Maybe Rowan Simpson & David Seymour are right after-all?

How do we create more value in New Zealand to enable a country that is relatively wealthy, wealthy enough to fund out future?

I am going to share some observations, which could have the tendency to be seen as negative, as they are focused on what I believe is wrong with our innovation system and that we will get more of the same results, irrespective of the system redesign that is underway.

We seem angst about the position we are in and we also seem angst about the solutions to address it? Most agree we need to do something to lift our productivity, to create more GDP, create more value - the why is clear, but many struggle with the what & how, will make a difference, that will change the trend lines and direction?

I don't think we have the formula right, and for that reason, I have more of a view that doing less would be better than more.

Since the year has started in New Zealand, and people are coming back to the desk, we have seen some moves. The current Government has declared Economic Growth is #1 priority. This last week, they released the initial findings of the Science System as well as what recommendations they were going to take forward at this time. Commentators like former Minister and current Icehouse and Icehouse Ventures Board Member, Steven Joyce has provided his views.

Over the years, during my time and post the Icehouse, I have written a lot about suggestions that would make in my head a difference, models that I had seen offshore and also things that I had seen working. There was at times some myopia in my view, especially when I was justifying our results to receive more funding from Government.

Today, I am a little more separated from the pitching days for the money from the G, and investors to consider new perspectives.

David Seymour believes that there is no logic for any Government intervention in the form of organisations like NZTE, Callaghan Innovation, NZGCP and more - he talks about them being akin to corporate welfare and I believe his view is that let the private sector determine the best route forward. Less is more.

Rowan Simpson has long written about his views that no good startup has issues with raising money. He has a less is more approach, and questions the logic and need for intervention by Government.

Maybe they are both right. I have certainly formed a view that it is better to do nothing, than do something poorly, or even mediocre. We waste so much money, and we continue to waste valuable resources, we also don't always recognise an opportunity for scale returns when they come along.

We have limited resources in New Zealand to focus on enabling growth, enabling economic returns and value - maybe we should spend none (extreme) or we should spend the resources wisely? As I have said, there is a lot being spent already and we seem to just layer cake on more and more initiatives.

Now, to my point.

It is easy for everyone on every side of the debate to have a position that supports their argument?

Why?

Because there is so little accountability and oversight about the effectiveness of Government investment in the economic development initiatives that have happened?

How do you know if incubators or accelerators were successful or not?

What about the Pre-Seed Accelerator Fund?

Marsden & Endeavour Funds?

What about NZ Growth Capital Partners?

NZTE?

Callaghan Innovation?

Why, oh why is there no accountability for organisations and for initiatives that detail accurate assessments of impact that lead to accountability?

I have been involved in this space of economic growth since 1998 first in a corporate venture arm of Fletcher Building and then from 2001 at Icehouse. It took us quite a few years, but we recognised that as a not-for-profit we needed to have some measures of success. We did create a measurement of impact, we tried to 'formula' it, and we did ok with it - it was not perfect, but we tried and results have been very good, while you can always do better. We also innovated with the Board and Foundation of Icehouse, enabling the creation of a private sector owned and led model in the startup segment with Icehouse Ventures being created and now reputedly valued at north of $50m itself with hundreds of millions under management.

Why does the Government not have accountability frameworks for their investments in the 'economic growth' arena? We have targets for education, we have targets for health, why not economic growth?

I fear it is because Ministers have for decades just liked doing what they wanted, and did not want to set accountability around things they did not understand or they just did not want them in place. Organisations the same. They will talk their Corporate Speak their G Speak, with their manifesto's and their 'orders' from the Minister, but really, how do you know if they have been successful or not? Wait, don't have they scorecards?

Or is this just representative of the confusion that the lack of insight that the G have that causes a CRI to be confused about their role? Or for Callaghan to be created with a research side (IRL) and a innovation development side, and for people to not realise that is like oil and water?

I agree with Steven Joyce, that you could argue that the latest moves around the science system are just moving chairs around the system.

What matters is people, and having an environment where our best people can achieve the best, crazy, amazing outcomes on the world stage. We have many doing that, we just need more.

Most of our breakthroughs have come from the private sector - that does not mean that the public sector is useless, it just means they can get confused about their role. I am also not talking about the 'corporate' and largely high market share sector that revolves around our domestic economy - banks, power, supermarket, building materials etc.

To be clear, system design alone is not going to change the outcomes that we will get from the science system, the Uni system, the new PRO system - we need more. We need to create the signals for ambitious people to go and start their startup, to take their innovation to the world.

What I would like to see is

• more accountability about the hypothesis, conviction and measurement of any activity by the G in economic development
• more courage to close down programmes and initiatives that aren't working
• more courage to back those initiatives that have shown they can deliver value, even private sector initiatives like Outset Ventures
• while also giving the ability for initiatives to be trialled, tested without too many early constraints ie proofs of concept trials
• a complete change in the culture that exists between Government Management, Boards & Ministers which is so risk averse, butt covering and mostly anti-logic based to support a growth mindset
• greater capability on the boards of innovation vehicles that have public sector funding
• an aggressive incentive programme for attracting founders to come start in NZ (both expats and new NZers) that includes tax, ESOP and UK style EIS angel investment offsets, and please remove the crazy and mis-aligned FIF tax regime that is doing the complete reverse of attracting people to NZ (ie most are leaving in year 5)
• funding support programmes like SBA out of the US that are more auto and less given to the 'whim' of accountants and lawyers who sit on panels

But overall, don't think we are going to get anything much different with the latest changes, because it looks to just have the same people sitting in different seats. Nothing against them, but it was not working before, so why will it work now?

I think often in my time about the people who have made it 'BIG' and those that have not - in startups, in privately owned small businesses that became big, and even in corporate careers. It is so hard to predict with 100% certainty before the market tells you, yes you can do this better on a portfolio basis, but the truth is that when a Sean Simpson or Carmen Vicelich or Peter Beck or Murray Holdaway or Don Braid or Ranjna Patel started, you really could not say with certainty they would be successful. The point is, we need a lot of people like them doing it, pushing it, challenging and dreaming to create something material, important and global. The conditions need to exist to enable them. People sitting inside the G are not going to be able to tell you let alone create a space industry.

Why I am on that, the space industry, that is such a great case study about how the G can come in behind the market and enable the success and ultimately a multi-billion industry that NZ benefits from. More of these please, but don't tell me that the G can pick them, they can only react to what the private sector creates.

And here is the point - the greatest value adding innovations have not typically come from our Government system. That does not mean the G system is not important, it is important, but we should be focused on enabling the courageous, the brave to come and do things in NZ and take them to the world.

I want the new PROs helping the existing industry be the most competitive they can be.

I don't want the G setting up a PRO for the future tech - this is more likely to be a failure. Instead find the frontier researchers and academics in NZ and around the world, and fund them to do their work that can be translated and released.

Ramble over, it is a Sunday in New Zealand and it is a long weekend for some of us, time to go and turn the BBQ on and read a novel.

Courage, that is what I want from the Government.

Courage to recognise you have to sort out our platform to enable us to be competitive - we need to pay less for what we consume / use. We have to reduce the distortions that come from our small market. We need to change our trade practices approach to benefit Kiwi's not corporate leaders and offshore owners.

Courage to also recognise that the how we grow is all about the people, creating the environment for the best to start, build and scale globally significant firms that ultimately New Zealand will benefit from.

Courage is all I ask.

BBQ time.

Thank you for reading

Hammy

PS, above was not meant to be prescriptive, and I will have missed things, like taxes, like property imbalances, like many things, yes I agree, but this is my view, my take, you add yours