Stitch Innovation Series #5

   

2008. R. W. Gauldie and William Giesbers. The Economic Boundary Conditions that Nurture Productivity Through Commercial Innovation. STITCH Innovation Series #5. The Gail Press, Wellington. ISSN 1178-3486 (Print) ISSN 1178-3494 (Online) ISBN 978-0-9597776-7-3. Hard copy and digital copy are deposited with the National Library of New Zealand. Download PDF (pdf 1.2MB) .

 
   

Abstract

The Economic Boundary Conditions that Nurture Productivity Through Commercial Innovation.

Bob Gauldie and William Giesbers

Innovation as a nice word evokes a sense of action, of bold and positive enterprise. But innovation as an actual action faces an unpleasant reality. All too often innovation is the wish that, unfortunately, came true. In what we call “Western “ society there are all kinds of social, political and economic strictures in place that stop innovation from occurring; let alone taking root in the economy. Innovation, nonetheless, slips through the cracks, and in doing so makes “Western “ society better fed, in better health, better educated and better in pretty much everything else in comparison with non “Western” societies in which the strictures against innovation are much more effective.

Edwards-Deming cautioned us that the willingness to change, to innovate, occurs only when extinction is the only alternative. There is a corollary to this one of Edwards-Deming’s laws of human nature: When innovation prospers, it is at the expense of its predecessor. Think about almost any device or product, or even idea, in daily use and you will certainly remember a long-gone predecessor. No company, no institution, no human organization, no grand theory, no religion; none of them would willingly agree to be the predecessor of something better, something innovative.

In New Zealand innovation is a gilded word. Innovation in action, however, is entirely another matter. It is certainly true that New Zealanders were in the past a highly innovative bunch. Otherwise, we would still be living in a green desert of poisonous or inedible native plants and not in the bright and productive fertile fields that we created out of a splendidly green, inedible landscape. Nowadays, officialdom is more centralised and vastly more intrusive. Innovation is only welcome if it is along officially approved lines. We were once a country with little respect for officialdom. New Zealand is now a country weighed down by not only the weight of officialdom-governed compliance, but also bowed by the even greater weight of complaisant acceptance of the burdens of compliance. Regrettably, most of our compliance burden is based on imported politically correct ideologies of mostly American origin.

Americans, unlike New Zealanders, have access to a vast amount of risk capital from the private sector that actively supports innovation. Much of the risk capital in the United States is available from profits made from prior commercial innovations. Here in New Zealand, for example, most of what we buy, from house paint to IT, is based somewhere along the value chain on an American innovation. Even more importantly, Americans have access to a political system that can make compliance burdens disappear for sectors with enough political influence. Otherwise, the United States government is just as inept at fostering innovation, and just as compliance-binding as any other government; including that of New Zealand.

We do not expect the grey blanket of politically correct compliance in New Zealand to roll back simply because it is part of the reason for our looming bankruptcy. Nor do we think that a wealthy class of investors will take up the role of the American innovation-investment cadres. All that we can do is to point out that there are certain structural elements in the New Zealand economy that can, without causing too much disruption, be adjusted to nurture our innovative spirit at a time when we need it most.

Download the pdf file The Economic Boundary Conditions that Nurture Productivity Through Commercial Innovation (pdf 1.2MB). It is completely free. Read it. It will give you something to think about.