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Innovation key to New Zealand's economic future

Posted by Ben Whittacker-Cook on 9/02/2021 12:15:00 PM

In response to the request for feedback on the Productivity Commission’s draft report New Zealand firms: reaching for the frontier, The Icehouse has provided its thoughts and recommendations. Productivity Commission

The report is an in-depth assessment of how the economic contribution of New Zealand’s top firms can be maximised. The Commission found that the productivity of New Zealand’s frontier firms is only about half that found in their overseas counterparts and recommends a completely new approach that learns from other small advanced economies is required.

The Commission recommends:

  • A greater focus on exporting specialised products at scale to overcome New Zealand's hurdles of size and distance

  • An overhaul of the innovation ecosystem to support firms and drive innovation

  • Focused government investment on areas of existing or emerging economic strength and competitive advantage

  • Collaborative, focused efforts by the government, industry and researchers on innovation policy and investments

  • A number of policy and regulatory changes to support innovation in important areas, including immigration, dairy, GM

The report resonated in the context of The Icehouse Group’s purpose: to enable Kiwi business owners and start-ups to fulfil their extraordinary potential through knowledge, investment and connections.

The response that we saw from Kiwi businesses pivoting and adapting during COVID showed the grit and determination of our SMEs and start-ups. What’s needed now is the support and resources to turn that innate determination towards a more global ambition.

Innovation key to economic future

We look forward to continuing to be part of the innovation ecosystem, helping to transform New Zealand’s productivity. We support the report and encourage the government to focus on practical policy implementation that is relevant to the brave and gritty reality of building and scaling a business from New Zealand.

The Icehouse Group, which includes Icehouse Ventures, broadly supports the report’s findings that the key to New Zealand’s economic future is innovation and that successful small advanced economies have large globally competitive firms that export specialised, distinctive products at scale. They, in turn, are supported by an ecosystem of small to medium enterprises (SMEs) that provide specialised products and services with deep globally competitive know-how.

The report noted how few frontier firms we have, our low export ratio, low economic diversification out of primary industries and provided evidence about our relatively low high tech firm penetration despite tech being now the second or third largest export for New Zealand.

Therefore, our sights must be on the next 10 years supporting the high-growth firms to go global or be part of the innovation ecosystem supporting larger frontier firms.  

The Icehouse's recommendations

Key points from our submission:

  • Innovation is more than R&D: value creation versus value capture
  • Without international focus and scale, you can’t drive productivity
  • Support the innovation ecosystem – going further together
  • Building leaders’ “dynamic capabilities”

We recommend a review of government funding to rebalance the spend on value creation (core science and R&D) and value capture. Critical value capture capabilities include but are not limited to: dynamic capabilities of founders and senior teams, international alliance and joint-venture building, and dynamic governance for innovative frontier firms.

We are not proposing a reduction in science spending, but a more balanced approach to funding the other types of innovation critical for lifting productivity.

We recommend the government consider sponsoring a consortia of private and public organisations to drive dynamic capabilities in export-focused frontier companies.

To request our submission please email: grow@theicehouse.co.nz.

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Topics: News & Events, Business Strategy & Planning, The Icehouse, Gavin Lennox, Group CEO, NZ Economy, Innovation, Icehouse Ventures, Export

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