so clean it was "safe enough to eat". Selling the compost would not only pay for the process, it would also turn a profit.

Case Study 3 – Karen Walker (slide 5)

Though still a fairly youthful 33, Karen Walker has a 15-year track record in the fashion industry since starting out as a teenager.

Walker launched her self-titled fashion label with just $200 saved from her waitressing job, and by 22, already had several employees and two stores of her own in Auckland.

Karen Walker went international in 1997, when she was the sole New Zealander to show in a line-up of hot new designers at Hong Kong Fashion Week, and her hit show resulted in an order from up-market New York store Barneys. Today Karen Walker is a multimillion-dollar company with 110 stockists in 12 countries and an international reputation for cutting edge style.

Case Study 4 – Laura McDonough/Menus.co.nz (slide 6)

Laura McDonough was still at school at Diocesan School for Girls when she was first involved in setting up a business through Enterprise NZ's Youth Enterprise Scheme (YES).

That led the way to setting up menus.co.nz, New Zealand's premier web-based dining guide. Menus.co.nz provides a comprehensive directory of restaurants in Wellington and Auckland, and is used by up to 900 people a day.

From the comfort of their own home, diners can choose locations within the two main North Island cities, their preferred type of cuisine (eg Indian, Italian), and others details such as availability of outdoor dining, live music, BYO or licensed.

They can then browse menus from the list of restaurants, and view photographs of the venues and the dishes on the menu. Once they have made their choice they can book online – and specials are offered to diners who book using menus.co.nz.


Case Study 5 – Te Kaihou Ngarotata/Ngati Babe (slide 7)

Fashion label Ngati Babe was born when 13-year-old Waipukurau girl Te Kaihou Ngarotata needed some extra pocket money, and found it difficult to get clothes to fit her tall, slim frame.

Her streetwear designs, made to suit her own tastes and those of her friends, were an instant hit, so she set up label Ngati Babe last year, followed by its brother label Ngati Bro this year.

With the support of her whanau, and mother Tracey as manager, a team of 47 people now work on Te Kaihou's designs.

She was chosen to show at this year's L'Oreal Fashion Week alongside New Zealand's leading designers, and her work has been featured in publications such as New York-based Elle magazine.

Case Study 6 – Tim Lightbourne/Clinical Technology (slide 8)

Tim Lightbourne is hardly your typical New Zealander washing dishes and working behind bars to pay for his OE. Instead Lightbourne is pushing the natural health products and sports medicines of his company Clinical Technology as he gains a toehold in the fiercely competitive UK market.

Lightbourne started the business in 1999 as a 22-year-old fresh out of marketing and business studies. His father Warwick, a sports injury specialist, had developed a range of natural health products, including natural herbal anti-inflammatory cream Percutane.

Lightbourne set up Clinical Technology to market the products to a much wider clientele than just his father's patients, and achieved a $50,000 turnover in his first year.

Its products are now selling throughout New Zealand, are stocked by 120 stores in Australia, and are also being exported to the UK. Lightbourne aims to boost UK sales by 50 per cent, and Clinical Technology's projected Sales for 2003 are worth $1.2 million.

From there, Lightbourne hopes to conquer Europe, and with that aim is employing both legwork and clever marketing ideas – from giving away thousands of free samples, to wrapping up Warriors league player Mark Tookey in the company's Thermastrap product.


THE POSITIVES OF YOUNG PEOPLE IN BUSINESS

These six young innovators come from a variety of backgrounds and places. They range in age from 13 to 33. Some are still budding entrepreneurs who are still at school, while others are fully-fledged members of the international business community.

What they all have in common is their youth – and it is their youthfulness that is part of what drives the other factors they share: enthusiasm, inspiration, innovation and good, new ideas that challenge the status quo.

For example, when most people find themselves in a frustrating situation like Dylan did, they merely tolerate it and do nothing. But Dylan's good initial idea for FlatmatesNZ.com, innovative thinking, the skills to turn a good idea into reality, strong understanding of his youthful target market, and the youthful enthusiasm to have a go and take some risks meant he did do something – and out of that a successful enterprise was created. I don't think an older person would have responded in the same way.

Young people like the six I have showcased here today will be the driving force of innovation, entrepeneurialism and business as they move into and up through the workforce and business community, bringing new ideas, attitudes and solutions with them.

It is their youthful perspective and understanding of their youthful markets that makes their products a success. Fashion, in particular, is a youth-driven industry. Young people determine what we wear and what the latest trends will be. Te Kaihou's personal connection with her market for Ngati Babe – essentially her peers – is vital to her understanding that market and recognising what it wants. On an international level, Karen Walker has that same instinctive knowledge of her clientele – and what better youth endorsement could you get than having Kelly Osborne wear your clothes to the MTV Awards?

However, while youthfulness brings a lot of positive attributes, it also brings inexperience. And, surprisingly, by international comparisons, New Zealand has a relatively low rate of young entrepeneurship. Obviously we need to do more to support an upcoming generation of entrepreneurs.

That is where the Government has a role in supporting and collaborating with young people, non-Government organisations and the private sector in ensuring that they make the most of their talent and skills, and are less likely to come to grief along the way.


WAIPAREIRA TRUST – A COLLABORATIVE APPROACH (slide 9)

Before being elected to Parliament in 1999, I headed an organisation called the Waipareira Trust in Auckland, which pioneered a collaborative approach to providing a range of social services.

The problem that Waipareira faced was that under a competitive model, different voluntary organisations were providing different services in competition with each other, and in competition with a number of Government agencies.

Under this model, collaboration was discouraged, and as a result services were fragmented and less effective. No one was providing a seamless service that addressed the overall and inter-connected needs of individuals or the community.

We had to build an organisation that provided a commonsense and collaborative approach – and in the current climate and accepted way of doing things, that was seen by a lot of people as radical.

We set out to provide seamless services right through from early childhood to our elders. We set up public primary healthcare based on pre-emptive wellness checks. Previously our clients had only got medical attention at Accident and Emergency, because health issues had not been prevented or addressed before they had got to critical level.

We provided foster care bed nights and residential facilities for youths. We provided second chance education for those who had failed in the mainstream education system – or who the mainstream system had failed. We provided substance abuse counselling.

We provided a relationship between the community and business and industry, placing people in employment and training. We developed enterprises – rubbish collection, security, labour, building construction and development.

We built links within the community – for example connecting elderly people living in council flats to act as mentors to solo mums in their community who had no support.

Most importantly, all those services were connected so we could address all those separate issues as part of a whole – social problems rarely occur in isolation; they are typically among a raft of symptoms stemming from the same underlying difficulties. We provided case managers who could look at the whole picture, and address it in a holistic way. They could work with people to draw up an action plan to guide them and inspire them about heading somewhere positive in their lives.

Contracting out of services to agencies such as Waipareira has been criticised by some as "privatisation" of social services, and the fact that non-government agencies like Waipareira can actually make a profit while providing services has also been criticised.

I reject the notion that non-government agencies must be not-for-profit – an organisation that deliberately sets out to run at a loss is no good to anyone. Profit is by no means a dirty word – as long as that profit is ploughed back into creating more opportunity in the community.

While the government will always have to maintain a strong response capability in all areas of health, welfare and justice, the non-government sector, given the opportunity, can provide outstanding results in those areas that the government never will. If he government fails to deal with a problem, it just throws more money at it. The "third sector" actually owns the problem – it has to live with it – and is therefore directly motivated to do something about it.

Waipareira was focused largely – though not exclusively – on Maori, but the same collaborative approach could equally be applied to youth, and our government is trying to develop a more collaborative approach to the youth sector. To provide effective support to such a diverse group, we must establish some common positive ground between all the players, the government sector, the private sector and importantly the local communities who are best placed to understand these needs.

THE GOVERNMENT'S ROLE AND INITIATIVES

I see my joint responsibilities as Minister for Youth Affairs and Minister for Small Business as an excellent opportunity to contribute to this dialogue.

Our youth often look to pop stars and sports stars as role models. I want to see our youth have the desire and ability to move into the business arena, and have the skills and attitudes necessary to help them succeed. And when they succeed, I want their success to be celebrated, the same way we celebrate our sporting success.

The government is promoting youth enterprise primarily through its growth and innovation framework. A key element of the government’s role is in education. The massive restructuring of the New Zealand economy and society since the 1980s has been reflected in a huge shift in the education sector as it has been forced to become more responsive to the needs of students entering a modern economy. We are looking to enhance enterprise education for young New Zealanders.

(slide 10)

Gateway programme

One way in which the government is promoting youth enterprise is through the Gateway programme. Gateway provides opportunities for senior school students to participate in learning towards national qualifications in real workplaces, and have that learning integrated with their wider courses of study. More than 1,000 students in 24 schools, and over 200 employers participated in the pilot programme during 2001 and 2002. The Government provided $3.8 million for the pilot programme, which now involves 62 schools.


Links outside Government

But of course the government cannot and should not act in isolation. I’m pleased to say that there are many other people that are helping to build the bridge between youth development and enterprise.

Young Enterprise Scheme (slide 11)

The Enterprise New Zealand Trust has been working to deliver programmes to our youth to help them to develop skills, most notably with the Young Enterprise Scheme has been in operation for about 23 years. Under this scheme secondary school pupils form a company, become directors, develop products or services that they market and sell. The most profitable enterprises receive national recognition.

This year: 145 schools participated in YES 345 teams were formed 2166 directors participated

Young Entrepreneurs involved in YES add value to their school-based knowledge, they develop a can do attitude and learn to accept and manage risks.

Teams from YES companies have won the two world Enterprise Olympics for New Zealand in competition with 14 other countries.

Many YES team members have gone on to become successful businesspeople once they have left school.

Enterprise Studies Programme

Another more recent initiative is the Enterprise Studies Programme, developed by Enterprise New Zealand Trust in cooperation with schools and businesses. It takes an experiential approach to learning and involves students in the development of their own enterprising project with a focus on their local community. Around 40 percent of New Zealand secondary schools run the programme.

PrEP

Enterprise programmes are also offered in our primary schools. Under the PrEP (Primary School Enterprise programme, students design and operate their own functioning society in school time. They work in ventures within their own economy, establish marketplaces and exchange the goods and services they have produced. Students design and produce a school-based currency and operate a banking system. And, as a government Minister, I am delighted that the students even have to pay taxes to support their own government!


Business Incubators

Another exciting development in support for young enterprise is the establishment of business incubators. The concept of business incubators was born out of the recognition that successful small businesses lead to a successful economy – yet the costs and risks of setting up a new business pose significant barriers, particularly to young people just starting out.

(slide 12)

After five years about 70 per cent of New Zealand’s small businesses are no longer in existence. However, international research shows that business incubators can dramatically increase survival rates – 87 per cent of businesses "graduating" from business incubators are still surviving five years later.

Business incubators mitigate the costs and risks of setting up new businesses – for example by sharing fixed costs such as office space and equipment, and providing mentoring support and business plans from experienced businesspeople. Some of our incubators are linked to universities and assist graduates to set up their own businesses.

As business incubators are still a fairly new concept in New Zealand, with 16 formally constituted incubators around the country, we are still waiting to see the long-term results. However New Zealand incubators such as The Icehouse and Westsmart are already showing encouraging results in supporting new businesses get of the ground. Many of the companies involved in the business incubators are ran by young entrepreneurs.

PARTNERSHIPS FOR SUCCESS

I see the government's role, and my role, in realising the huge potential of our young people as a collaborative role – not one where the all-powerful government hands down services and programmes from above, nor one where the private sector and individuals are left to their own devices.

What I see as having the greatest potential is a role for government in partnership with the private sector and non-government organisations to maximise the best attributes of each sector, and create the greatest opportunities for our young people.

It seems there is a great deal of willingness and expertise available to support young entrepreneurs, but we need to build greater linkages between these groups.

Research shows that young people are ideally supported by the successes of their own generation, rather than the generation before them. Their networks may operate in different ways than traditional business structures – for example they are much more likely to be based on virtual web networking, or a social context.

If we can connect this youthful vitality and new ways of doing things with the wisdom, experience, insight and financial backing of an older generation of entrepreneurs, we'll have a potent and successful mix.

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