Vodafone xone Innovators Series: NZTE's David Downs on resourcefulness, resilience and innovation

To mark the arrival of the Vodafone xone business acceleratorIdealog is interviewing a whole heap of established New Zealand innovators, as well as the founders of the 10 startups selected by Vodafone to receive mentorship, funding and the potential benefits of working with a global network. 

Next up, David Downs, the co-author of seminal innovation book No. 8 Re-Wired, general manager, services, at New Zealand Trade and Enterprise, and, undoubtedly his most impressive title, Idealog's resident business agony uncle.

Ben Fahy, Idealog’s publisher and editorial director: Your book, No. 8 Re-Wired, was an exploration of Kiwi ingenuity, and detailed some of the country's most famous and in some cases relatively unknown inventions. What did you learn by going through that process?

David Downs: We learned about the incredible diversity of invention and innovation that's happened in New Zealand over the last couple hundred years, or in fact 1000 years, since New Zealand has been around, just the incredible variety of organisations and companies and products that have come through. That's the key thing. It's not all about farming implements.

We also learned about the type of people that make successful innovators, which are ones who are incredibly resilient, who are willing to fail and try again, and sharing their stories, hearing their stories, being able to write about them in the book was a great privilege.

I know it's probably like choosing your favourite child, but do you have a favorite Kiwi invention, or maybe a surprising invention that people don't know that emanated from here?

There are a lot, and you're right, the favorite child thing is a good analogy. There's a few that I think are unknown that have had a huge impact on the world, and they'd be good to dwell on. Colin Murdoch was an inventor from Timaru. He was a pharmacist and a vet, and he invented not only the tranquiliser gun but also the disposable syringe, which today is used in the millions and millions around the world, and also revolutionised the healthcare industry through the use of plastics.

Very little was known about Colin until recently, I suppose. He unfortunately didn't really reap the benefits of that amazing innovation. He would probably be one of my stand-outs. And then there are prolific people like came out of the South Island. Invercargill and Dunedin were very successful places. David Strang invented granulated coffee, instant coffee. That's probably one of the lesser known ones. So yes, lots and lots.

And of course pavlova, which has brought untold benefits to humanity.

Exactly. There will be a day when even Australians will stand and up and salute the Kiwi who created it. Mrs. McCray is her name, blessed be her name. Basically yes, the pavlova definitely came from New Zealand, as did the lamington, by the way.

Good to know. Also, perhaps like children, everyone wants to believe that theirs is special. Is New Zealand really that special when it comes to inventiveness? Surely Norway, Canada, Colombia and Senegal are inventive as well.

Oh I'm sure they are. I have not done extensive analysis of Senegali inventions. New Zealand ... It depends on how you look at the metrics, basically. If you look at the metrics of how well have we commercialised and created IP, trademarks or patents around our work, no, we're a bit behind some of those other countries that you mentioned, maybe excluding Senegal.

But if you look at our willingness to create and innovate and generate new things … the definition of innovation is really around how do you take existing things and create something new, then we probably are among the world leaders. Part of that is due to our tinkering nature, our multidisciplinary approach, our willingness to challenge authority. There are a lot of reasons why we're good at creating things. We're not that good at commercialising or turning them into products or services that might be protected, if you like.

I like that phrase in your description of your book that necessity is the mother of invention and the father is getting up in the middle of the night and mucking around in the shed.

That's right. Fossicking around where he shouldn't be.

Is that a danger thing that we are good at coming up with new things? But as you mentioned before, not particularly getting the benefits from that. And how do we stop that from happening?

Yes, it is a danger. There's a lot of people like myself in my day job at New Zealand Trade and Enterprise and also organisations like Callaghan Innovation, who I suppose really are trying to understand the structural issue with research and development and commercialisation as a country. While we celebrate No. 8 Wire, rightly so, we’re great at inventing. We are well behind in terms of the amount of private sector money that goes into research and development. For example, we have nowhere near the number of triadic patents, the patents registered in the three big markets around the world. I guess some of it is trying to understand what's behind it. What's the cultural and psyche behind it.

David, a bit of a cliché I guess around New Zealand is being content with the bach, the Beamer and the boat. You could argue that that's holding us back, many do. But you could also argue that it's a trait is appealing to many and that's why people want to come here. We are laid back, we're casual, we maybe don't have that ambition. What's your take on that?

I think every strength has a weakness. Every strength has a shadow. Our shadow of our wonderful lifestyle, our beautiful beaches, and island and our laid back nature is that it can potentially make us less ambitious. That's a sweeping generalisation, obviously, because there are those among us who are not like that. But in general it seems to me that yes, it's very easy to come here and be complacent, or content anyway, with the wonderful lifestyle that we have. So that's the shadow side of it. There are people who are very good at being able to break out of that paradigm and think more internationally and recycle the money they make from inventions into other things than the three Bs. They're still a bit of an anomaly in the system, not the norm.

Do you find that it's an addictive thing to get into? Like you have those character traits that you mentioned before that once you've started, once you had one, you had a few more?

We certainly see it's a definite personality that makes a successful entrepreneur. Definitely.

What are those traits?

David: The willingness to challenge authority. We have a low power ratio, power distance ratio in New Zealand, which is a good trait for not accepting no for an answer. Resilience is a massive part of it. Every successful entrepreneur will tell you a story about how they failed, how they lost their hair, failed at the mortgage, live on the parent's couch, whatever. There seems to be a lot of that. People who are resilient. People who surround themselves with creatives. So they don't have to be creative themselves always, I've noticed. But they like the input from creative people.

So you get a few of those characteristics and as I said there's kind of a Kiwi cliché almost about our ability to turn our hand to anything. Our 'she’ll be right, I can have a go at that, no one has taught me that, but I can have a crack at it.' Which is quite unusual.

I think that lack of specialisation sometimes can hold us back. And maybe in this day and age, is that No. 8 Wire, has it had its day? Can we compete on a global stage with that attitude?

It's a great question. I think it's no longer sufficient, that doesn't mean necessarily it's holding us back. A lot of things that are great about No. 8 Wire. The fact that we will challenge authority, we are very inventive, we think differently. All those things are great. It's no longer sufficient in this globally connected world of huge different supply chains where information is relatively free. So now today you've got to add to that No. 8 Wire, that's kind of the key premise of our book, which is thinking about that and how you collaborate with others and how you invest in research and development. And how you commercialize and be savvy about the value of your ideas. I think that's the big thing.

Also one of the main goals of government agencies, like NZTE and Callaghan Innovation. ATEED as well. You get a big of flack, possibly, for wasting taxpayer money. What do you say to that? Do they not understand this is for the greater good and innovative economies need that kind of funding and the boost to start things and to grow things?

I think it's very obvious when you read the literature and sort of do a bit of examination of what that investment in research and development, and a country's research and development, is a core driver of growth. For New Zealand, as a particular country, we've been heavily reliant over the many years on tourism and on the primary sector industries for much of our economic growth. The diversification of our economy is something that's almost an over-arching strategy. You're not going to get that without innovation. In New Zealand, we've got an almost structural issue with the private sector's investment in research and development. There's a few reasons for it, but fundamentally, we've got to fix that. Government at the moment is involved in stimulating research and development and supporting companies who are entrepreneurial and I can see that that will need to be the case for a while yet. But I'd love to foresee a future where we are more like the Israels of the world, or the Denmarks or the Senegals for that matter. Not that I know that much about them.

Where the private sector in particular, and companies that are really reinvesting in growth and innovation is a key driver of their own future success.

One of the most enlightening graphs I've seen was in Sir Paul Callaghan and Shaun Hendy’s book, Get Off The Grass, and it was about the difference between the Danish economy and New Zealand economy. Denmark is full of little slivers ... pastries, furniture, bacon, I think.

Lego.

Yes, Lego. New Zealand had two big chunks. The primary sector and tourism and then some other smaller ones that are growing quickly. Do you think that that's changing? Are we still too reliant on the old classics?

No. I know it's changing and it's changing relatively quickly. Is it changing quickly enough is the question. There was an issue with us heavily reliant on a couple of sectors probably even 15-20 years ago. Today the tech sector in New Zealand is the third largest export leg. The wine industry is big. There's a whole lot of diversified parts of our economy. We are now catching up, or trying to catch up, with the rest of the world who's been on that diversification route for a lot longer than we have.

It really took the shocks of the ‘70s and ‘80s for us to kind of think about how we were going to get there. I think we're on the right track. Certainly if you take the tech sector as an interesting sub-group, $6.8 billion dollars I think it is, it contributed to exports last year, which is not far off the tourism at number two, or dairy, our primary sector is number one. And hugely diverse, from specialised manufacturing to ICT, cloud solutions. All sorts of things going on there. I'm very positive that we're on the right track.

I often get to write about innovations and come up with ridiculous, potentially million dollar ideas, like combined condiments. Pestomustonise. I think that's going to be a big hit. How about you? Have you got any amazing ideas?

I wish I did. Someone told me the other day that ideas are cheap but the execution is the difficult bit. But I was going to scratch my head and still try and think of the ideas. When Jon and I wrote one version of our book we came up with a brilliant invention, which was called, bath be smaller. We patented it, just to go through the exercise of what it would take to patent something. Extensive and painful, by the way. It wasn't really a serious invention. But in my day job at New Zealand Trade and Enterprise we're meeting companies all the time who are coming up with quite amazing innovative technologies or solutions. Without trivialising it, it does seem that ideas are relatively fruitful, particularly if you surround yourself with creative people, which I've noticed. Get some university students and get some different ways of thinking. Ideas flow pretty quick. The difficulty is turning those ideas into actions.

You see that quite often. For example, Uber is used regularly as an example of a great innovation, creating a taxi service that would take over the world. It's something a lot of people have tried to come up with and do and Uber, through tenacity and the passion of the founder and the team that surrounds it, and some very clever tactics, has got close to doing that.

And speed to market. There's a whole lot of core business fundamentals that still need to kick into place. You've got to have the money to be able to deliver your vision. You've got to have the speed. You've got to have the customer empathy. Their business model is one that replicates. Speaking of coming up with great ideas. I often, over a dinner party, will try and think of something that starts with that 'Uber-of', and then you insert your own fill in thing there. I connect the perfect business model. I came up with one called the Uber of childcare, which is that you're at home and you want someone to look after your baby. There's probably just people sitting around in their own homes. Why can't we have some app that hooks them up? Apparently according to my wife didn't think it was such a great idea.

Who would have thought? New Zealand, going back to the tourism and sectors where we are renowned for. Tourism is a good thing to be renowned for. The Hobbit campaign has done wonderful things to get lots of people coming here. But is there a misperception as a result of that, that we don't have anything else?

There's two potential issues with tourism, again generalisations. One is that tourism brings in a lot of revenue. But the actual job value of a tourism role is actually, on the whole, lower than other roles. Increasing tourism has been potentially lowers the average earnings of the people. So that's a bit of a challenge. That's not true for all sectors. High-value tourism can change that. But the average backpacker doesn't spend a lot. The second thing is yes, it semi-reinforces this model of New Zealand as just mountains, sheep, and bungee jumping. Whereas we all know it's much more than that. The New Zealand story, our knowledge about ourselves is much more nuanced and kind of sophisticated. It talks about innovative spirit and it talks about our welcoming and trustworthy nature as well as our beautiful spaces.

I was actually at a presentation with Paul Spoonley from Massey last week. He was talking about the demographic shifts in New Zealand, which obviously are really pronounced in Auckland. My theory on that is we have a combination of pride and self-doubt here. ‘Are you having any a good time? Do you enjoy it here?’ And that is a good thing for welcoming people in, because we’re nice, which is a good thing to be in this world.

It's interesting, because we are hobbits basically, aren't we? We like people to have fun. We like to entertain. That sounds very self-deprecating. We've also got other bits to us. We're hobbits and we're All Blacks. They perform the haka. They're tough. They haven't lost in like a hundred-plus games. They've got a tenacity and a backbone about them. And so we can be both. You don't have to be one or the other. In New Zealand, particularly in business and exporting and innovation, we could be a little bit more All Blacks, and a little bit less hobbit.

If we are still renowned for our inventiveness, what are those things that are holding us back? What particular elements? Is it our ability to sell ourselves? That kind of brashness that you see with American startups who really passionately believe in their product? And then that creates momentum?

Yes, I think there's definitely an element of that. There's an element of the self-confident, walking proud, walking tall. The other reality we've got is that New Zealand businesses go international in their business lives very early. They're often not very experienced with competition, hard competition, here in the domestic market and they're going out offshore, they don't have necessarily all the skill sets and experienced people around them to help them with that growth. There's a real challenge there and that's why agencies like NZTE exist is to help companies make those steps.

Fundamentally underneath it there's a psyche part of New Zealand mentality about ourselves that actually we need to tune up a bit and be a little bit more proud.

What's the one, or two pieces, or maybe three pieces, of advice that you have for someone who has an idea or has a business, to make it work?

There are a few, because there's not one answer. First of all, is there a customer for your idea or product? Too many products are great ideas in your head but don't have the market.

Like pestomustonaise, perhaps?

Actually, I'm willing to invest in this pestomustonaise venture ...  But yes, that might be an example. Make sure you've got a customer and you really understand the real needs of that customer and feed that into your process. Number two is probably realise that you need help. It's a pretty rare company or inventor or entrepreneur these days that can do it all alone. So getting some marketing advice or strategic advice or market entry advice is a good thing, not a weakness. It's a show of strength. And then it will come down to if you've got both of those things right then it's going to take tenacity, possibly investment. It's going to take you a clear focus. You're going to get distracted by other things. So really, you've got to have the courage to see the course. Very rarely do you get an overnight success. You hear about them all the time, because these publications like Idealog, you know ... But you know as well as I do that the overnight success story is not true. It's an overnight success after five years of hard work.

It's interesting with the [F Word] project that we did recently with Callaghan Innovation around failure and the belief that you need to accept that as part of progress. It will happen to you, and it's not pretty usually. But as a long-term goal, you need to accept that. The economist Tim Harford was talking about the two things that he thinks happen when you're scared of failure. One, you never do anything interesting. And two, you never know when to pull out of something when it's not working. I think that's quite true.

Yeah. Failure in itself is not an issue. Failing slowly is the real problem, because you lose credibility, money, all sorts of things. Failing fast is potentially a good thing. Succeeding fast is even better, so don't get it wrong.

How do you succeed fast in a corporate environment? You look at the No. 8 wire mentality, it's often linked to the tinkerer or the man alone, perhaps. How do you bring that culture into a company with a lot of people? Xero is an interesting example of creating a product that can be used by an ecosystem, or be the core of an ecosystem?

If you look at what's fundamentally behind Xero, one of the great bits of their models is about collaboration. We have a challenge in New Zealand that we're not great at collaborating. Companies that have been successful at working out business models that include collaboration as a core part of their business model seem to be doing quite well. Founders and owners and entrepreneurs who are able to collaborate with others and ask for advice seem to on the whole do better than others.

It's easy to say, but usually pretty hard to do for a lot of people.

It is. Because you get very proud about your own piece of work. Your self-worth gets tied up in the concept of your product or your service or your company and you've got to sometimes divorce yourself from that. You've got to be careful your business is not an ego trip. If you're there to generate value for your stakeholders and shareholders, then collaboration is likely to be a path you need to go down.

So maybe to finish David, what sector or business, if it's not too political, gets your blood flowing? What do you think New Zealand will be renowned for in ten or 20 years from now?

I think we absolutely need to look at how to harness the traditional strength of New Zealand and our future. Agribusiness and agri-technology for me are very exciting. The work that New Zealand has done over the past couple hundred years to get extremely good at farming practices and growing things and understanding how the land works, matched with the fantastic work that's going around like drone technology and robotics is really interesting. We almost get shy about it, we almost go, ‘aww shucks’. We shouldn't do that.

I was at a thing in San Francisco a few months ago where a whole lot of North Californian innovators were showing agri-tech products. And I actually got quite angry, because at the end of it I said we could have done all of those, why aren't New Zealanders being more proud about that and less writing tiny little games for the phone or whatever? We could harness our traditional strengths and match them with the needs of the future.

I hope you swiped them off the table aggressively, in a rage.

‘I'm not standing for this.’

Thank you. We look forward to seeing the future.

Very good. Thanks, Ben.