Ministry of Innovation

Tuesday 1st May 2001

Why fresh thinking matters more than ever

New Zealand has a meat 'n' drugs problem. Back in 1967, our meat exports were worth 16 times the value of our pharmaceutical imports. Today the ratio has slumped to 5:1, and we're fast heading for parity. When we get there, we won't be able to afford the standard of medical care we believe we deserve.

Into that little nugget from Dr David Bibby of Industrial Research Limited, you can read the entire New Zealand economy: we aren't earning a decent living from the world economy. But there is a solution: innovation, a buzzword that makes the remedy sound so easy. Crank out better products and you'll make your fortune.

Reality, though, is far more complex. Innovation is not a business process. It's an entire way of life, for individuals and society. It's about gathering and using knowledge, maximising our natural advantages, rewarding risk, learning from failure, encouraging entrepreneurs, collaborating with partners, fostering creativity and generating confidence.

To inform and debate those issues, Unlimited is launching a regular monthly "Ministry of Innovation" column. It will be rooted in reality, exploring not just what people are achieving through innovation but also how. It'll work best if it's interactive, so please tell us about your own triumphs and failures.

Why bother? "Innovation has become the industrial religion of the late 20th century," says The Economist. Innovation is the new theology that unites the left and right, says Gregory Daines of Cambridge University. Half the growth of the US economy in the 1990s has come from industries that barely existed a decade ago, says Alan Greenspan, chairman of the Federal Reserve. One-quarter of the revenues of 3M, maker of Post-it notes and a plethora of industrial products, come from items less than five years old.

Are we any good at innovation? Not good enough. The meat industry exports a product essentially unchanged in 120 years - although, to be fair, the shift from frozen to chilled meat is a technological triumph that has greatly enhanced taste, texture and appearance.

Can innovation save the meat industry? Yes. It already is, through big productivity gains and better business practices by farmers and meat processors. But the next steps are far harder: intricate relationships between farmers, processors, retailers and consumers; complex science; clever logistics; inspired marketing; and state-of-the-art business processes. These are essential to take meat from commodity to high-value source of nutrition and pharmaceuticals.

Cow's milk is being genetically engineered to produce a cure for cystic fibrosis. What other great benefits can be unlocked from cattle? That's innovation.

Some New Zealanders are already great innovators. Take Garth Galloway, managing director of Galloway SPI Asia-Pacific. The Auckland company is a rotational molder of plastic products. But don't think water tanks. Think 6m boats, playground equipment, portable lavatories and highway crash barriers - all items requiring the world-beating technology Galloway SPI has developed. They're sold to some of the most demanding customers in the world; McDonald's buys much of its playground equipment from the company.

Some of the molding technology has been developed with Professor Roy Crawford, who taught at Auckland University before recently returning to Queens University, Belfast, to become its vice-chancellor. "In Ireland we have eight or nine rotational moulders but New Zealand has about 35, even though the population is about the same size," says Crawford.

"They're father-and-son businesses, all trying to undercut themselves on tanks and other basic products. But Garth is different. He innovates, seeking new products and technology. He's in a class of his own, competing against the best in the world."

Now foreign companies are beating a path to Galloway SPI's door to draw on its expertise. The standard industry practice, for example, is to time products in the mold to control the curing process. But working with Crawford, Galloway SPI has developed temperature-controlled ovens that have doubled the odds of getting a perfect cure, reaching a success rate of 87%. By improving the structural and aesthetic qualities of the plastics, the technology is opening up a wide range of products never before attempted - roofing components, for example.

"We're making a black art into a systematic process, from concept all the way through to the finished product," says Galloway. "We're being far more analytical and putting a huge amount of added value into ourselves." Galloway SPI exports some 80% of its output. More telling is the fact that 70% of its sales are of products that the company has developed over the past four years.

Galloway SPI has brought together local and foreign technology, coupling them with New Zealand ingenuity and design. It's a perfect example of why we should set our sights far higher than the knowledge society. That's far too passive. Let's build the innovation society, creating a country that puts knowledge to work.

Rod Oram, a contributing editor to Unlimited, is an industry fellow in Unitec's New Zealand Centre for Innovation and Entrepreneurship.

Rod Oram
oram@clear.net.nz

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