Why Kiwi companies can't cross the gap between innovation and success. What it takes to scale the innovation ladder

Think you are an innovator? Think again. Being good at innovation does not mean immediate success at building a profitable business around the innovation.

To successfully commercial innovation requires a certain kind of religiosity to strict commercialisation discipline, says Mitchell Pham, co-founder of Augen Software whose business is to help companies take their innovation, build scale, and globalise. Augen has built inroads into the Asia Pacific market and since its founding in 1993 completed over 300 successful software projects across many sectors, including banking, commercial services, community health/wellbeing/disability services, finance, fitness, human resource, among others.

Pham says New Zealand companies struggling with commercialising innovations often don’t have the discipline or experience to target the right outcomes.

“To succeed, you need a best practice (of how to approach commercialisation); you also need to develop specific skills to innovate, deliver the innovation, and to support the innovation.”

“You don’t just innovate willy nilly. You need to define the process well, whatever pathway you chose.”

Technical discipline requires innovators to make choices which often come with a trade-off based on the choices made, he says.

 “You have to understand technical debt which defines the limitations of the choice of technology you made on your development model, your delivery platform, the scalability.”

Pham was a keynote speaker at this year’s KiwiNet forum, Igniting Innovation: From Science to Start-up and Beyond, held at Christchurch on Oct 22. Kiwi Innovators Network (KiwiNet) is a consortium linking 13 universities, crown research institutes and crown entities. KiwiNet’s aim is to approach research commercialisation in a collaborative manner. 

Co-founder of Augen, Mitchell Pham (Pic from Augen)

New Zealand’s perennial problem is dealing with its low level of commercialising ideas or innovation. As a nation, New Zealand ranks 22nd among countries in the world that have successfully filed patents in the US. Only 20% of Kiwi patents have been successfully filed overseas, Kate Wilson, patent expert at James and Wells says.

Risk management, change management

A central part of commercialising innovation requires Kiwi companies to resolve some business management issues to answer questions on how to validate the market for the innovation, the timing to market, the revenue and profit model; the management and exit strategies.

Then there is the issue of stakeholder management – alignment of the shareholder’s values, how to resolve conflicting values, the issue of culture, corporate strategy, and the expectations from various stakeholders of the journey involved.

Pham notes another critical element of successful commercialisation is coming to terms with the timelines and managing change in the innovation journey.

“Many innovators don’t understand change management is an important part of the innovation process. You are asking people – who are used to doing certain things a certain way – to do something they might not be completely comfortable with,” Pham says.

He notes this is a critical part of the process which could decide the success or failure of a project.

Companies also need to be prepared for the transformation that comes with innovation, he says.

“Innovation transforms the innovator. It challenges a person or an organisation – it forces you to confront barriers as you become a different group of people.

“The innovation process may cause you to change direction, as an organisation, because of what you know, or may not know,” he says.

Capital and funding are other important pillars of successful commercialisation as are timing and speed to market, according to Pham.

Once you have successfully reach commercialisation, staying highly engaged with your target customers is just as important.

“It is important for your target customers to be part of the engagement process, you need to know their challenges, the pain they are going through, the constraints they face. This is seen by the market as ‘they understand our pain’ and your relevance to them in the (solution) process,” Pham says.

He adds Kiwi companies have great opportunities to succeed in providing global solutions in many sectors, including clean air, water and food technologies; sustainable food, renewable energy; healthcare and education; safety and security solutions; climate change solutions; and social development among others.

KiwiNet’s general manager Dr Bram Smith, says collaboration among research institutions is key to creating the next wave of clever companies.

About KiwiNet

KiwiNet's partners include WaikatoLink, Plant & Food Research, Otago Innovation Ltd, Lincoln University, AUT Enterprises, AgResearch, University of Canterbury, Callaghan Innovation, Viclink, Landcare Research, Cawthron Institute, ESR and NIWA; representing 6,000 researchers or two thirds of the researchers in New Zealand’s public research organisations.  Principal support is also provided by the Ministry of Business, Innovation & Employment (MBIE).  

The KiwiNet investment committee has invested 8.6 million over 6 years into 244 projects. This has resulted in $2.4 million external co-investment alongside pre-seed, 47 commercial deals and $500 million of potential export earnings.