Book extract: New Zealand Unleashed

Idealog presents an exclusive extract from New Zealand Unleashed.

Idealog presents an exclusive extract from New Zealand Unleashed

George Bernard Shaw, the British Nobel Prize-winning playwright and music critic, visited New Zealand in 1934 to great fanfare. Adoring crowds flocked to his every public appearance. He was the first major celebrity to visit New Zealand, and his celebrity attitude didn’t disappoint. For instance, when his ship pulled into port he wandered down to the waiting crowd and greeted them with: “Oh, good morning, ladies and gentlemen. I suppose you have seen at least 50 million pictures of me. You want to see the animal walk about and you want to hear the animal talk.”

He toured the country for a month, and people everywhere swooned in his presence. At his only official reception, in Christchurch, a Professor James Shelly said that Christchurch had become the intellectual capital of the world due simply to the fact that it contained Mr Shaw. He doled out advice to an eager nation. One reporter asked him his impression of the country and, after a pause, Shaw replied: “Altogether too many sheep.” He observed that New Zealand was a communist country without really knowing it, and denounced tourism as an unsatisfactory industry. Perhaps most tellingly, the cover to a booklet published at the end of his trip, What I Said in NZ: The Newspaper Utterances of Mr George Bernard Shaw, was adorned with a picture of Shaw holding his head in his hands. But beyond the patronising, he also said various things that might strike a New Zealander today as rather important. For example, he recommended the creation of a local film industry. Otherwise, he said, New Zealand would lose its soul without even getting an American one. But it was during a public address at the Chateau Tongariro that he made his most interesting observation. He urged New Zealand to start producing things other than butter. When asked by a member of the audience what he had in mind, Shaw replied: “Start producing brains, perhaps.”

What Mr Shaw failed to realise is that New Zealand has always been good at producing brains. It’s just that they’ve belonged to ruminant quadrupeds known as sheep and domesticated ungulates known as cows. Not that there’s anything wrong with those brains. They’re brains that do a great job at producing milk for drinking, wool for wearing, and meat for barbecuing. Unfortunately these brains haven’t quite figured out how to use a TV remote, send a text message or do any of the other things required of 21st-century humans. They certainly haven’t figured out how to produce more highly valued things like world-class fashion or world-beating yachts or world-entrancing films or world-engrossing novels.

Thankfully, since Mr Shaw’s visit, New Zealand has been producing brains that can do those things, and much more. From Witi Ihimaera in literature, to Niki Caro in movies, to Alan MacDiarmid in science, to Bruce Farr in yacht design, to Graeme Hart in business, to Angus Tait in electronics, New Zealand’s brain production has shown far greater output than Mr Shaw might have anticipated.

Brain production … let’s stop using that term … idea generation is critical for any society. As we saw in chapter six, idea generation is the energy behind any society’s adaptation. It’s the key to any society’s strategy to avoid slipping behind. Societies need new ideas to sustain their activities. They fuel new ways to earn a living, entertain ourselves, and navigate the complexities of life. In short, they provide an evolutionary edge.

But creativity does not enact or sustain itself; it needs to be continually cultivated. Unlike land or capital, creativity cannot be passed down from generation to generation. So even if New Zealand was an idea-generating nation in the past, that does not necessarily mean it is today, or will be in the future. The capacity for new ideas needs to be constantly fermented and reproduced by society.

With that in mind, this chapter seeks to understand what creativity is; to understand how New Zealand measures up on the idea-generation front; and to propose a few ways in which New Zealand can ensure its creativity furnace is stoked as powerfully as ever.

What is creativity?

In the mid-1950s, a father in an industrial city in England spent almost a fortnight’s wages buying his son a guitar. The boy showed an interest in music, so his father decided to encourage it. When the kid tried to join the school choir, however, the teacher said that he really wasn’t very musical and he failed his audition. Fortunately he persisted with the guitar, became pretty good at it, worked at his singing and started his own band. The boy’s name was Paul McCartney and his band became The Beatles.

As a society, we’re shockingly bad at recognising creativity and talent. We’re even worse at developing it. Sir Ken Robinson knows this better than most. An expert on creativity and innovation, he has in fact advised the Liverpool Institute for Performing Arts, whose leading patron is Sir Paul McCartney. In 1998, he led a national commission on creativity, education and the economy for the UK government. His report, All Our Futures: Creativity, Culture and Education (also known as the Robinson Report) was published to huge acclaim. In its review The Times said: “This report raises some of the most important issues facing business in the 21st century. It should have every CEO and human resources director thumping the table and demanding action.”

Today, Robinson is senior advisor to the J Paul Getty Trust in Los Angeles. He spends a lot of his time on the speaking circuit, preaching a message many seem willing to hear. He was one of four international advisors to the Singapore government for its strategy to become the creative hub of South East Asia. He has also advised Hong Kong and the European Union on their creativity strategies.

Robinson’s primary focus is on the creative challenges facing business and education in the new global economy. His core message is that the key to the future, for organisations and societies, lies in new approaches to developing the creative talents of all their people.

To begin with, he challenges a major misconception about creativity that we pick up at school and have reinforced at work. That misconception is that only special people are creative. Companies everywhere reinforce this myth by dividing their employees into the creatives and the suits. The creatives, according to Robinson, are the people who wear jeans and don’t wear ties and come in late because they’ve been struggling with an idea.

The other stereotype about creativity is its association with almost divinely inspired talent. Much of the psychological literature dealing with creativity has concentrated on ‘successful creativity’ or ‘influential creativity’. This is where creativity is studied by examining the lives and circumstances of famous innovators in the arts, science and business worlds.

While studying the lives of the highly creative is helpful, it can leave one with the impression that a person either is or is not creative. On top of that, there’s not much anyone can do about it. We’re left with the assumption that real creativity is an exceptional capacity that’s limited to people of rare ability like the Rutherfords, the Goldies and Shortland Street stars. Again, according to Robinson, that’s simply not the case.

Robinson argues for a completely different approach to the way we think about creativity. The truth is, he says, we all have profound creative capacities. Societies (and organisations) that are serious about churning out great ideas and innovations must work hard to develop the creative capacities of all their people.

Creativity here, there and everywhere

In 2003, Professor Richard Florida was a keynote speaker at the Knowledge Wave Conference in Auckland. Citing research material from his bestseller, The Rise of the Creative Class, he explained how important creativity is becoming to the modern economy. Creativity, he maintained, is to the 21st century what the ability to pull a plough was to the eighteenth century. Creative occupations are growing and firms now orient themselves to attract the creative. Employers prod their employees on to greater bursts of inspiration. The lesson to be taken from Florida’s message is that cities that want to succeed must aim at attracting the creative types who are, he argued, the wave of the future.

He called this wave of the future the ‘creative class’. This segment of society, Florida says, is comprised of members “engaged in work whose function is to create meaningful new forms”. Florida’s creative class consists of two components. First, a super-creative core that includes ‘scientists and engineers, university professors, poets and novelists, artists, entertainers, actors, designers and architects, as well as the thought leadership of modern society: non-fiction writers, editors, cultural figures, think-tank researchers, analysts and other opinion makers.’

This group is supported by the second component of the creative class, the creative core. The creative core comprises creative professionals who work in a wide range of knowledge-intensive industries such as high-tech sectors, financial services, the legal and health-care professions, and business management. It is their job to support the super creative core in the work they do. His basic argument is that cities must do all they can to attract this creative class (in other words, turn themselves into cauldrons of culture and coolness).

Florida returned to the topic in 2005 with The Flight of the Creative Class: The New Global Competition for Talent, a sequel that extends his argument internationally. Florida’s basic point is that the entire global economy increasingly revolves around innovations that flow from the creative classes. He points to the small creative empire constructed in Wellington around Weta Workshop as an example of global talent magnets that are sucking the most creative people from places like the US.

He used International Labour Organisation data and job classifications to develop an index of the creative class in countries around the world. Since 1991, Florida says, New Zealand’s creative class has jumped from 19 to 27 percent of its workforce. That places New Zealand fifth in the world (behind the likes of Ireland and Australia, but ahead of 35 other countries including Finland, Singapore, the UK and the US). Those are the kinds of statistics that get our politicians excited.

While Florida’s notion of a creative class may be compelling, the dichotomy between the creative person and the non-creative or average person seems a little artificial or, to use one critic’s term, ‘formulaic’. Certainly artists and designers and filmmakers and architects are creative generators of new ideas, forms and representations. These creative activities—music, literature, visual arts, design, architecture and performing arts—are central to New Zealand’s identity, economy and social tapestry. They are what we often think of as the creative part of our society.

But in thinking about how New Zealand can build its adaptability, our use of the term ‘creative’ has to be broader than that. After all, New Zealand society consists of thousands of separate fields of expertise, from farming to cooking to music to mathematics to computer programming to religion to art. Each of these fields comprises a set of instructions for behaviour. There is a commonly accepted way of starting a company or writing a will or being a tow-truck driver or publishing a book or managing a shop or treating a fractured wrist or fixing a bike. The instructions for operating in each field are passed from one person to the next through learning. In most fields, they don’t change that often.

However, there are individuals who are always trying out to farming techniques, new methods to compute quantities, new ways to think about cells or economies or educational techniques, and so on. If these are deemed to be better than the old ways, the new idea will be called ‘creative’ and be absorbed into the set of instructions or knowledge in that field. New ideas fuel improvements. It’s how societies learn, adapt and grow. It’s how they prosper. That’s why a leading expert on economic development, Harvard University’s Laurence Harrison, suggests that the societies that progress the fastest are simply those that help all their people realise their creative potential.

That's why even if progress is narrowly defined in economic terms, it’s not just the entrepreneur who creates progress. As Harrison explains:

The inventor of the machine employed by the entrepreneur; the scientist who conceived the theory that the inventor turned to practical use; the engineer who designed the system to mass-produce the machine; the farmer who uses special care in producing a uniform raw material to be processed by the machine; the machine operator who suggests some helpful modifications to the machine on the basis of long experience in operating it—all are contributing to growth. So is the salesman who expands demand for the product by conceiving a new use for it. So, too, are the teachers who got the scientist, the inventor, and the engineer interested in their professions and who taught the farmer agronomy.

And so on. The point is that everybody contributes to a society’s march forward. Each person adds their creativity in their field of work. To Harrison, development is as much a process of millions of small breakthroughs as it is of a few monumental innovations, the work of geniuses. A society that smoothes the way for these breakthroughs and encourages them is a society that will progress far. For that reason, New Zealand shouldn’t take Florida’s idea too far and become overly picky about who it turns to for new ideas.

Looking for creativity

Teresa Amabile, head of the Entrepreneurial Management Unit at Harvard Business School, has been grappling with the question of where creativity is found for three decades. She has collected nearly 12,000 daily journal entries from 238 people working on creative projects in the consumer products, high-tech and chemical industries. Without telling the study participants that she was focusing on creativity, she asked them, in a daily email, about their work that day. She then went through their emails looking for moments when people struggled with a problem or came up with a new idea—in other words, when creativity surfaced in their work.

One of the things she found was that creativity can be found anywhere in an organisation. ‘The fact is,’ she says, ‘almost all of the research in this field shows that anyone with normal intelligence is capable of doing some degree of creative work. Creativity depends on a number of things: experience, including knowledge and technical skills; talent; an ability to think in new ways; and the capacity to push through uncreative dry spells.’

If we define creativity then as the generation of new ideas, we can see the traces of creativity everywhere. A parent becomes creative when he devises novel ways of making the everyday life of his children stimulating and comfortable given a limited budget. A farmer is creative when she comes up with a more efficient way of distributing feed to her livestock. The entrepreneur is creative in developing a new product or service, then thinking up new ideas about how to differentiate his goods or services from those of others. So under that broader definition of creativity, some of New Zealand’s most prolific idea generators are located in our country’s homes, hospitals, schools and companies.

This creative economy, then, is one where people don’t do just a nine-to-five routine, repetitive job. It’s where people, at any stage—talking to their spouse, sharing a bottle of wine with friends, watching the rugby or swinging a golf club—think they may have an idea that will actually work. Not just an idea that gives some sort of esoteric pleasure, but an idea that will make a difference in their life and in their work. It’s why Robinson defines creativity simply as ‘individuals having ideas’.

The point is that New Zealand needs to ensure it is spreading its idea-generation net as widely as possible. That means avoiding the tendency to only look for new ideas in certain areas or from particular people. The young, the old, the conservative, the alternative, the uneducated and the overeducated: all have a creative capacity, like anyone else. While their ideas will invariably differ, the stock of ideas open to an organisation or a society is enhanced when different ideas are brought to the fore, tested, modified and integrated. New Zealand is too small to afford exclusivity when it comes to idea generation.

So the message is: creativity exists everywhere and in everyone. Let’s make this more tangible by understanding why creativity is important and how New Zealand stacks up.

Why creativity counts

We hear a lot of talk these days about what New Zealand needs to do to sustain its economic growth. It’s talked about a great deal because it’s very important for the country’s future. It funds, after all, the standard of living we hope to enjoy in the future. If we don’t grow our economy, our schools, hospitals, public areas, and so on all deteriorate. Without a minimum level of economic growth, we’ll struggle to provide for our children the bright future other societies are able to give theirs. It’s easy to forget, however, amid all the economic jargon we constantly hear, just how simple the basic laws of economic growth are and the central role creativity plays.

At its most fundamental, economic growth occurs when people take resources and rearrange them in ways that are more valuable. Stanford University economist Paul Romer uses a kitchen metaphor. To create valuable final products, we mix inexpensive ingredients together according to a recipe. But the cooking we can do is limited by the supply of ingredients. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes generally generate more economic value per unit of raw material.

Romer likes to provide a very innocuous example. You may not have noticed, but in many cafés you can now use the same size lid for small, medium and large cups of coffee. That wasn’t the case for a long time. That small change in the geometry of the cups means that a coffee shop can serve customers at lower cost because they only need to carry one type of lid. Employees can replenish supplies more quickly throughout the day. Customers can get their coffee just a bit faster. Romer points out that while big inventions like the Walkman or antibiotics or the cellphone grab the headlines, it’s the millions of little discoveries like coffee lid designs that are equally important in driving up a nation’s income.

The good news is that while the world is filled with finite resources, there is an almost unlimited number of ways in which these resources can be combined. Romer explains the concept of combinations this way. There are 1088 particles in the known universe. That is a very, very large number. But it is nothing compared to the number of ways things (or ideas) can be combined. To illustrate, take a deck of cards. It can be rearranged in many, many ways. In fact, there are 1068 possible card decks, which means that the order of the last deck you shuffled has probably never appeared before.

What this means, according to Romer, is that we are limited only by our imagination. There are lots of new recipes to be invented. By coming up with new ideas on how to increase, say, the power of a microprocessor, humans can increase productivity, open up new opportunities for profit, and ultimately power economic growth.

The problem for developed countries like New Zealand is that there are lots of countries in the world, as we saw in chapter two, who are churning out lots of workers able to work to existing recipes—very cheaply. They can follow a recipe, take the ingredients, and put it all together for a fraction of the cost New Zealand can. That’s why New Zealand needs to focus on generating new recipes. That’s what we do well, and that’ll fuel our economic growth far more powerfully than trying to compete on old recipes.

That’s why creativity is so important for New Zealand’s future. Many other developed (and developing) nations are quickly coming to the same conclusion about their economic futures. Many countries recognise that the future of national economies depends upon a steady flow of innovative ideas. So, for example, Singapore aims to be the creative hub of South East Asia and has in place the Creative Singapore Strategy. Even China, the manufacturing powerhouse with an abundance of cheap labour good at following old recipes, is desperately trying to figure out how to educate its people to be creative.

The US is certainly very worried about how equipped its workforce is to generate the ideas necessary to grow its 21st-century economy. A report on the future of the American workforce entitled Tough Choices or Tough Times was released at the end of 2006. The New Commission on the Skills of the American Workforce—a high-powered bipartisan panel that includes senior government officials, business and civic leaders—issued the recommendations in an effort to light a fire under the country. Fostering creativity lies at the heart of the commission’s recommendations.

Those countries that produce the most important new products and services can capture a premium in world markets that will enable them to pay high wages to their citizens. In many industries, producing the most important new products and services depends on maintaining the worldwide technological lead year in and year out, in that industry and in the new industries that new technologies generate.

But that kind of leadership does not depend on technology alone. It depends on a deep vein of creativity that is constantly renewing itself, and on a myriad of people who can imagine how to use things that have never been available before, create ingenious marketing and sales campaigns, write books, build furniture, make movies, and imagine new kinds of software that will capture people’s imagination and become indispensable to millions.

If the world’s largest economy is that concerned about the need for creativity for its future growth, then tiny New Zealand certainly can’t afford to ignore the vital role creativity will need to play in our future.

So how does New Zealand measure up?

The notion that New Zealand is a society of innovators has become part of New Zealand’s folklore. From the ingenuity of the Maori to the making-do of the early, isolated European pioneers to the tinkering of 20th-century heroes like motorcycle speed-hound Burt Munro, it’s easy to gain the impression that creativity is in our drinking water. But how creative a people are we really?

There’s no absolute way of knowing, of course. So I’m going to use a metric, albeit an imperfect one, for establishing our collective creativeness: patents. A patent is the legal protection anyone receives who invents or discovers any new and useful process or item. What’s more, it’s not just new products that are patented. The US Patent and Trademark Office has given Dell Computers a patent not for the computers it sells but for the way it sells them. The British Patent Office has also headed off into new territory by awarding a patent for the technique of cloning Dolly the sheep, which covers the ‘possible use of the technology in cloning human cells’.

As of 2004, there was a total of around 5.4 million ‘live’ patents registered with the World Intellectual Property Organisation. That year almost 1.6 million patent applications were filed. New Zealand filed 1,631 of those, which means New Zealand filed about 400 patents per million people. That puts us in sixth place in the world behind Japan, Korea, the US, Germany and Australia. New Zealand is in fourth place when patents are measured against gross domestic product, ahead of both Australia and the US. We’re also in fourth place when our patents filed are compared to our research and expenditure budget. So it seems as though our creative juices are flowing strongly.

But simply looking at worldwide patent statistics can be somewhat misleading, since different countries follow different standards for granting patents. That’s why I’ll look at patents granted in the US. It receives patent applications for nearly all major innovations worldwide, and holds them to the same strict standards. Looked at from that angle, a slightly different light is shed on New Zealand creativity.

In 2005, around 75,000 of the 143,000 patents granted in the US went, not surprisingly, to Americans. Some 30,000 went to Japanese inventors, and 9,000 to Germans. The next ten most innovative countries—including the usual suspects in Europe plus Taiwan, South Korea, Israel, and Canada—produced around 25,000 more. The rest of the world accounted for just five percent of all innovations patented in the United States.

New Zealand chipped in with 143. ‘Drug, Bio-Affecting and Body Treating Compositions’ was New Zealand’s most popular category, with eight patents, but there was also a patent granted in the ‘Buckles, Buttons, Clasps, Etc’ category, and another under the ‘Bed’ category. There were even four patents for ‘Chairs and Seats’.

Spend a bit of time snooping around the statistics and a telling story emerges. The first thing we find is that while we scored highly on the world patents index, we didn’t seem to do so well at the US patent office. In fact, we’re quite a bit off the pace relative to some other players. There are about as many New Zealanders as there are Singaporeans, and yet for the last five years they have managed to register well over twice as many patents as New Zealand. There are only half a million more Norwegians, yet they have registered almost twice as many patents in the US as New Zealand. There are only a million extra Finns, yet their patent generation in the US is over five times New Zealand’s. Put another way, it took about 5,000 New Zealanders to generate one US patent in 2005. That’s a lot more than the 2,100-odd Singaporeans, the 1,200-odd Fins, and the 1,100-odd Swedes.

A couple more pieces of New Zealand’s innovation puzzle emerge. First of all, a very high proportion (18 percent) of New Zealand’s patent applications were from individuals. In other words, they were individually owned. That 18 percent is a lot higher than the figure for many other small countries. Only five percent of Singapore’s patents were from individuals, four percent of Finland’s and six percent of Denmark’s. Some countries had nearer 15 percent of their patents filed by individuals, but they tended to have significantly larger populations (like Australia).

Some may say that the high number of individually-owned patents is another example of New Zealand’s No 8 fencing wire genius at work. Perhaps it is. But what it also suggests is that many of the new ideas generated in New Zealand do not have the support (money, expertise, infrastructure) of an organisation helping them realise their innovation.

That’s a problem, as we’ll see in a second.

The other piece of New Zealand’s innovation puzzle is that very few of New Zealand’s patents originate with a single organisation. In fact, New Zealand’s largest US patent-getter over the last five years, Fisher & Paykel, managed a haul of around 65 US patents—about eight percent of New Zealand’s total. For Singapore, Chartered Semiconductor, the big manufacturer of microchips for computers, generated 442 patents alone over the last five years. That constituted 22 percent of the country’s total. A big chunk of Sweden’s 1,189 patent applications came from the telecommunications giant, Ericsson, which alone contributed 209. And Nokia, the other communications giant, contributed a whopping 39 percent to Finland’s 4,224 patents over the last five years.

What this suggests is that New Zealand is a little hamstrung without a couple of big exporters in highly innovative industries like semiconductor or cellphone manufacturing. It turns out that there is something about large organisations that drives greater innovation than is the case with the equivalent number of smaller companies.

Innovation in big organisations

To understand why big organisations can out-innovate smaller ones, let’s return (oddly enough) to genomics (the study of an organism’s hereditary information). In 1996 the scientific community was shocked to discover that the yeast genome contained as many as 6,300 genes. That was more than many had expected. On that basis, biologists estimated the human genome, considering our place at the top of the evolutionary food chain, would come in around the 100,000 genes mark. But they were in for another surprise. When the human genome was decoded five years later, it turned out we humans had only about 22,500 genes. To make matters worse, that was only 10,000 more genes than the humble roundworm—a dent to Homo sapiens’ pride for sure.

But before you invite a family of roundworms around for dinner, consider this: a small increase in the number of nodes (genes, cells, people) in a complex system can radically affect the system’s level of complexity. It is no different for organisms like humans or roundworms. It works like this. If any one gene in a cell can be either ‘on’ or ‘off’, independently of one another, a cell with, say, a hundred genes could display 2100 distinct states. If the potential number of distinct states a cell could be in is a measure of complexity, the difference between the worm and humans is staggering. Humans, by this measure, end up being 103000 times more complex than our wormy friends. Hope you feel reassured now.

Add more genes to a cell and complexity increases exponentially. Add more people to an organisation and the same thing happens. Think of the difference between your local coffee shop and Telecom. Your local café employs, say, seven people, whereas Telecom has around 6,000 people clocking in each day for work. The jump from ten employees to 6,000 is only three orders of magnitude (103) but the jump in complexity from making lattes to keeping New Zealand’s telecommunication system running is many, many orders of magnitude greater.

That means an organisation the size of Telecom has inherently more capacity for innovation in the future—the larger number of states in the Telecom network means there are more potential ways for Telecom to make a profit than for the local coffee shop. As organisations grow in size, the space for possible innovation unfolds exponentially. It’s the same with societies as well.

Of course what the company does is also important. A very big company producing say, apples, many not have the same capacity for innovation as a smaller company making microchips. Unfortunately for New Zealand, the majority of our products are grown, and mountains of butter or carcasses of lamb lack the complexity of some other products. Hence the range of potential innovations is smaller.

The other issue for New Zealand is that it is a nation of small companies. New Zealand is a world leader at starting companies, but not great at growing them. The Total Early-Stage Activity (TEA) index is a measure of the prevalence of individuals engaged in the start-up or gestation phase or in managing a young business, less than 42 months old. New Zealand ranks top of the OECD, clocking in at around 14 percent of the working-age population.

In 2006, New Zealand had over 345,000 enterprises, employing around 1.76 million people. Ninety-six percent of New Zealand enterprises employ fewer than ten people. Close to 60 percent of New Zealand entrepreneurs are self-employed, and two-thirds of them are home-based. If you’re setting up shop in your garage or spare room, there isn’t much room to grow, and typically that’s fine for those who elect to work from home. But it means that New Zealand remains in the realm of tiny businesses.

More significantly, most of New Zealand’s entrepreneurs (the vast majority of the 281,000 businesses) are involved in what is known as the ‘economic core’. They are typified by the corner dairy, the lawn-mowing and house-cleaning franchisees, and shopkeepers in Newmarket and Levin. We need these businesses, and it’s difficult to imagine life without them. But they’re also characterised by their low rates of innovation (how do you continually innovate in a corner dairy?) and low rates of growth. So a great wad of our entrepreneurs are in businesses that will never be big drivers of new ideas in the economy.

What this all means is that the innovation story for New Zealand is mixed. On the one hand we have the good news that New Zealanders have never been short on creativity and improvisation. We’re a creative bunch, for the most part.

The bad news, however, is that as individuals we don’t live in a vacuum. Individuals often need institutional support to harness their creativity most effectively. As economic historian Joel Mokyr puts it: what makes individuals implement, improve, and adapt new technologies, or just devise small improvements in the way they carry out their daily work (in other words, what makes them innovate), depends on the attitudes and resources around them. Without the right support, good ideas just stay that way—as ideas. Our ability to build and develop them into money-generating activities is limited. Put another way, we’re not coming up with enough new recipes.

Small countries like New Zealand have to work extra hard at generating creativity, and then turning it into innovation. Although we cannot predict creativity, we can foster it by providing environments that encourage it. Necessity is not always the mother of invention. Creativity is a very emergent property, and we’ll now turn to a few ideas that might help it bubble up further.

Investing in our idea-generation infrastructure

Any society makes conscious choices about where it invests its resources. Some societies choose to invest more of their resources into activities that generate ideas. They figure in the long run that will help them prosper more successfully.

New Zealand is not one of those societies. Our total investment in research and development (key idea-generation activity) amounts to a paltry 1.2 percent of our gross domestic product, a fraction of our spending on housing, infrastructure and other physical capital, and way below most other developed countries. In fact, we’re in sixteenth place when it comes to our expenditure—as a percentage of GDP—on investment in knowledge. It’s not surprising, then, that we top the OECD when it comes to the percentage of our manufacturing exports that are considered ‘low technology’. We can come up with all the justifications and excuses we like, but the fact is that as a nation we’re not investing in the creation of new ideas in the way other countries are. That hurts our ability to adapt.

Thankfully, that is slowly changing. New Zealand is gradually evolving into an idea-generating economy. But this is a generation-to-generation journey. It will require ongoing ‘show us the money’ scrutiny of those entrusted with the public’s coffers. The fact is the payback in purely economic terms would be far greater if we channelled a fraction of the money we spend on, say, sports stadiums, into supporting new biotechnology or software research.

In 2006 Auckland wrestled with the choice between spending about a quarter of a billion dollars upgrading Eden Park, or up to a billion dollars building a new waterfront stadium, to host the 2011 Rugby World Cup. It appeared a painful process for all involved. The decision was made to go with the Eden Park option. There was fierce debate about which option was the best but little was said about whether investing such vast amounts of money into any stadium was in the country’s longer-term interests.

We need our sports stadiums, of course. But we also need to be honest about the reasons for them. They’re there for our enjoyment of sport and the odd concert. That’s a perfectly legitimate reason for any society, especially one as sports-mad as New Zealand. Further, building a new stadium may help Auckland become a ‘world-class’ city, some claimed.

But when people begin claiming ‘long-term economic benefits’ as a reason for building a new stadium, we need to pause for a minute. It’s important that they articulate how New Zealand’s longer-term economic benefit is better served by spending an additional $500 million on a new stadium versus the economic benefit of spending that money in the country’s idea-generating infrastructure (scholarships for engineering and science students, funds for university research labs, and so on).

Perhaps we need a higher standard of what ‘economic benefit’ means. Supporters of a new stadium point to the added benefits: extra profits for nearby restaurants, shops and hotels, and extra tourists. But can’t we do better than that? Are a few more meals sold or hotel rooms booked or souvenirs flogged the best New Zealand can expect from its investment in economically productive assets? The longer-term economic benefits of investing that money in idea-generating infrastructure will inevitably be greater—new products for export or licence, the absorption of overseas capital, attracting and retaining smart people, and so on.

Let me reiterate: New Zealand needs its sports stadiums, and economic benefits are certainly not the be-all and end-all of any decision. But as a tiny nation we also need to be clear about what we’re gaining, and losing, from our investment of public funds. We need to understand the significant trade-offs we make when we plug money into a sports stadium over a science park, into a racecourse over a research lab. These are not trivial choices. In a country the size of New Zealand, the legacy of $500 million decisions like that will last for generations.

By adding to the stock of what Richard Florida calls ‘creative capital’, we’d increase New Zealand’s wealth substantially. Such investments generate substantial ongoing returns by attracting top scientific, technical and creative talent. They spin off new companies and attract firms from other countries. That all tends to make things like better hospitals, more schools and even new sports stadiums a lot more affordable. This is territory that has been well travelled in public discourse over the last few years, but it would be remiss in a book of this sort to ignore how important investment of public funds in idea-generation is to the future of our nation.

Growing creative kids

Here’s a remarkable thought: the children who start school today will be retiring around 2065. Does anyone have any idea what the world will look like in 2065? We’ve seen already that it’s hard enough venturing a guess beyond the next ten years. Yet it’s the job of today’s education system to prepare our children for a future that we cannot predict.

The Tough Choices or Tough Times report—from that high-powered US panel—puts the imperatives of 21st-century education like this:

This is a world in which a very high level of preparation in reading, writing, speaking, mathematics, science, literature, history, and the arts, will be an indispensable foundation for everything that comes after for most members of the workforce. It is a world in which comfort with ideas and abstractions is the passport to a good job, in which creativity and innovation are the key to the good life, in which high levels of education—a very different education than most of us have had—are going to be the only security there is.

The report points out that this is a world where mechanics will need to understand the computers embedded in new cars, architects will need familiarity with nanotechnology, where software engineers with a familiarity with music will have an edge over those who do not as the entertainment industry evolves, and small businesspeople who construct custom boats will only survive if they understand the scientific foundation of carbon-fibre composites.

As the report alludes to, the current way we educate our children may not be preparing them optimally to face a future no one can anticipate.

A century ago, education’s function was to pass on the knowledge, skills, and wisdom of the past to the next generation. As the schoolmaster in Charles Dickens’ Hard Times, Thomas Gradgrind, said:

Teach these boys and girls nothing but Facts. Facts alone are wanted in life. Plant nothing else, and root out everything else. You can only form the minds of reasoning animals upon Facts: nothing else will ever be of any service to them … Stick to the Facts, sir!

But in the course of the 20th century that changed. In the paraphrased words of the British science philosopher Alfred Whitehead, for the first time in human history the wisdom of our forebears will be of less practical value to our livelihoods than the knowledge produced during our lifetimes. To reflect this, the emphasis in education has slowly shifted from simply learning facts to building skills and driving creativity. And that shift needs to continue in earnest.

That shift in educational methods needs to quicken. For despite the progress in educational methods over the past 100 years, research suggests the challenge to grow creative children into creative adults remains a daunting one. George Land and Beth Jarman, in their book called Breakpoint and Beyond: Mastering the Future Today, report on research they did, over a series of years, into divergent thinking. Divergent thinking is the capacity to think non-logically—to think associatively, and it’s a good example of creativity. Land and Jarman gave a series of tests to 1,600 three- to five-year-olds. Ninety-eight percent of the children scored at the genius level or higher for divergent thinking.

They gave the same tests to the same children five years later at the ages of eight to ten. At that stage 32 percent scored at the genius level in divergent thinking. By the time the children were 15 the number of divergent-thinking geniuses had dropped to just ten percent. When the researchers gave the same test to over 200,000 adults, only two percent were in the same category. Something eroded in the capacity of those children to think creatively. It just might do with the way modern educational systems teach children to think.

That’s why we need to continue to update the way we’re teaching our children. The human brain is intensely interactive. As Ken Robinson points out, the school curriculum tends to kill these interactions by setting up separate subject departments. So we teach maths for an hour and then music for another half an hour. Perhaps there is a way of making these processes more interactive.

New Zealand has been experimenting with various education models that do just that. For example, the Primary Enterprise Program (PrEP) develops the entrepreneurial capabilities of primary-school children through the establishment of micro-businesses. From pizza and smoothie shops to travel agencies to film documentaries, it’s a thriving economy that in 2004 involved 212 schools and 24,000 students. Jobs are applied for, CEOs appointed, mayors voted in, and bank managers pleaded with. Laws are passed and then broken. The total curriculum time is a couple of hours a week. It’s a taste of real life that breaks students out of the compartmentalised learning environment, allowing them to use their maths and their English and their art cohesively. It’s about engendering creativity, problem-solving and curiosity.

Mitchel Resnick, a professor of technology and learning at Massachusetts Institute of Technology, is all for that. He explores how new technologies can help children learn new things in new ways. He’s inventing technologies that radically change how and what kids learn, fostering ‘decentralised thinkers’.

Corporate structures, scientific theories, computer architectures, political and economic models are all becoming more decentralised. And the Internet is accelerating this trend. As we discovered earlier, in a decentralised system lots of simple parts interact with one another in simple ways, with no single part in charge: birds in a flock, cars on a highway, buyers and sellers in a market economy. If today’s children want to succeed in tomorrow’s world, Resnick believes they need to be comfortable with decentralised approaches.

Part of the challenge is to build an education system comfortable with decentralisation. Whether they end up creating organisations, tech¬nologies, communities, or theories, Resnick believes people will need to think this way. To understand decentralised systems, children need opportunities to design, create, play with, and explore decentralised systems.

Some New Zealand schools are experimenting with completely different education models. Unlimited Paenga Tawhiti, for example, is a relatively new state secondary school located in the city centre of Christchurch. It was established in 2003 by the Christchurch-based Learning Discovery Trust. It is one of just 11 schools running under the Designated Special Character criteria of the Education Act, and has a roll of just under 300 students.

What makes Unlimited Paenga Tawhiti school special is its novel approach to learning. Each student is given an individual learning plan based on consultation with parents, teachers and the student. The students have dedicated one-on-one sessions with teachers where progress is evaluated and improvements are worked on. The New Zealand curriculum underpins the learning at the school, but does not drive it. Students are immersed in technology and interactive learning environments both in and out of the classroom. They don’t wear uniforms, sit at desks in classrooms or work to set timetables. For some people an education programme that loose is unfathomable. But then perhaps the thought of sitting in a classroom rote-learning facts and figures from a set curriculum as a way of equipping students for the future is pretty unfathomable as well.

PrEP, or Unlimited Paenga Tawhiti, or other novel education methods and models may not be perfect. Inevitably there will be some failures along the way. But at least New Zealand is experimenting with education methods that might equip our children for the 21st century. We get upset about text message abbreviations being permitted on examination answer sheets, but perhaps we’re getting upset about the wrong things. Maybe we need more national angst about the fundamental question of whether our schools are developing creative, stimulated, confident children.

No one is disputing the need to develop children who get their quadratic equations correct, work their way around a periodic table with ease, and can conjugate their verbs with aplomb. No one is disputing that the education system must instil in children an ethos of discipline and hard work. People are not even disputing that children need guidance and structure in their learning. All these elements must be a hallmark of a 21st-century education system. What is disputed is whether all of the above is achieved with education methods that, at their most fundamental, have changed little in 100 years. We now know so much more today about how the brain works, what stimulus it responds to, and how the learning needs of one child varies from the next. We can’t be afraid to use that.

The fact is, no one has all the answers to the question of how to prepare a nation’s children for the future they will face. But every nation is struggling to figure it out. New Zealand can’t be left behind. It’s often said that education is the key to the future. It is. But as Ken Robinson points out, a key can be turned in either direction: locking resources away, or releasing them. We won’t survive in the future simply by doing better what we have done in the past. Our future idea-generating capability will require much more than that.

Understanding the value (and limitations) of the incremental

In the 1940s, Genrikh Altshuller began work as a clerk in the Soviet patent office. He became interested in the invention process and set out to establish some generic rules that would explain the creation of new, inventive, patentable ideas. It was a task that would not even be interrupted by imprisonment in a labour camp during one of Stalin’s purges, where fellow inmates assisted him with his research.

His study scrutinised over 200,000 patents (others have continued his research and that figure has now reached over 1.5 million), to determine how many of them represented truly new knowledge. The result? Only five percent of them were truly new concepts. The rest were simply improvements on what had already existed.

That’s an important nuance to the whole creativity story. Up until this point in the chapter I’ve used the term ‘creativity’ in its most general sense. All new ideas fall under this broad rubric. But obviously not all ideas are created equal. Some represent a completely new solution using an entirely different set of principles. Other ideas—the overwhelming majority, in fact—are simply incremental improvements in the way something has been done before.

Conceiving and making the first Post-it notes was a completely new idea. Making them different sizes, shapes and colours was an incremental improvement on the original creative idea. Even though planes had existed before, the Boeing 747 design was actually a daring, novel, risky and original one. Much larger than any existing commercial aeroplane at the time, its design, construction and operation meant starting afresh on many aspects of conventional aircraft manufacturing. The widening and lengthening of the cabin, plus the myriad other changes to the wings, cockpit and engines that have occurred in the 747 design since, are incremental improvements on the original idea.

This distinction may seem trivial, but it’s actually quite important. It’s important to distinguish between novel and incremental ideas because the processes are different, the risks are different, the starting points are different, and the environments needed to achieve them are different. Organisations and society need both. To grow and prosper, most organisations need to constantly improve their existing products and services; but to survive, they also need to create new products and services before existing ones become obsolete and non-competitive.

Generally most businesses are more comfortable with the incremental than with the new. Why? Because the incremental is a lot safer. It’s far easier to achieve success improving something that exists than starting with something that doesn’t. The incremental requires a much lower level of risk and it can be stopped at any time. The end point is generally known. There is often less of a need for long-term commitment of resources and money.

Completely new ideas, on the other hand, require a different mindset, tolerance of mistakes, an acceptance of risk, and a commitment of time and resources. They require the acceptance of possible failure. Continuity has to be allowed for. Taken together, these requirements affect the culture of any organisation or society that aspires to be creative.

But this is far from easy. Most organisations find it far easier to do the incremental than the extraordinary. In their book Creative Destruction, management consultants Dick Foster and Sarah Kaplan looked at Forbes magazine’s list of the hundred largest US companies in 1917 and compared it with Forbes’ list in 1987. What they found is quite astonishing. A mere 70 years after the first list of 100 was compiled, only 18 companies were still on the list. A staggering 61 of them no longer existed.

These 18 that did survive weren’t exactly champion performers. With the exception of just two companies, General Electric and Kodak, all 18 underperformed the average growth in stock-market value during that 70-year period. Then Kodak disappeared off the list in the 1990s, leaving only General Electric. One company, out of 100!

One reason leading companies struggle so much to maintain their performance is due to the difficulty they have with continuous change. In his book The Innovator’s Dilemma, Clayton Christensen, a professor at Harvard Business School, revealed that companies find it very difficult to move from one innovation to the next. If a technological innovation pushes up the performance of a product then the technology tends to preserve the power of existing players. However, when a new, disruptive technology comes along, the entrenched companies that support the older technology often struggle to adjust.

That’s because in business organisations there is a constant tension between two critical requirements: to perform in the short term and to invest and innovate for the long run. For this reason, Tom Peters and Bob Waterman, the authors of perhaps the most famous business book, In Search of Excellence, argue that organisations must simultaneously be tight in executing and loose in adapting.

While this executing versus adapting challenge crops up regularly throughout business literature, most organisations are much better at the executing part of the equation than the adapting. Better at the small incremental improvements than the larger, more significant changes—like developing entirely new solutions or products as opposed to endlessly tinkering with their existing product line. The corporate record is littered with examples of companies that chose to stick to their knitting, rather than change.

Polaroid, the manufacturer of 35mm film for cameras, grew into a large, successful company in the 1970s and 1980s. As the company prospered during this period, and the longer the industry remained relatively stable, the more convinced the management team would have become that it really understood what was going on and was able to predict where the business was going. The more convinced the management team became, the more precisely and specifically it would have tuned its assets, skills, and people to continue doing the incremental—small improvements to their traditional 35mm product range.

Then in the early 1990s, Phoebe Moses’ hand trembled—digital technology was developed. The world started to change. To begin with, the company’s leaders would have believed that the problems they were experiencing were just a temporary anomaly. The new digital technology hardly looked likely to set the photography world on fire: it was horribly expensive, bulky and unreliable.

But while the executive team waited for more evidence, the world kept changing. Digital photography took hold. The company suddenly found itself in a new game and stuck with the wrong strategy, the wrong assets and the wrong skills. Sure enough, fewer than ten years later that executive team was looking for a new job as Polaroid went out of business. The technology improved, as it always does. It became cheaper, smaller, and more reliable. Poor 35mm, and those who made it, didn’t stand a chance.

It’s hard to be too critical of Polaroid’s management for not wanting to erode their existing 35mm product line. Especially when the long-term payoffs from this new digital technology would have been far from certain. That’s a difficult message to sell to your board and shareholders. It highlights the difficulty organisations face. The path of least resistance is invariably that which optimises our short-term gain at the expense of our ability to prepare for the future.

The New Zealand government has been doing some real thinking in this area over the last few years. Its Growth and Innovation Advisory Board has been talking to businesses about their attitudes to growth and innovation. In one study, the Board found that New Zealand businesses are good at making lots of small innovations, with people at all levels working on continuous improvements to the business. But when it came to big innovations, New Zealand businesses struggled. Part of the reason why they struggled to produce industry-changing innovations, the board found, was the absence of structural mechanisms for innovation. As one respondent in the study said, the challenge is getting the ideas from 95 percent to a workable solution. It’s that five percent which requires a disciplined approach to creativity, what another respondent described as ‘structured creativity’.

New Zealand’s No 8 wire mentality has become a cliché. But if it exists, then it suggests we’re at the incremental rather than the completely new end of the creativity spectrum. Sure, we have our ‘one out of the box’ breakthrough moments, like the carbon-fibre America’s Cup yacht, but generally we’re tinkering, improvising, to make improvements on the new products and services of others. There’s nothing wrong with that as such. That’s often the best strategy for the small, the resource-constrained and the risk-averse.

But it does mean we’re less likely to generate the game-changing leaps forward that come with completely novel ideas. To get into the radically new idea game, New Zealand will need to re-evaluate its thinking about the importance of research and development, the types of industries that have the capacity for radically new thinking (biotechnology rather than hotels, for example), and a broader tolerance for failure.

Collective creativity

In 1497, the French ambassador to the Vatican commissioned a sculpture of Mary holding the body of Jesus after his death. In less than two years, Michelangelo had carved from a single slab of marble one of the most magnificent sculptures ever created. When Michelangelo finished his Pieta, he was a mere 24 years old. A year later he began tapping out his David, and completed that before he was 30. It’s hard to think of a better word to describe Michelangelo than ‘genius’.

Michelangelo’s creative contributions to humankind are not disputed. Neither is his talent. But we tend to imagine Michelangelo toiling alone on the scaffolding high above the floor of the Sistine Chapel. In fact, he wasn’t alone. Thirteen people helped Michelangelo paint the work. Michelangelo wasn’t only an artist; he was, as his biographer William E Wallace points out, the head of a good-sized entrepreneurial enterprise that collaboratively made art that bore his name (an opinion piece by Wallace in The New York Times was aptly headlined ‘Michelangelo, CEO’).

The Renaissance scholar, in fact, no longer exists. According to Vera John-Steiner, author of Creative Collaborations, the power of the unaided, individual mind is highly overrated. Although creative individuals are often thought of as working in isolation, the role of interaction and collaboration with other individuals is critical to creativity. Given our continuing obsession with solitary genius, reflected in everything from the worship of film directors to our fascination with Stephen Tindall, Sam Morgan and other high-profile entrepreneurs, it is no surprise that we tend to underestimate just how much creative work is accomplished by groups.

Ronald Burt, a sociologist at the University of Chicago, has spent most of his career studying how ideas move from place to place. The usual image of creativity is that it’s some sort of genetic gift, some heroic act. But according to Burt, creativity is more often an import-export game. As we’ll see in the next chapter, when it comes to solving complex problems, getting the right combination of skills on a team is as important, if not more so, than trying to get the smartest team members.

Creativity, whether you’re designing a stone axe or a space shuttle, is easier when a group, rather than an individual, is trying to assemble the pieces. As Alexander Graham Bell once said, “Great discoveries and improvements invariably involve the co-operation of many minds.” Or, to put it another way, none of us is as smart as all of us.

Individual creativity is critical to New Zealand’s adaptiveness. But it isn’t enough. Our understanding of complex adaptive systems tells us that simply looking at the individual agents in a system, while ignoring the interactions between them, doesn’t get us all the way there. We need to understand how individual and social creativity interact with each other. Put another way, in order to meet Mr Shaw’s “produce some brains” challenge, we need to understand how to hook those brains up to each other and the outside world.

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