How could the New Zealand Primary Industries become more adaptive to disruptive change through Investing in Innovation?

Kellogg Rural Leadership programme participant George Strachan, is currently working through a research proposal which includes a series of case studies and interviews with key stakeholders around innovation. His topic is 'How could the New Zealand Primary Industries become more adaptive to disruptive change through Investing in Innovation?'

The project will consider how successful New Zealand businesses cultivate ideas, position themselves and their innovations to boost growth and become more adaptive to disruptive change. It will also consider how and why they finance this investment, what the barriers to investment are and what learning's might be spread wider across the industry.

He interviewed key influencer and Sprout Business Strategy Advisory Stu Bradbury.

What is innovation to you?

Innovation on one level is what leads to production and efficiency gains for any part of the value chain in an industry. An example would be the invention of multi-ply tyres or the refining of LED lighting. On another level, disruptive innovation could completely over-run and sideswipe other innovation that has taken place in the past by offering a vastly different and superior solution to what has become the norm, such as Uber or smartphones.

What’s your view on innovation in the Primary Industry in New Zealand?

NZ’s Primary Industry has experienced a lot of innovation and drives innovation out to the world. Due to our spatial separation from the rest of the world, innovation in order to survive or make the most of our resources (such as refrigerated shipping) is ingrained in our DNA. We are pioneers in animal management technologies (electric fences, break-feeding), seed technologies (e.g. Biolumic UV treatment) and no-till drilling (Cross Slot).

Can you share a specific innovation strategy you’ve recently encountered which you find compelling?

Robotics Plus are developing some amazing smart machines such as the kiwifruit picker, robotic pollination machines and apple sorter/packers. Their strategy is to identify areas where value can be added to their customer’s operation, and then charge their machines out as a service (similar to a lease). This type of strategy means that it is more affordable for the customer to adopt the technology rather than forking out for a big capital cost up front - they share their added revenue with the innovator.

What do you see as the most challenging barriers to increasing value chain gains, now and in the future?

Cost and lack of efficacy in the early days are often a barrier to customer adoption.

Public perception. For example we have some amazing technologies emerging in biological advances with things like Genome editing, which scaremongering could slow down or halt if the public are not informed correctly about the actual value gains and what they will mean to them, vs the risks.

Sometimes the free-flow of information that we have today could actually slow down technological advancements due to the wrong people having access to the tools they need in order take technologies and do bad things with them. For this reason (and rightly so), before a technology is released, the public needs to be educated and steps put in place to mitigate the risks.

I also think there is often a disconnect between the mass population and the voting rights or ability they have to shut down a technology or project versus their education on what the technology is actually going to mean for the population in the long run.

Where do you think innovation will have the biggest impact in NZ’s Primary Industries?

We have limited resources. I think we could use innovation to extract greater value from these resources. Our Dairy industry is a giant and we should be proud of our accomplishment. However, it comes with its challenges and one of those challenges is that as the world matures, we are going to need to extract greater and greater value from our land resource. There is huge opportunity for innovation in the dairy industry to extract greater value from our resource.

What do you see as the next generation of investment in the Primary Industry? Has it become easier to source funding for innovation and what are the pitfalls?

We are currently experiencing a boom in investment into Agritech. It’s a buzz-word and rightly so as the population all like to eat, so we want to invest in securing our future food bag. We’re seeing a lot of activity around the world with Agritech business start-up accelerators much like our Sprout Accelerator (but obviously not as good as ours) helping start-up businesses in Agritech release their technologies and innovations to market.

This is possible due to many factors coming together, one of which is the availability of capital from investors looking for new and exciting areas to put their money. Another way to source funding for innovation is through an innovation in itself; crowdfunding.

Although I’m an advocate for start-ups first seeking “Smart Money”, once they have the correct business structure in place, crowdfunding then becomes an exciting place for businesses to access funding from the public that would otherwise be much more difficult to access, and the public to get insight into the innovative businesses looking for investment that they otherwise might not have been able to find.

What in your opinion is an effective innovation strategy? And how do measure innovation effectiveness?

At a small business level (the area in which I work, as opposed to say government level) in order for any innovation strategy to be effective, the innovation needs to be able to create value in order for the business to thrive in the free market. I think the free market is a great test – if the market doesn’t want the innovation, it is either a poor innovation, or the strategy to get the innovation to market is wrong. It presents challenges and encourages lateral thinking which is what we need in order to innovate well.

What more do you think NZ has to do to reach a point of innovation optimisation?

That’s a tough question… how do you define optimisation? I think once you think we’ve reached a point of innovation optimisation, there will be some more optimisation that will take place as technologies change and then we’ll reach another point. However, I think we should always be striving for optimisation and I’d love to see more emphasis on innovation and optimisation in schools.

If we are educated as a population to strive for innovation, perhaps we can experience some culture change?

How would you rate New Zealand’s Primary Industries approach to targeting value, positioning itself in key points along the value chain?

I think the Primary Industry has a spectrum of different approaches. As I’ve mentioned earlier, I think we should be pushing our dairy output further up the value chain.  There are some really innovative companies among the NZ Primary Industry population. For example, Wilcox perlas are a great example of innovation in marketing where they have taken a byproduct (potatoes too small for general consumption), washed them and applied some clever marketing to make a product that over in Australia they leave on the ground in the paddock during harvest into a high value product here in NZ.

If we use that example of innovation, I think there would be plenty of opportunity throughout NZ’s Primary Industries to apply innovation and move up the value chain.

What barriers do you see to the Primary Industry lifting the value of exports and are there other countries NZ could learn from?

I don’t really see any barriers that we can’t innovate around. The biggest barrier I think is public perception, which we can change through education. With regards to innovation and pushing innovation out to market, I think we could learn from Israel. They have an interesting approach which seems to be largely related to culture. I’m not suggesting that we change our culture – we are who we are, but if we can learn from others and apply the things that work for them, perhaps this could help us out.

Considering the proportion of SMEs in NZ, is there anything that needs to change to enable more impact from innovation?

I remember when I first left university. I didn’t go and get a job because I had a vision to build my own business and use innovation as the enabler for the business to succeed. I was surprised by the number of friends and other people who said that I was “so clever” and “brave” for bucking the trend of going and getting a job after leaving uni, and then building several businesses, one of which was “Precision Irrigation”, the business that is now known as the first business to take Variable Rate Irrigation from New Zealand to the world, now owned by Lindsay Corporation in the USA.

I think I was lucky that I came from a part of rural NZ where I saw people running small businesses all through my childhood, including helping Mum and Dad to run our family farm, so rather than looking to get a job, I saw it as normal to create your own job. I didn’t think it was clever or brave at all, I was just encouraged from a young age to think laterally about problems and come up with better solutions than other people previously have. It’s quite a few years since I was a kid and went to school, but I think it would be great if today’s youth were encouraged in much the same way I was so that when they get to an age where they are able to apply themselves to building a business (e.g Patrick Roskam, invented the Gudgeon Pro at 11 years old), they’ve got the initial skills and support to just get into it.

Other than ROI what other key considerations do you see investors in innovation making?

Is the market in need of this innovation as a solution to a problem?

Is this innovation an improvement on current techniques, will it help to solve a problem or will it completely eliminate a problem?

How is the market going to uptake this innovation? Will it spread through the market with next to no effort at all (e.g. viral), or will the market require education about why they need the innovation before they will get into it (e.g. Variable Rate Irrigation).

What is the size of the market the innovation will be addressing? Or another way of phrasing woudl be is it able to provide an ROI for the investors?