In the beginning there was the DSIR. And after many years, the DSIR did beget the Crown Research Institutes. And thus were they named the CRIs.
And lo, there, too, was the Ministry of Research, Science and Technology (MoRST), and annoyingly also the Foundation for Research, Science and Technology (FoRST). And the two were sometimes confused. MoRST did set the science and innovation priorities, as did FoRST dole out the money. And there was public sector science upon the land, with a somewhat more commercial bent than in the past. And among the CRIs was Industrial Research Limited (IRL), an advanced materials institute that invented many things but did start few businesses and did, for many of the people, bear too little fruit.
Then it was that, in 2009, MoRST and FoRST begat the Ministry of Science and Innovation, which did become one with the Ministry of Business, Innovation, and Employment, which had in ages past been called the Ministry of Economic Development. And the high-value exporters did scratch their heads in wonderment and were bemused. Yet still Minister Joyce did look upon the national innovation ecosystem and say: “It is still not good.”
And so was Callaghan Innovation begot. And on its name doth much hope ride.
A serious player
There’s a slightly disconcerting, serious stillness to Mary Quin, the steely 59-year-old New Zealander who’s returned from 37 years away to lead Callaghan Innovation, the biggest attempt by a government to accelerate the creation of globally-ready, high-value New Zealand companies in years. It’s the alertness of a listener, an easily underestimated introvert, and a serious player. The chief executive of the new $250 million-a-year agency has spent most of her life in corporate America, reporting at one
time in a strategy team one level below the most senior of Xerox Corporation’s global senior management.
That was a while ago. Xerox’s big mission in Quin’s day, the 1980s, was the launch of colour photocopiers. It almost sounds amusing now, but that experience put her at the highest levels in the white-hot competitive atmosphere of a big, multi-national corporation operating in the vast US and global retail markets. Even today, they still dwarf almost every New Zealand company. Her division alone was a US$6 billion to US$8 billion business, she notes almost in passing.
The physics and engineering graduate from Canterbury and then Northwestern University in Chicago was a star; she got to know marketing, knocked around on the boards of various high-value manufacturing and high-tech firms of that era, learnt about capital-raising and the commercialisation of patented inventions. She travelled the globe constantly for work and took off in her spare time to the farthest flung corners of the world for holidays.
Now she’s down this way, she’s closer to a long-held goal of attending “one of the big sing-sings in New Guinea”, although with only four months in her new job, Quin is anxious to stress she’s not planning any holidays soon. She’s serious that way. All that travel included regular trips back to New Zealand family, where ‘Aunty Mary’ would occasionally run across a nipper called Chris Quin, who is chief executive at Telecom Retail today.
She’s seen the country grow up a bit. “New Zealand is a far more cosmopolitan country,” Quin says. “The restaurants, the nightlife, the performing arts, the whole arts scene in the country is just far more diverse and interesting than when I left in the 1970s. My sense is that is in large part because there’s been probably two generations of New Zealanders who’ve travelled significantly, done their OE, in some cases just for a year or two, in others for a few decades, and who’ve brought back ideas from the things they’ve seen all over the world. That’s made New Zealand a really dynamic and interesting place.”
In 1998, just after Al Qaeda embassy bombings in Africa were met with retaliatory air raids by the US in Sudan and Afghanistan, Quin decided to go ahead with a trip to Yemen, having seen its coast across the Red Sea from the previous year’s holiday in that other well-known pleasure spot, Eritrea.
In Yemen, she was to find herself famously kidnapped by desperate and disorganised terrorist group. Ever the professional, Quin observes in her book Kidnapped in Yemen – a title demonstrating her tendency to plain accuracy – that when her captors stopped for the night to set up camp, they could have done with a decent team leader and some KPIs. “The manager in me was instinctively assessing their performance,” she wrote. “Most of them were milling about in a nervous, disorganised way and seemed unsure what they should be doing. ‘I could run a kidnapping better than this,’ I thought.”
The next day, used as a human shield during a chaotic Yemeni army rescue mission in which four fellow travellers died, she took her chances. When the man with a Kalashnikov jabbed into her back was wounded, she whirled around, put her foot on his forehead, grabbed his gun, and made a run for it.
Quin’s probably tired of the endless references to this episode. But it says something about this slight, measured, and determined woman that she then spent years following up the experience, returning to Yemen to understand what had happened and why, and to document her findings.
Nor did it curb her wanderlust. Not long afterwards, she travelled to northern Afghanistan on a private mission as part of a women’s human rights delegation, meeting Ahmad Shah Masooud, the Lion of Panjshir, whose assassination just before 9/11 was later understood as a harbinger of that attack. In other words, Mary Quin is no ordinary executive for a colour printer manufacturer.
While she was writing her book, she was moving to Alaska, starting a small business and then being catapulted into her most recent role as chief executive of NMS, a services firm half-owned by native Alaskans, servicing remote oil fields and other Arctic activities in
a joint venture with one of the world’s largest remote logistics companies, Sodexo. That gave her insights into how the economic aspirations of indigenous people mesh with cultural ambitions. With the burgeoning Maori asset base a major part of the Callaghan Innovation mission, that experience was another string to her bow when a global search firm tapped her on the shoulder to consider coming home after 37 years. But she’s careful not to draw a direct line between the Alaskan and Maori worlds.
“I believe that experience is very helpful and relevant, but I don’t for a moment assume that solutions that worked for an Alaskan native tribe in a very, very different environment, different economic opportunities, are directly transferable.”
Rather, it helped shape her understanding of an indigenous tribe’s aspirations for shaping the kind of economy they want, the values they want for preserving their culture, for bringing up their children, and opportunities that blend their culture. “For an Alaskan native that might be a subsistence lifestyle in villages that are off the road system and being able to preserve those aspects of their culture alongside being successful businesspeople and introducing and helping develop technology, whether into health, education, telecommunications, transport in their communities. Many of those values, while implemented differently in New Zealand, are shared by indigenous peoples throughout the world,” she says. One of her eight direct reports will be focusing on Maori opportunities.
As for the rest of the job description, it seemed like a gift.
“That was quite amazing to me,” she says. “It was like the job was tailor-made, using everything in my career background,” Quin says. “What was really interesting and attractive to me about this role was that it used everything, even having been an entrepreneur with a retail store in Anchorage at the time I was writing my book. It used going right back to my PhD in materials engineering, working in big and startup companies, in marketing and sales, the profit and loss responsibility, even then working with a company that is focused on the needs of an indigenous community.”
The new institute
One of the great fears about Callaghan has been that its creation would destroy the cluster of advanced materials research excellence that evolved at IRL’s dowdy Gracefield campus, on the outskirts of Wellington. IRL, which had performed poorly for years in commercial and industry engagement, had more recently seemed to turn a corner under the leadership of Shaun Coffey, an Australian with a track record of change management in Australian public sector science.
But Coffey’s ambition to create a new Advanced Technology Institute, with deep links to both the Auckland and Canterbury university engineering schools, was thwarted first by Science and Innovation Minister Wayne Mapp, and then by Mapp’s far more influential replacement, Steven Joyce.
Joyce’s vision, and that of the advisors who’ve created Callaghan Innovation, was that IRL should disappear and its capabilities turned to being a commercialisation catalyst. Where Coffey saw links to university engineering schools, Joyce saw ties to New Zealand Trade and Enterprise for leads to home-grown new high-value global industries and to the New Zealand Venture Investment Fund, with its mandate to fill the holes in a small country’s immature private equity market. That’s where policy lies now.
Callaghan’s head office is in downtown Wellington, shared with NZTE, but Quin’s ambition for Gracefield’s continued renaissaince seems real. Callaghan is forging deep new links with the Auckland engineering school, as IRL was doing, has kicked off two new research groups at Canterbury, as IRL would have done, and is proposing to invest in a show-case innovation campus at Gracefield, as long as the private sector and universities will buy into the idea.
There are already 15 companies co-located on the Gracefield site, the CRI Geological and Nuclear Sciences has a campus next door, and there is deep research and science talent in parts of the old IRL. Why wouldn’t it work?
“When the idea clicked I thought, ‘ahh, that solves several problems here’,” says Quin. “In preliminary dialogue with universities, they are very open to having our people who transition to their institutions while continuing to work in the labs they’re working in now,” she says. “It’s a practical solution in one sense. But what’s really valuable about it is that we see some real opportunity to develop Gracefield into a Wellington innovation precinct.
“If we can also have a presence by one, two, three universities and perhaps some CRIs, it’s got the potential to create a very dynamic, collaborative environment focused on the high-value manufacturing and services companies. That’s complementary to the innovation precincts planned for the Wynyard Quarter or in the rebuild of Christchurch.”
We slurp on our soupy plunger coffee as Quin extols the virtues of the “water cooler conversations” such a campus might engender. This is Wellington, I demur, it’ll need better coffee. Quin accepts the quip, but parries it as a serious person would.
“It needs to improve,” she says. “But that’s probably not one of our most urgent things to address,” she adds.
One thing that will really help at Gracefield, says Anthony Scott, chief executive of the CRI lobbyist Science New Zealand, is that Callaghan will no longer bid for contestable science funding, which all the other CRIs and the universities scrap for. The former IRL teams, if allied to CRIs and universities, will still be able to access those funds without creating the discomforts that often accompanied their efforts.
“There’s no doubt that IRL has been underinvested and undervalued and should have been a separate type of CRI for more than 20 years, because the types of sectors it was dealing with are different in significant ways from many others,” Scott says. Now, Quin says, the focus at Callaghan will be on “near-market and technical services” – a phrase she uses several times. Scott’s buzz-phrase is Callaghan’s new emphasis on “access, not ownership” – a reference to the fact it will neither seek to own intellectual property it develops nor to invest in either stand-alone or joint ventures based on discoveries it’s helped make. That’s a big change.
“I can see this already,” says Scott, “a very strong bond being formed between Callaghan Innovation’s mission and CRIs.” That means protecting good ideas if no one wants them immediately, but not flogging dead horses in either research of the services Callaghan seeks to offer the private sector, says Quin. “If we come up with a bright idea for a service but aren’t finding firms willing to co-invest in or purchase those services, then we would not pursue those kinds of services. But we’re very cognisant of wanting to
have a line of sight to basic research going on throughout the country and where we see something emerging that could lead to a whole new product category, new firms, or even a new industry, we want to be playing a role in creating the links for the entrepreneurs who want to be able to do that.”
Only time will tell whether the solution at Gracefield is as elegant as the plans sound. Callaghan’s mantra will be to “fail fast”, its chair, Sue Suckling has said on numerous occasions. If the uptake isn’t there, the Gracefield vision won’t fly. Says Quin: “There’s absolutely no commitment at this point to an innovation precinct at Gracefield. But you could put that label on it now. We have researchers and firms co-located, working together, so it’s just developing that idea further. That could be done at a fairly low level of additional investment or at a level where it becomes a national showcase of capabilities.
“It’s something I’m personally pretty excited about. It is something that requires the development of a business case in its own right. But one of the important things we want to be working on in the next 12 months is working the private sector and developing some options for the scale and the level of investment in that innovation precinct.”
From IRL, Callaghan has created Callaghan Innovation Research Ltd (CIRL) at Gracefield, and Quin hopes the message is getting through to a sometimes disgruntled workforce that she describes as “people whose tremendous value to New Zealand is fundamental research”.
“When we shared the Statement of Intent [tabled in Parliament on July 9], one of the employees in CIRL said, ‘Well, is it possible that I could start up a company with an idea that I’ve been working on in fundamental research’ and I thought that was a fantastic question,” Quin recalls. “We would see that as a huge success if we saw our own scientists and technologists launching new companies as a result of what they’ve learnt or developed.”
But Callaghan won’t own an invention or a company investing in an invention. The closest she’ll come is to say: “If there was a breakthrough of some kind and there was no firm willing or able to protect it, then Callaghan Innovation will protect it on New Zealand’s behalf so that a company or institution in another country doesn’t make the same invention and preclude us from using it.”
The booster seat
OK. So far, so good, but what about the gaping hole between New Zealand’s potential and how it actually performs today, and the vital role Callaghan Innovation is intended to play in changing that? MBIE’s chief economist Roger Procter argues the New Zealand economy should be a third bigger than it is, simply by performing as well as the OECD says our policy settings should make us perform. New Zealand’s economic performance is 23 percent below the OECD average for economic productivity, while the raw analysis says we should be 22 percent above the average. In crude terms, the difference is $100 billion of wealth generated annually, in an economy that generates about $200 billion today.
Much of that difference comes from what we already know – distance from markets and the size of our domestic market diminishes cross-border trade and competition. Poorly performing firms survive, while firms with global potential face bigger hurdles to tap the size of their opportunity. Yet even moving halfway along that spectrum would be a huge boost to a country beset with low income growth, a large social underclass, and growing questions about whether its education and health provision – strong but challenged by competing, fast-growing Asian neighbours – is up to scratch. And don’t even mention the challenge of an ageing population.
That makes doing better at producing far more high-value firms important. Callaghan’s Statement of Intent targets creating another 250 such firms. But after 30 years of telling ourselves some version of exactly this story, one of the greatest fears for Callaghan Innovation is that it will just be another case of ‘we’re from the government, and we’re here to help’. One of Quin’s biggest challenges is the fact that, after four years of bureaucratic and political wheel-spinning over innovation system reform, the level of scepticism about Callaghan Innovation is high in the very parts of the economy where it needs to be most supportive.
“The question I hear from the big guys, the successful exporters looking to grow, is: what’s Callaghan going to do that I can’t already
do for myself?” says one closely placed observer, who like most of its critics, prefers to remain anonymous. He sees a hollowing out of the old MSI, MoRST and FoRST workforces for replacement with what Shaun Coffey once called “clean-skins” – people free from the baggage of the recent battles, but also potentially without the hard-won experience of how to make a business-friendly agency more than a well-meaning, bureaucratic obstacle to entrepreneurial progress.
Quin acknowledges the problem, but is not focusing on the past, for which she bears no responsibility, and has reserved for herself the design and appointment of the senior management team she will need to make Callaghan a success. That team will comprise eight direct reports, five of them “very operational” and three of them more strategic, covering research and technical services, accelerator services to link grants administration and training, and linking businesses to resources, markets, capital and talent.
There will be a small group of National Technology Network managers and a new social media-based project, codenamed
Avatar, seeking a cross between LinkedIn and TripAdvisor to help companies find the expertise they need. “That’s a really important new initiative where we see ourselves playing a valuable role of working with all the other science, engineering, technology, design providers around major technological areas where we collectively believe New Zealand needs to have a strong in-country capability,” says Quin.
She’s paid to be an optimist, but she talks a good game. “My sense is we’ve never been better positioned to expand into multiple industries,” says Quin, after casting an eye over New Zealand’s potential in light of her other career experience. “We’ve got a nucleus of very effective businesses in multiple industries. I can think of healthcare, medical devices, automation products, the whole area of communications equipment is a strength, where there’s a reasonably in-depth world-class capability.”
And the challenge of the role was “irresistible”, she says. For once it doesn’t sound like corporate-speak, even when delivered in the measured tones of the corporate professional. “It’s not often in a career that you get the potential to have an impact on the success not of one company, but potentially on the economy of a country.”
Welcome home, Mary.