Competition has been an important contributor to the rapid economic growth achieved during the past 200 years. The most effective businesses are rewarded with profitable growth while the least effective fail and their resources are redeployed.
Late last year I participated on conference panel with Franceska Banga (CEO, NZVIF), Peter Chrisp (CEO, NZTE) and Murray Bain (CEO, MSI). The topic was competitiveness, yet we all praised progress on collaboration to lift the performance of New Zealand’s innovation ecosystem. So what’s going on? Has something fundamental changed?
There is an important change resulting from three adjustments of priorities. The first is Government’s greater emphasis on increasing effort to improve New Zealand’s economic performance. The second is greater commitment to growing high-value exports following more widespread recognition of the potential of differentiated goods and services, combined with the realisation that commodity exports cannot be relied upon to provide prosperity.
The third is recognition that success of high-value exporters requires much better innovation ecosystem performance and that, in turn, requires more effective collaboration among the government agencies that manage the ecosystem, and provide funding and services to innovative businesses.
The economic management approach of the past relied lot on competition to encourage performance improvement. The CRIs were meant to compete with one another. Researchers were meant to compete for funding. Firms were meant to compete to secure the resources they needed for success.
Government agencies worked relatively independently to provide services to individual firms. Competition drove performance. Fragmentation ensured competition. Silos were the norm.
The approach is changing now as more people recognise that New Zealand’s real economic competitors are in other countries. We now see more clearly that New Zealand’s small and remote internationalising businesses need supportive innovation ecosystem. Other countries have done lot more to improve their ecosystems and support their internationalising businesses.
The change is not shift from competition to collaboration. It is integrating collaboration with competition to develop an innovation ecosystem that will help more of New Zealand’s emerging and established businesses to succeed in international competition.
The leaders of New Zealand’s innovation ecosystem are doing what leaders do; setting direction for development with shared goals, including more prominent role for collaboration, motivating participants in the innovation ecosystem, and aligning people so they can collaborate more effectively.
Peter Chrisp, CEO of NZTE, said: “The institution is dispensable, the cause is not. If you come at it that way you can collaborate and co-operate, and not worry about your patch. What you worry about most is the group of companies that you’re working with and whether they are growing or not.”
There is great potential to improve New Zealand’s economic performance via more effective collaboration, partly because the past approach has produced an innovation ecosystem where businesses struggle to secure the talent, capital, knowledge and connections required for success, and those deficiencies may now be addressed.
There are also risks that must be managed. In the past, New Zealand has scored well on international measures of corruption and trust. Critics of the change in direction sometimes point out that increasing collaboration brings greater risks from cronyism, regulatory capture or other forms of corruption, as well as from group-think and complacency.
On balance, the gains available from collaboration far outweigh these risks, especially if the risks are recognised and managed. Alongside growing collaboration should be increased emphasis on values, institutional design that encourages good practices, increased vigilance and effective enforcement.
Many countries are turning to innovation as the engine of economic growth. New Zealanders will succeed best by collaborating to compete successfully. M
Rick Boven is director of the New Zealand Institute.
