Creativity in the business world
Hon Jim Anderton Minister of Economic Development
University of the 3rd Age.
You have asked me to speak about creativity in the business world, as well as some examples of innovation turning into great ideas.
It’s an easy topic for me.
I think I am lucky enough to see more of New Zealand’ creativity and innovation in action than anyone.
I often say New Zealand is the most creative nation in the world.
That isn’t political pandering.
It’s the sort of thing that is said to me by overseas visitors who study innovation in New Zealand.
Singapore’s deputy Prime Minister, for example, told me ‘I envy you Mr Anderton, because people in your country are so creative. In my country we have to order people to be creative.’
Or the owner of Allied Telesyn, an IT research firm here in Christchurch.
When I met the new owner of that company, he told me about a project his computer engineers in California had been working on for months, at a cost of millions of dollars.
His IT engineers in Christchurch solved the problem, virtually using existing ideas in their office, in a matter of days.
The creativity of New Zealanders springs from our isolation.
We are a small country far from the rest of the world.
We don’t have large sums of money to spend on solving problems.
We are not on the doorstep of huge, wealthy markets.
As Lord Rutherford said, ‘we don’t have much money, so we have to think,’
Our isolation means it is more difficult for us to enter the networks and access the funding of larger developed countries,.
It has also made us more resourceful.
We are accustomed to thinking for ourselves, and solving problems in a unique way.
We are used to the freedom of thinking for ourselves, and the solutions mothered by necessity.
I few years ago I published a book about New Zealanders who made outstanding contributions, but who were not necessarily well known.
One was the nineteenth century pioneer founder of New Zealand’s export company, William Soltau Davidson.
His triumph was to use refrigeration engineering to transform the New Zealand economy.
His background was in developing farms.
He had found that the problem with being a farmer in New Zealand was the distance between the sheep and the market for wool.
Not only that, but between 1873 and 1883, wool prices slumped.
Most of the sheep, other than its wool, was waste.
If you had asked most farmers at the time, they would have said ‘New Zealand will never sell meat to Britain.”
Sound familiar to
you? How often have you heard someone say ‘New Zealand will
But in Britain, Davidson saw there was a huge market for meat, if only he could get it there.
The story of his success in sending the first experimental shipment of meat to Britain aboard the Dunedin is well known.
The episode changed New Zealand’s economic landscape forever.
Our exports of so-called agricultural consumables grew from 200 tonnes of cheese and butter – and no meat at all – in 1881, to 50,000 tonnes of meat and 6000 tonnes of cheese and butter by 1895.
The impact of refrigeration on the New Zealand economy could hardly have been more profound.
Davidson’s success is all the more surprising, because most farm owners at the time were not especially interested in the long-term development of a productive industry.
They were speculators looking to make quick buck.
We can learn a lot from Davidson and adapt it to today.
We can learn the importance of being open to new ideas.
We need to encourage visionaries who come up with new ways to solve problems.
We need to know that visionaries with practical solutions can transform our economy and change our destiny.
The story of William Saltau Davidson reminds us of the importance of practical solutions.
It tells us the importance of focusing on productive activities that add real value, rather than on short-term speculation.
Davidson’s triumph tells of the importance of engineering and science to the economic prosperity of New Zealand.
It tells us about the value of innovation.
Innovation is not an esoteric thing.
It’s not a matter of just saying ‘innovation would be nice’, like it would have been nice if we won the football.
It’s a crucial issue for the social well-being of all of us.
I asked MED to calculate the results if New Zealand’s economy had grown just one per cent faster each year for the last thirty years.
Every family would be $179 a week better off.
We would have another $3.7 billion a year for health.
Another $4.2 billion more for education.
The quality of life New Zealanders aspire to can’t be produced by a low-cost, low-value, low-skill and low-rewards economy.
In the past, New Zealand was a commodity producer.
We need to move up the value chain.
The United States exported the same weight of goods in 2000 as it did in 1900.
The value increased many hundreds of times.
The difference was the export of ideas and creativity.
Taiwan and New Zealand had about the same level of exports in 1970 – about $1 billion a year of mostly commodities.
Today, we export thirty times as much as we did then.
Taiwan exports a hundred and twenty five times as much.
The difference is Taiwan started exporting complex manufactured products – we are still commodity exporters.
What should we be doing instead?
The average output of all New Zealand workers nationally is $60,000 - $70,000 per person.
The average added value output of a worker in a Christchurch electronic engineering firm is $250,000.
The average value added by a biotech worker in Taranaki? $1 million – each.
Innovation is the difference.
Another example: The CWF Hamilton.
CWF Hamilton had a problem with his propellers getting broken when he took his small boat up rocky South Island rivers.
He responded to the problem the way so many innovative New Zealanders do: by developing a local solution.
He developed the Hamilton jet engine that doesn’t use propellers.
In contrast to many New Zealand innovators, he didn’t stop there – he went on and successfully commercialised his idea.
Now, I understand, Hamilton Jet is building waterjets for ferries and supply boats in Europe and the US.
In places like New York where 66,000 commuters a day take ferries through the New York river system, the ferries will be powered by New Zealand engineering genius.
Hamilton Jet is a New Zealand story because it shows how our particular conditions have bred resourcefulness.
In turn, this innovation has helped unlock our future prosperity.
Across Christchurch a new institution has just opened, called the ‘HIT Lab’, or Human Interface Laboratory.
There, a brilliant young New Zealand computer engineer is leading a team working on virtual reality.
Their technology allows you to move computer generated models around a real room as if they were the real thing.
The director of HITLab, Mark Billinghurst, has come back to New Zealand to run the lab, and I understand he began his interest in these ideas from tinkering as a child.
In Tauranga, a young company that only started out four years ago is exporting Blokarts – state of the art land yachts.
I went to Massey University and met a lab technician with a PhD.
His job was to extract DNA from leaves.
He was doing about 13 each day.
He wasn’t looking forward to a lifetime of boring, repetitive DNA extractions.
So he developed an automated system that can perform something 13,000 extractions a day.
Now the university is getting contracts from USA for $20,000 an hour to use this machine.
Consider this: Many children who are now just starting primary school will work in industries that haven't been conceived yet.
Some of our top companies in ten years time haven’t been started yet.
Our major advantage in the world is our creativity.
We will only be able to afford the standard of living we want if many more of our innovators are commercially successful.
Their success provides the jobs that help pay for the first world heath and education services we all like to see our country provide
So we need to create a culture that celebrates success.
New Zealanders are rightly proud of our successful sports people.
But we always seem to come together as a nation to celebrate our sporting success.
We need to learn to celebrate that success in every field of endeavour.
New Zealand needs to show the same passion for innovation that we show for sporting success.
We need to celebrate businesses that develop new ideas and turn them into world-class successes.
The government is playing its role:
Support for innovation.
Support for creative industries:
Film. Television Music Design.
If global success is going to be realised, companies are usually going to need linkages with world leaders.
We won’t get opportunities as of right when our companies grow.
We will win them on merit.
The challenge for New Zealand is to be the right place. To be good enough.
What, then, do we have to get right?
Our exchange rate, our regulatory environment, our resource management laws, our tax rates and a pool of skilled workers are all important ingredients of success.
Take a company like Navman.
In 2002 it was made Trade New Zealand's Supreme Exporter of the year and New Zealand’s Hi- Tech Company of the year.
It is a world leader in marine navigation products and one of our fastest growing companies.
The company makes marine navigation equipment.
It analysed the market and decided it needs to be locked into a large marine manufacturing company.
The days when marine nav equipment was an after-market add-on are going to decline, like electronics in cars.
Last year, 70 per cent of Navman was sold out to one of the world’s largest marine companies, Brunswick Corporation.
Critics were quick to say, ‘there goes another great company, lost to New Zealand.’
But Navman has always been a global company.
It was global on its first day, with a customer in the US for its product manufactured in Singapore.
Today it remains a global company with units in China, Australia, Christchurch and Auckland.
The activities it carries out in New Zealand – where it has eighty percent of its operations – are not based here out of sentimentality.
They are here because this is the right place for them.
As it grows, it is going to keep carrying out its activities in the best place.
That is why it grows.
The challenge for New Zealand is not to stop Navman from growing, or to stop it changing ownership, but to be the right place for the company to base its activities.
We need companies like Navman to grow.
It is crucially important for New Zealand that we have the ambition to create a hundred and then a thousand significant, exporting technology companies.
If Navman realises its dream of becoming a seriously big global business in a high-value sector, it offers the potential for many more high value jobs.
From 350 now to maybe 3000, or even 30,000 like Nokia.
Perhaps, but it’s not guaranteed.
We also have to accept the quid pro quo: we can’t expect them to do everything from here.
The bigger it grows, the more Navman will do overseas, and with overseas partners or owners.
But also, the bigger it grows, the more activity there is potentially to base here.
Our aim has to be not just to grow the Navman’s of our economy – but also to be the source of Navman’s competitive edge.
Our creativity, innovation and successful commercialisation will unlock our future prosperity.
If we can’t unleash our creative power, we can’t match the living standards of other countries.
If we aim to be simply the lowest cost producer, we will end up at the lowest end of the value chain.
Higher living standards result only from unlocking better ideas –
Not from race debates.
Not from being ‘cheap’.
Only from the skills and creativity unique to New Zealand.
We need to have the confidence in our selves to believe New Zealanders can succeed anywhere.
We will succeed by being competitive at everything we do, and developing an edge on the basis of the distinctively New Zealand things that can only be done here.
That is why innovation and creativity are so important to us.