Changing Gears

Learning to ride the knowledge wave

Keith Newman

www.wordworx.co.nz

An old Maori proverb:

“Remove the heart of the flax,
From where shall the bellbird sing;
you ask me, what is the most important thing in the world,
I say to you, it is people, it is people, it is people.”

Harakeke or flax is a versatile plant that was used for clothing but it can also be woven into baskets, plaited into ropes and snares for fishing. The fibre can be treated to make cloth. The flax roots have a medicinal value - when cleaned and boiled the liquid can act as a laxative.

We can have all the technology we like but if we don’t realise that people are our greatest asset then we lose over and over with each new generation forgetting the value of creativity and community. If we focus only on the tools or the outward form – the software and hardware and networks - and forget the heart where the seeds are produced then it is not only the birds who will forget their song.

It’s time to get back to basics

Instead of a tool to enhance, enable and empower individuals and communities technology has become a 16-wheeler with no brakes heading out of control into an unknown future. In my presentation to you today I want to try and get behind the wheel and find the nearest truck stop so we can understand where we’ve come from and where we’re going.

We’ve come a long way in the decade and a half since I relied on a Remington typewriter to produce my words to sitting in my home office with two 400MHz PCs and a fast Internet connection.

I’ve heard a lot of promises from technologists, futurists and slick salespeople in my time as an IT writer and editor, and have become rather disillusioned with what I am seeing. Rather than giving us the four-day week and improved lifestyle technology has kept us glued to the screen and many of the promises of productivity and equal access to the information superhighway have failed to materialise.

Whether we like it or not technology and its tools are reshaping our future workplace and society in many cases faster than we care to believe. New Zealand has not done anywhere near enough to ensure the benefits are available quick enough to empower our businesses and communities to participate in a world that is being reshaped before our very eyes.

While successive governments have actively talked up the IT software and telecommunications markets they’ve done very little to boost confidence of this sector, train people or get behind our best ideas to help turn them into multimillion dollar export successes.

There it was in the Herald on March the 20^th the official admission that New Zealand has missed the bus on information and communications technology. Science minister Pete Hodgson says he’s now determined not to let that happen with biotechnology, which is “where it’s at in the next century in terms of technology”.

What a statement. He said New Zealand had missed the ICT bus because it did not have military research or a venture capital industry and the entrepreneurship that goes with it. I prefer to believe hands-off government policies and monopolistic practices by certain corporates have been behind the industry stand off which has deflected the focus to profits and playing safe rather than preparing this nation for rapid social and economic change.

Harvard Business School professor Dr Michael Porter returned like a prophet of old in August last year to point his bony finger at those who did not heed his warnings. Dr Porter wrote a prescription for our economic ills in 1991. At the conclusion to a two-year study he warned our 1950s economy would continue to decline unless government and business took notice of the march of technology, entered the free market and became more responsive.

Subsequently we went through the painful process of privatising, reducing subsidies and opening up our markets to the world. Then four years ago he returned to tell us we'd done the difficult things but beaten ourselves up in the process.

The government should have been stimulating our thinking, retraining the workforce, investing in science and technology, encouraging innovation and capitalising on our uniqueness. Instead we got the hands-off treatment. He said we needed an "energising national vision" and to invest in technology incubators where like-minded people benefit from each other’s contributions and foster innovation.

He reminded New Zealanders again at last year’s Catching the Knowledge Wave gathering of the need for tax write offs, greater investment in r & d, support for local entrepreneurs and incentives for international businesses to locate here.

Rather than freeing businesses, entrepreneurs and talented people to get on with the business of doing what they’re passionate about we’ve overloaded them with administration and compliance costs. One estimate suggests employment relations, union negotiations, health and safety; resource management and a range of other impositions have added about $26,000 in costs to the average medium sized business.

The term knowledge wave appears to have been just another catch cry which confirms New Zealand, as Brian Gaynor said in the Herald in February “as world leaders in consultative reports and advisory committees” but lagging well behind when it comes to specific policy decisions.

The statistics tell a bleak story which must be turned around if we’re to build the sense of ownership, identity and pride required to fuel an empowering vision of the future, and pay the bills.

Only 4 per cent of NZ firms export, 30 firms produce 50 per cent of those exports. We’re among the lowest exporters in the OECD and it appears we still have the lowest proportion of hi-tech exports of any developed country.

The bulk of our exports are still agriculturally related and while we’ve been talking about diversity and the potential of the hi-tech sector for ages there’s been little effort to actually define that sector and where it’s headed.

It’s been suggested we’re capable of generating $10 billion in exports by 2010. It’s hard to tell whether that’s bullish or simply bullshit.

If you wanted to know the size, growth potential and export projections for the electronics, telecommunications, information technology or software industries you would have to visit numerous web sites and make endless phone calls to even get close.

In fact official statistics tell us we’re slowly sliding south. The latest figures released in March by Statistics New Zealand show the market has slowed to 5 per cent growth compared with 7 per cent in 2000.

Total sales of single user and multi-user computer hardware, communications hardware and software and overall software sales reached $4.8 billion for 2001. IT exports overall were up 11.7 per cent to $770 million. Although general software sales were up 11 per cent to $537 million, software exports declined 14 per cent to $97 million after four years of steady growth.

At first sight that’s depressing news. However the fact is the government gets its statistics the easy way – by guessing and using old ideas of what constitutes technology. I’m sure if I added up the value of all the offshore software sales reported in the media each year the value would consistently blow the official numbers out of the water.

In the official government statistics, a communications service – a very lucrative sector for our main players including outsourcing and consulting contracts - is not included and neither is electronics or embedded software.

Existing stats don’t include software sold or downloaded over the Internet, multimedia or services and support // software developed here by branches of overseas-owned companies // or embedded in petrol pumps, washing machines or telecommunications devices. And what about web development and e-commerce coding?

Research Company IDC suggests local software industry revenues were around $770 million last year growing to $921 million by 2005. It’s been estimated software exports alone could be around $500 million

Software companies are loath to supply accurate information. They’re already taxed on r & d spending, which cannot be recovered until they have a product to sell, so that figure often ends up in the expenses column. The current tax regime acts as an incentive for dishonesty and penalises pioneers.

The electronics industry alone is worth around $1 billion - 75 percent of which is exported. The overall telecommunications market is worth at least $5 billion but there’s no accurate breakdown of exports. If you ask Statistics for better data the answer is ‘who’s going to pay for the research?’ IT minister Paul Swain has promised better statistics but how that’ll be achieved is uncertain.

We not only need tax incentives and better statistics, we need clear direction – a vision that all New Zealander’s can relate to, backed by practical help to enable, encourage and empower businesses to do what they do well without being faced with toll gates for taxes and business compliance costs at every turn.

Questions

New Zealand is a $100 billion economy but we only spend about $150 million, on marketing and positioning ourselves internationally. We’re not very good at telling our success stories to each other or to the world.

So what is it going to take to wake us up? The Global Entrepreneurship Monitor (GEM) 2001 report, rated us the second most entrepreneurial nation (18.2 per cent of us) in the world. In the ‘opportunity’ entrepreneurs category we’re number one (82 per cent) when it comes to acting on a hot business opportunity – the world average is 55 per cent. We also have the world’s highest rate of female entrepreneurs (44 per cent).

The study shows 6.2 per cent of Kiwis had made some informal investment to help capital businesses get off the ground compared with the world average of 2.9 per cent. Generally though the level of official venture capital was low.

Ironically our entrepreneurs are inwardly focused with low aspirations - only a small percentage are considered dynamic and export oriented. The GEM report recommends entrepreneurship teaching, research and education be strengthened at all levels and greater effort made to encourage women and Maori.

Who we think we are has a great bearing on what we achieve. While the statistics tell us how many sheep and trees we have there’s little official evidence that we have a vibrant community of smart business people, intelligent and innovative software developers, hi-tech engineers, inventors, scientists, film makers, designers, authors, artists and songwriters.

New Zealanders typically have a rare combination of talent, skill and innovation. Our creative people are technically aware and our technical people are creative. If the off-the-shelf solution doesn’t work we’ll adapt it or make our own. If someone says it can’t be done we find a way. We’re full of ideas but often lack the funding, marketing or business skills to turn them into profitable ventures.

I think New Zealand’s Edge web site has the right idea about helping to spread the good news.

The Edge project came about after Wired publisher Kevin Kelly visited here claiming New Zealand’s high level of creativity and innovation arises out of our being a nation on the edge.

He says change and innovation happens on the edge. Edges are very active places. While the centre typically represents stability and comfort the edge is exhilarating or threatening depending on your personality. Creative people are often described as living on the edge.

Brian Sweeney who operates the site and runs public relations agency Sweeny Vesty says New Zealand was the last significant land mass to be settled and is most distant from any other landmass on earth. It has been variously described as a paradise, a sanctuary, an asylum, a laboratory, it’s people moody, broody, dislocated, dysfunctional, and introspective. This is coupled with an extraordinary sense of innovation and social progress including engineering, art and design.

“We need to tell our stories, celebrate our heroes, share ideas and network the Diaspora – the scattered New Zealanders around the world," he says.

Latest estimates are that New Zealand’s true population is about 4.7 million – it’s just that about 800,000 of us are living off shore at any one time. And at long last there’s an infrastructure being built up to ensure Kiwi ex-pat’s who’re succeeding in so many areas overseas can encourage and assist their peers back in their old homeland. That’s all part of the international community so essential to our recognition and indeed survival in the world marketplace.

Mr Sweeny says good ideas can act virally and all it takes is 5 per cent of the population to stimulate a major social change. "Inspiration is infectious," he says. Its time to spread the news:

There is no shortage of examples that New Zealand punches above its weight in the entrepreneurial stakes. Wellington’s Weta Workshop has won global accolades for its work on Peter Jackson’s Lord of the Rings trilogy. Virtual Spectator, internet-based animation software for viewing the America’s Cup, is now sought after for coverage of motorsports, golf, cricket and live concerts.

Research and development firm Powerbeat has harnessed light to deliver data at 160Mbit/sec over a distance of up to 4km. Researcher and AUT lecturer Vishwa Shukla came up with a digital anthrax detection unit, which was all but ignored until September 11. Tiny Auckland firm Domain Numbers has a winning application for mobile phones and handheld devices enabling people to use numbers to access complex web addresses.

Then there’s last year’s chemistry Nobel prize winner Alan MacDiarmid, who discovered plastics could conduct electricity, opening the way for major technology innovation including flexible plastic transistors, electrodes and electro-luminescent polymer displays.

Whether it’s Ernest Rutherford a founder of modern atomic physics, Richard Pearce our own pioneer of powered flight or Beatrice Tinsley a world leader in modern cosmology, you’ll find a growing archive on our heroes of innovation at the NZEdge web site (www.nzedge.com).

This nation at the edge of the world, where the sun and entrepreneurs first rise, is truly blessed. We need to stop complaining about the past, get our official act together and form a vision for the future. Technology offers such amazing tools and possibilities for creative people and yet such an awesome threat to our culture, privacy and freedom if it is misused or neglected.

We’re still waiting for a concerted national response to the knowledge wave, which has so far been more like a Mexican wave on a bad afternoon at the cricket.

The new wild western electronic frontier needs creative, enthusiastic, moral citizens to create, populate and influence its virtual communities. If you fit the description, apply today.

It’s time we were Changing Gears.