Innovation in business. It’s unquestionably important – as a scan of most, if not all, CEO’s strategic priorities and board agendas will attest.
But equally important, as the CFO will dutifully remind us, is that innovation is pointless if it doesn’t make – or save – money for the business, and hopefully appreciable amounts of it.
That was the key message behind our recent four-city, nationwide seminar series, “Turning Innovation into Gold”, which saw 13 kiwi entrepreneurs tell the business story of their personal journey through innovation. A journey that covered the mistakes made, the strategies that worked (or didn’t), the lessons learned and advice for others contemplating a similar path to possible prosperity.
Some common themes emerged. One of the biggest issues many of our entrepreneurs faced was a simple lack of funding – at start-up, or at critical growth points on the journey such as that scary step into the global marketplace.
Being innovators, however, the speakers on tour had plenty of tips to help others struggling in this environment and their innovative instincts extended beyond the products or services they’d created. For Scott Noakes of classroom management software company LineWize, innovation was also about saving start-up costs by engaging experts in the business and giving them shares in the venture – creating fully engaged employees in the process.
Other speakers had similar tips around collaboration. Karl Gradon of NZ Mānuka Group told the Tauranga audience of the power of giving your suppliers “skin in the game” – letting them share in the prosperity. Amanda Wiggins of Christchurch-based Forest Herbs, makers of therapeutic products derived from the native Horopito plant, says her company benefits immensely from working closely with a few key distributors, developing the relationship, rather than working with many who you don’t know so well.
Collaboration for Bruce Davey’s Christchurch-based company ARANZ Medical, makers of specialised 3D medical cameras, means working closely with your customers – seeking their referrals and leveraging their marketing. Jason Low of Tauranga-based Trimax Mowing, who manufacture large mowers for parks and sports grounds and sell them globally, also emphasised the importance of customer collaboration – in Trimax’s case, that’s about constantly innovating, drawing on what customers tell Trimax they want and need.
Leveraging your customer relationships was also on the menu for Heilala Vanilla, says Jennifer Boggis, who pointed to the benefits of co-branding with established manufacturers like Whittakers and Lewis Road to get the Heilala Vanilla brand recognised.
Innovation Council speaker Louise Webster urged innovators to look for partnerships both as a way to improve their speed to market and to access established channels to their customers.
Trimax also flew the flag for the importance of service and reliability – don’t let your customers down, a view shared by Prolife Foods of Hamilton, part of whose marketing catch cry is “Providing great food with obsessive service”.
For Binu Paul, Auckland-based developer of SavvyKiwi, an app that helps people decide which KiwiSaver provider is the right one for them, the hard-learnt lesson was about not blowing all your funds on product development. You never have enough funding at the start, he said, but whatever funding you do have, you must keep a decent amount aside for market validation.
That importance of clearly identifying the need (and thus a viable market) for a product was echoed by Todd Gisby of StretchSense and SleepDrops founder Kirsten Taylor. An engineer, Gisby worked for many years trying to develop an artificial muscle before realising that what people really wanted (and couldn’t get) was a type of sensor that could be woven into stretchable clothing – which StretchSense duly delivered.
Taylor, a naturopath, tapped into an often undiagnosed need for sleep remedies but realised there were many different sleep disorders and one remedy couldn’t possibly cover them all – hence her specialised range, targeting individual disorders.
Gisby’s approach to collaboration differed from the others on the tour, however; StretchSense sticks resolutely to its core – making the stretch sensors – which they sell to those producing the actual consumer products for the marketplace.
Proud Waikato craft brewer Darrel Hadley was able to get around a common obstacle to marketing new beers – not being able to secure outlets for the product – by opening up his own, on the back of his experience in establishing cafes and bars. Selling the Waikato brand story and collaborating with fellow Hamiltonians has grown this award-winning brewery brand.
For Gallagher, a global electronics success, the constant push for innovation was illustrated by the amount of money they put into R&D – around 9 percent of revenue, against a New Zealand industry average of less than two percent.
And therein lies the self-evident truth to come out of the “Turning Innovation into Gold” seminar series. Continual innovation is a key to long-term growth and competitiveness in the global marketplace and a higher standard of living for all, yet we do little in this country to really prime the innovation pump.
Back in the 1980s, countries like Denmark and Finland were agriculture-based economies like New Zealand with similar per capita incomes. But they have now sprinted ahead, leaving us mired on the farm in our Wellington gumboots.
In the 1980s Israel’s economy was a cot case – but in the last year alone, there were 1400 new technology start-ups in Israel.
The economies of these countries have diversified and become more productive because their governments engineered a cultural shift in attitudes to innovation and created a business environment that facilitates and supports technology based start-ups. We can do this too.
Persuading kiwis to invest in innovation and start-ups (rather than property) is not something business alone can do, because we have a small, risk-averse domestic market which is dominated by small businesses.
The answer lies with our Government; if it sincerely believes in a thriving innovation economy where we profit from the brainpower we have here, it needs to unclog the arteries of innovation and get things pumping. Our government must follow the lead of countries like Israel, Denmark and Finland which have R&D tax breaks, assistance for IP ownership, and generous, readily accessible funding for good ideas.
New Zealand needs to be creating jobs in the high-salary technology sectors rather than low-wage farming and tourism sectors.
What we need is a government which itself has some innovative flair and the determination to create a start-up welfare state in New Zealand.
Tips for innovators
Give experts a share in the business to save money and ensure engagement
Look for partnerships
Allow loyal suppliers to share in the profits
Develop great relationships with a few key distributors
Use customers for referrals and product development
Emphasise service and reliability
Set aside some funding for market validation rather than just product development
Clearly identify the need and thus the market
Invest in R & D