IBM's 2013 Innovation Index raises questions about the future of Kiwi innovation

IBM's 2013 Innovation Index raises questions about the future of Kiwi innovation
IBM Innovation Index of New Zealand 2013 launched today

The findings from the 2013 IBM Innovation Index of New Zealand were released this morning, revealing better results than the inaugural index in 2010 for overall innovation in New Zealand, but highlighting that there is a lot of room for improvement.

The 2013 IBM Innovation Index is a multi-indicator study that tracks the shape and rate of local innovation from 2007 to 2011, assessing the key areas of Intellectual Property (IP), Research & Development (R&D), and Business Innovation. 

The previous index did not paint a pretty picture for New Zealand innovation, with results showing that Kiwi innovation was flatlining, and suffered particularly after the 2008 Global Financial Crisis (GFC). 

However, things appear slightly more promising in this index; New Zealand's overall innovation rate increased three percent in the four years to 2011. This was bolstered by increased spending on R&D during the GFC. But after the economy started to recover, during 2011 to 2012, the growth in R&D expenditure slowed. 

“Increasing investment in R&D during the global recession buoyed our overall innovation rate, but we are yet to catch up to comparable nations’ innovation intensity.  Seeing business spend more on R&D is a positive sign, and extra collaboration across New Zealand’s domestic and international innovation ecosystems is required to take this research to market,” says Dougal Watt, IBM New Zealand’s Chief Technology Officer. 

Business Innovation was led by the Education, Arts, and Finance industries. However, the overall rate of Business Innovation remains flat, with only marketing showing a positive change. In fact, only 46 percent of businesses involved in the survey reported innovation between 2007 and 2011, prompting Lance Wiggs, who was MC at the index launch, to pose the question, "Aren't they [the non-innovators] going backwards?"

Paul Brislen from the Telecommunications Users Association of New Zealand expressed concern that businesses are not seeing R&D as a growth strategy. And head of Better by Design Melissa Jenner expressed that there is a culture of fear of failure that is holding some businesses back. Perhaps we need more 'moonshot thinking'.

Key findings from the 2013 Innovation Index of New Zealand include:

R&D employs 50,000 New Zealanders

- R&D created the equivalent of 4,600 full-time jobs between 2007 and 2010, when the equivalent of 12,600 full-time jobs were lost across the economy as a whole.
- By 2012, nearly 50,000 New Zealanders were employed to conduct R&D; 35,000 in research roles and the remainder in support roles.

Private sector R&D on the increase

- Public sector investment drove R&D growth during the GFC but since 2010 most of the growth is due to private sector spending, especially from manufacturing companies.
- Nearly a third of Private Sector R&D expenditure is directed towards improving manufacturing, followed by ICT, then Primary Industries.
- R&D expenditure for improving Primary Industries grew by $60 million from 2010 to 2012, which is almost on par with ICT.

Applied R&D is thriving

- Applied R&D expenditure grew by 46 percent between 2008 and 12; much faster than either Experimental R&D (14 percent growth) or Basic R&D (3.4 percent growth).
- Growth in Applied R&D is driven by strong investments from the Private Sector (44 percent growth) and from Higher Education (82 percent growth).

Business Innovation remained steady

- 46 percent of businesses reporting new or improved goods and services, or improved methods for marketing, organisational or operational processes. 
- Marketing Innovation is the only one of four measures that has grown during this period, from 25 percent in 2007 to 27 percent in 2010.
- The Education and Arts industries reported the most Business Innovation with 62 percent, followed by the Finance and Insurance industry at 61 percent.
- Agriculture, Forestry and Fishing was the least innovative industry, with only 26 percent reporting any Business Innovation.

Overall, Intellectual Property registrations fell

- IP  trademarks, patents, Plant Variety Rights and designs  registrations per business in each industry fell 5 percent between 2007 and 2011.
- Some industries experienced a one-off spike in types of IP, for example Agriculture, Forestry and Fishing, (Plant Variety Rights), and Healthcare and Social Assistance (Trademarks). 

All the materials including the data visualisation tool, which allows companies to drill down into the 18 industries included in the study, can be found here.