Tuesday, 4th March, 2014

It concerns me that with all the creativity New Zealand businesses claim to have, we have not come up with a story line that puts Innovation at the top of our minds and part of a standard behavior pack for business.

Similarly it should be of concern to the small and medium end of the business market that we seem to agree with the principle, “innovation is key to success”, yet we do little to put in place behaviors which challenge the status quo in our firms.

We like the concept of doing well for a nation our size and the bumper sticker strategy that suggests “we do things differently here”, but my sense is we are going to need to lift our pace of change and point of difference, if we are to either compete in our end of the world or supply to it.

Small and medium enterprises are widely referred to as the engines of economic growth. They make up 95% of registered businesses and even though an SME is defined as a business employing 20 people or less, they are credited with more than half New Zealand’s jobs. What constantly surprises me, is how many SME’s regard delivering innovation and raising productivity as being the business of big business.

Not so. It is innovation which converts the entrepreneurial spark, the ideas, and its close cousin invention, into business opportunity. It is innovation that has driven the improvement of our quality of life since the Stone Age. It is innovation that is at the heart of every successful business, and what gets a new business – often an SME in a garage or living room of someone’s home – off the ground in the first place.

Innovation is the new idea; the new product, the new approach, the new system, the new technology that allows something to be done that couldn’t be done before, or done in a new way which greatly reduces the cost of doing it.

Above all else – it is innovation that is the key to business success.

It follows that every business should put a definition of innovation into their firm’s business plan. If you do, you have a tool to apply innovation across all facets of the business – to access a ready market, to access capital, to hire skilled staff, to more efficiently use resources, and to locate your business where infrastructure can best support you.

If innovation is an integral part of the business plan and culture, the business owner and everyone else works together with an expectation that change is part of the environment.

Logically innovation must be a component of any firm’s HR strategy. If we are to get difference in our firms as we build new teams, we need to employ difference, not clones of those who are already there – we all know what we will get if we keep on doing the same old thing we have done in the past. That difference will apply to gender, ethnicity and a range of other factors that will ensure we respond to a changing customer base with quickly changing demands. And then within our firms we need to promote the fact that there is an innovation role for everyone and when we recruit new people they should be encouraged to challenge what is and introduce change.

Likewise, innovation is critical to a firm’s marketing strategy, whether domestic or export. The globalisation of product and service markets is accelerating. In particular, Kiwi SMEs face increasing competition not only for sales, but also for technical know-how and skills. The competition could well be an SME located in another country – almost anywhere in the world. Equally, the opportunity exists for small and medium New Zealand companies to compete for business in virtually any city or market in the world. Our distance from the rest of the world used to be a constraint. But no longer - and no longer is New Zealand a remote backwater for the rest of the world; we may be a small market, but for any SME with aspirations to have global reach, New Zealand is an obvious target.

The point: In this global environment, competitiveness of any business, but especially an SME depends crucially on the speed with which new products can be brought to the market place and new cost-saving improvements made.

Isolated decisions to upgrade technology, set up a website, or have an innovative marketing and HR strategy are not enough – an innovative approach to tap ready supplies of finance is also needed. In short, what is needed is a dynamic, self-sustaining culture of innovation across every aspect of the business.
In many fields innovative SMEs have advantages over larger firms. They provide the channels along which new products and services develop. In sectors such as biotechnology and information technology, software development, and Auckland’s innovative marine sector, relatively small but creative, innovative businesses have developed and become key suppliers of new technology-based products and services.

Their ability to develop new technologies, and to respond quickly to changing market needs, has given SMEs a pivotal role in the success of the New Zealand economy – going back to the adaption of refrigeration technology, the jet boat, fibre composite yacht hulls, through to electric fencing and more recently the Ike Bike, the skeletal frame to enable disabled people to walk, and the Martin Jetpack flying machine.

“We do things differently here…..”

Well some might, but what we really need is a culture of doing things differently and encouraging change within all our firms. We need a pipeline of new people and new ideas that we are prepared to take to market in a way that delivers a sustained long term difference, not just the few moments in time we occasionally get to celebrate.

For more information contact Michael Barnett, mobile: 0275 631 150.
Michael Barnett, Chief Executive, Auckland Chamber of Commerce.