Accelerate - June 2014

Innovation, is it worth it?

open this image in new window: Whiteboard brainstorm

Renowned business management thinker and author Tom Peters said that a new idea either finds a champion or it dies: “No ordinary involvement with a new idea provides the energy required to cope with the indifference and resistance that change provokes”.

Not only are new ideas challenged by indifference and resistance, but to develop and test those ideas is also costly, as investing in R&D and finding the right talent to do it does not come cheaply. So is innovation worth it?

Perhaps the best answer is to look at the firms that focus on innovation as core business strategy.

The Statistics New Zealand Business Operations Survey released in April 2014 reported that, of companies that innovate (which was 46% of the total), most of them said innovation:

  • increases
    • revenue (88%)
    • productivity (77%)
    • market share (70%)
  • responsiveness to customers (70%)
  • reduces costs (67%)
  • establishes/exploits new market opportunities (59%).

The same survey found that, compared with the previous financial year:

  • sales increased for 54% of innovating firms, compared with 41% of non-innovators
  • profitability increased for 43% of innovating firms, compared with 33% of non-innovators
  • productivity increased for 43% of innovating firms, compared with 28% of non-innovators
  • market share increased for 32% of innovating firms, compared with 16% of non-innovators.

The evidence shows that innovating businesses not only tended to do better, but also, in 2011, the 46% of businesses that innovated contributed 75% ($35.9 billion) of measured export income.

We need to grow our economy and we cannot do it successfully by working harder only. We also have to work smarter, with a constant focus on innovation.

A good idea has the potential to change the way people live, relate to each other and even to launch an industry. Often the path from idea to market is long and arduous and can take many twists and turns before it makes an impact or attracts investment.

An excellent example is 3D printing technology. In 1983, Chuck Hull was working for a small business that made tough coatings for tables, using ultraviolet lamps. He suggested a new way to use the UV technology that would quickly turn computer designs into working prototypes. After months of experimenting, he created the first working 3D printer and the patent was issued in 1986. It took almost 30 years of constant testing and developing, and several extra patents, before he saw his invention become the juggernaut success story that it is today.

While not all commercially successful inventions have a 30-year timeline from concept to market success, all of them had a champion who believed in their potential. If we want to grow the New Zealand economy, we need to be the champion – we need to believe in our nation’s innovation potential.

That is why Callaghan Innovation has such a crucial role to play in the innovation system in New Zealand. Our focus is to support and champion innovation in the high-value manufacturing and services sector and an essential form of innovation is R&D.

We are firm advocates that R&D can drive success in new and older businesses, small or large, niche or mainstream. There is no one-size-fits-all solution in R&D, some ideas will fail quickly, some will evolve into a totally different concept, and others will take years to refine before they become a commercial success.

All of these paths have different funding, advice and resource requirements and Callaghan Innovation needs to be nimble and flexible in how we help firms to find their path to product launch readiness.

Through our coordination role, Callaghan Innovation provides a single front door to the funding, skills, advice, support and technical services that businesses need to turn ideas into internationally marketable products and services.

Dr Mary Quin, Chief Executive, Callaghan Innovation

Updated: 4 September 2015