By Kate Pierson
New Zealand is world renowned and respected for its beautiful landscape, Kiwi ingenuity and green fingers when it comes to recycling and sustainability. Yet behind this pristine facade, the lifeblood of New Zealand and backbone to the economy — our businesses — are falling short.
In turn, New Zealand is starting to fall behind and more than 78,000 Kiwis are leaving annually to seek better employment opportunities offshore.
Studies by the Ministry of Research, Science and Technology (MoRST) have shown that investment in Research and Development (R&D) is about half the Organisation for Economic Co-operation and Development (OECD) average. In 2004, only one percent of New Zealand’s gross domestic product was dedicated to R&D expenditure, which was well below the OECD average.
As the world moves towards a period of economic recovery, New Zealand businesses will want to look at how they can maximise their productivity and earning potential through research and development methods.
What is R&D?
The OECD Frascati Manual defines R&D as, “creative work undertaken on a systematic basis in order to increase the stock of knowledge,” but the interpretation of what R&D is and how to use it will vary depending on a company and its operational nature and needs.
Definitions aside, R&D is a vital tool for businesses and a way to protect the economy and livelihood of current and future generations.
In New Zealand, R&D is a hot topic for all the wrong reasons. Our national headlines have been inundated with warnings about New Zealand’s lacklustre approach to R&D and the potential consequences of this nonchalance.
On its website, MoRST maintains that a pro-active approach to R&D is critical to New Zealand’s prosperity and “an increase in business R&D is necessary if New Zealand companies are to remain competitive worldwide”. So why are we falling behind in R&D?
Is the time right?
As New Zealanders move beyond the turbulent economic times, many are asking if now is the right time to be investing in R&D. The answer is “yes”.
Our quintessential Kiwi ingenuity will help New Zealand regain its financial footing, but for businesses, having a strong knowledge of their enterprise, target market and strategising for the future, will ensure this happens.
A New Zealand Trade and Enterprise (NZTE) report ‘Changing the Game: Recession Survival Strategies’ says investing expenditure in R&D during a recession is advantageous to a business, so post–recession companies should be looking to invest substantially in R&D.
“Increased R&D can also create products that meet the increasingly diverse needs of customers and helps firms identify and focus on the innovative products that provide the most value,” NZTE says.
Invest for results
The Foundation for Research, Science and Technology (FRST) has also created TechNZ, a government funded initiative, which runs a business investments programme designed to support companies and people undertaking research and development. Its mission is to invest for results and deliver greater prosperity, security and opportunities to all New Zealanders.
FRST’s manager of investment services, Hamish Campbell, believes that in the context of New Zealand’s commercial sector, R&D is of critical importance. “When businesses invest in R&D, they are investing in their future. Without an ongoing investment in R&D, the risk is you simply get outpaced by your competitors.
“Market saturation is inevitable for most products and services so you need to innovate to meet constantly changing customer demand,” Campbell says.
To date, TechNZ’s investments of $450 million have helped approximately 4500 New Zealand businesses. What the organisation does,
in an R&D nutshell, involves setting investment strategies and facilitating processes to guide investments they make in other businesses.
Its regional TechNZ partners, located throughout New Zealand, help companies develop and commercialise new products. “Our funding support ranges anywhere from $10,000 to more than $1 million depending on the size and aspiration of the business.
“We also look to connect businesses to the experts both technical and commercial to ensure they have the right people on board to deliver the result,” Campbell explains.
A tool for all trades
The notion of research methodologies and development proposals can be misleading for smaller businesses, as this terminology is considered to have scientific and corporate connotations. While R&D has propelled science and corporate sectors forward, it is a tool that can benefit companies of all trades and sizes.
Smaller businesses can benefit from in-house research and development. Accountants, lawyers or bank managers can discuss costs and how to incorporate R&D into a business. Local polytechnics and institutes of technology can assist in a pro bono capacity by offering staff and students to help with R&D projects.
More comprehensive, scientific research can be conducted in collaboration with universities or Crown research institutes.
R&D for success
There would be few who would argue against the benefits of R&D. As the recipe for success on a personal, professional, societal and economic scale, it allows companies and staff to acquire knowledge that empowers and educates them.
As we move into a period of recovery, businesses will want to strategise for the future. R&D can also help companies become reacquainted with their market and with themselves. A move towards R&D will secure New Zealand’s footing on the world’s economic stage and perhaps bring home the talent that has left for greener pastures.