Innovation by NZME.

Innovation Tuesday, March 4, 2014

Section D

Inside

Add another ‘B’ to the ‘bach, boat and BMW’ trophy list New Zealand entrepreneurs have long been criticised for cashing up their businesses to settle for the good life instead of growing them to global scale. Callaghan Innovation chief executive Mary Quin says why not add simply add another ‘‘B’’ to the ‘‘bach, boat and BMW’’ trophy list — the billiondollar company? Isn’t it possible to have it all? Xero CEO Rod Drury is one New Zealand entrepreneur who has changed the mould by leveraging US investors to scale his business. Drury is a leading Cloud pioneer who espouses a vision of making New Zealand a ‘‘test lab for the world.’’ It’s a vision that the ‘‘baby Bell’’ investors who took a significant share

in Telecom at the 1990 privatisation also shared, seeing New Zealand as small enough to trial innovations. Telecom Digital boss Rod Snodgrass reckons that though New Zealanders are way more innovative than Australians our problem is ‘‘is scaling things.’’ ‘‘A lot of Kiwis they come up with a really cool idea [but] not many of them are like Rod Drury. Then they go, ‘Right I’m going fishing’. ‘‘I’m a bit like that, I’m thinking I’ve got enough to retire soon. Whereas if you go to the US they just want to do more and more and more.’’ Xero’s Drury is clearly on that track. About 60 per cent of Xero’s revenue is set to come from offshore, off the back of the expansion of the company’s

The ‘‘bach, the Beamer and the boat’’ is great. But let’s have the billiondollar company too. — Mary Quin. CEO Callaghan Innovation accounting software and the expansion of the joint venture with ASB to the Australia market. At the recent Xerocon, Drury also unveiled a ‘‘Farming in the Cloud’’ service, to bring real-time, single ledger reporting to the farm.

The service will allow farmers and their accountants, banks and rural service companies to work together from the same set of online, real-time data. It will likewise provide one centralised home for key accounting and farm management tools. New Zealand Trade and Enterprise research says our national traits — a frontier self-reliance, egalitarianism and a ‘‘she’ll be right’’ attitude — don’t cut the mustard when it comes to taking on the world. But Callaghan’s Quin reckons New Zealand can breed more such billiondollar companies. Mary Quin’s challenge Rod Drury

A national-scale data hub could create a ‘completely new marketplace’ in New Zealand

Alexander Speirs

elecom’s Digital Ventures is gearing up to launch a national-scale data hub which it is expected to bill as a great resource for New Zealand Inc. Digital Ventures chief executive Rod Snodgrass says the company believes it can create a ‘‘completely new marketplace here. ‘‘It’s not a big secret but we don’t talk about it openly,’’ says Snodgrass. ‘‘We have built a national-scale data hub for ingesting lots of different data and smashing it together to create insight. And we intend to take that to market soon as a B2B business around data as a service, insight as a service, and full analytics — you can outsource your whole BI (business intelligence) to us and we can run all that with dashboards.’’ Snodgrass said there was an element of public-private partnership to the initiative. ‘‘It’s our vision over time to create an NZ Inc data hub that we’re not the owners of — it’s almost data for equity. You throw your data in and we agree the rules around security and keeping the data anonymous.’’ Snodgrass says key elements are still under wraps. But as an example, he says by putting Telecom’s network and Wi-Fi data together with weather data it could help point the way to Auckland Transport to tell it where it should build roads. The Digital Ventures initiative is one of the most disruptive to roll out of what insiders term Telecom’s ‘‘skunkworks’’. But the ability of NZ

Rod Snodgrass says the vision is to create a NZ Inc data hub. Picture / Natalie Slade

firms to leverage data mining is impacted by a severe lack of available talent domestically. Though the data scientists New Zealand has are ‘‘some of the very best’’, hiring more is proving to be a serious challenge for businesses. Loyalty New Zealand CEO Stephen England-Hall says at the moment his firm is ‘‘throwing the net as wide as

we can and seeing what we reel in. ‘‘Domestically there’s a very small number of people so we have to look everywhere.’’ This year, for the first time, the University of Otago will offer a Master of Business in Data Science. Programme director Michael Winikoff says the university feels data science is a promising area, both in terms of

Tim Miles explains Gen-I’s brave new digital world — D6-7

— D2-3 — D5

The rise of big data Innovation

Upwardly mobile

meeting a real need, and in terms of being an area ‘‘where we had sufficient critical mass of relevant expertise on staff’’. The University of Auckland offered a Master of Professional Studies in Data Science for the first time last year, tailored for those already in the workplace. The initial programme ran with five students but interest for this year’s intake is said to be ‘‘significantly higher’’ as the university looks to build a more flexible schedule to fit around people with professional commitments. There are suggestions it might also link with Telecom to launch a data academy. ‘‘We have a lot of intelligent people in New Zealand, but they don’t know the science behind going through the data process, so that formal education is necessary,’’ says Chandan Ohri who leads KPMG’s IT Advisory team. ‘‘The number of graduates who are coming to us with even a basic knowledge of data and analytics is miniscule. This could really be helped with the introduction of a full threeyear programme.’’ Sam Daish, Kiwibank’s Head of Enterprise Information, cautions that any approach needs to be carefully considered, given the rate at which the sector is evolving. ‘‘It’s more about educating people about the core principles about how this works and teaching transferable skills rather than expecting people to come out of university ready to operate a specific platform. ‘‘What analytics demands is the ability to think clearly about problems, gather facts and group those in a methodically different way to try to uncover unusual and novel insights that you can act on,’’ he says. continued on D2

Sustainable success Simon Power looks at economic solutions for environmental challenges — D11

Start me up Bill Bennett talks to Nigel Parker about Microsoft’s start-up programme — D12-13

Let’s do it differently Innovation needs to be integral, says Michael Barnett — D15

Promoting success Diane Foreman on supporting women entrepreneurs — D23

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Research in development Rise of big C data

abinet Minister Steven Joyce is impressed with Mary Quin’s ‘‘impressively nuggety and feisty’’ style. Says Joyce, ‘‘She comes through the middle and has to evaluate the science sector and the business sector, and the minister’s expectation.’’ Joyce — who has responsibility for innovation as part of his suite of portfolios in the business and economic development areas — was highly instrumental in the machinations with led to the launch of Callaghan Innovation one year ago. To him Callaghan Innovation is a ‘‘unique beast’’. To accompany its birth the Government has also made significant changes to its grants scheme, making them appear almost a fait accompli for those entrepreneurs and businesses that tick the boxes. ‘‘The R&D Growth grants are not about having officials try and judge what it is the right strategy or not,’’ says Joyce. ‘‘But if you are engaging in R&D and spending a certain percentage of your turnover on R&D, and spending at least $300,000, then you qualify for that 20 per cent funding.’’ He is confident the changes to the Government’s R&D grants system will benefit business. Joyce stresses the Government is insistent that R&D is conducted in New Zealand. ‘‘We are less worried about the ownership and more concerned about where the R&D occurs. Fisher and Paykel Appliances and Endos are examples of where the companies are owned internationally.’’ He’s also sanguine about the policy shift to ensure the equity is ultimately recycled so that others get a go. ‘‘It is not a scheme to line entrepreneur’s pockets . . . it is a scheme to encourage and build an ecosystem of R&D that captures the benefit of having the right researchers and being able to start their own company.’’ Joyce points to a 25 per cent increase in business R&D over the two-year period from 2012-2013 as measured by Statistics NZ. This was equivalent to 0.5 per cent to 0.58 per cent of GDP, he notes. The high dollar value has also driven firms to be more

CALLAGHAN’S 1ST YEAR MILESTONES

Innovation

Fran O’Sullivan

innovative. Though the the increase in innovation is driven in part by the ecosystem — more so it is out of necessity. ‘‘They are out there selling at a much higher dollar, and have to be able to set their price levels, be more unique and less price-sensitive to deal with the significant dollar appreciation.’’ Though dairy is still 20 per cent of New Zealand’s exports of goods

It is not a scheme to line entrepreneur’s pockets . . . it is a scheme to encourage and build an ecosystem of R&D. Steven Joyce

and services, ICT and high tech manufacturing together is currently just under 8 per cent. ‘‘That’s the area we have to work on,’’ he says, noting that high-tech manufacturing exports have grown at a faster rate than our wine industry over the past few years. Joyce wants to see a big push on skills, particularly in the engineering sector. The biggest change he has noted around innovation hubs is the level of private sector engagement. ‘‘I think the hub idea is great, but there is a potential tendency, to draw a ring around those existing players and say we’re a hub. ‘‘What I’m looking to see is governance structures involving private sector, research facilities and companies on the sites — we already have that happening in Palmerston North — so we get a genuine cross-pollination between public and private sector.’’

● Worked with 230 businesses on 800 different R&D projects ● Over 500 companies have received 750 grants worth $200 million

ORGANISATION ● Recruited world-class executive leadership team ● Transferred 50 staff to two new Victoria University research institutes co-located at the Gracefield Innovation Precinct ● Stakeholder advisory board, led by Andrew Coy, appointed ● Strengthened sales capability

INCUBATORS ● Transferred incubator support programme from NZTE ● Working with MBIE on new tech focused incubators which will administer the repayable grants scheme ● Two staff are working with the Product Accelerator — which has led to at least two dozen new R&D engagements ● Embedded a tech expert into another company as a prototype for Callaghan’s Tech Experts capability ● Identified critical technology platforms supporting multiple businesses, and have begun hiring national technology managers (the first being in the ICT/digital arena — who has begun bringing companies together to identify common technology needs such as in the telematics and big data spaces) ● Took ownership of the Foodbowl (with Ateed), and are growing the number of companies using it to develop awardwinning new products ● Discontinued involvement in the contestable funding process COLLABORATIVE INNOVATION PROJECTS ● Took a lead role in the Christchurch Sensing Cities project — funding a health informatics pilot project and providing personnel and expertise PARTNERSHIPS ● Strategic partnerships signed with NZTE, NZVIF, the MacDiarmid Institute, Ateed, CDC, Lincoln, Scion, KiwiNet, Metro Group (polytechs) ● Became a member of KiwiNet ● Established links with EU innovation networks SPONSORSHIPS ● Motivating best practice through sponsorships of TIN100, the World Class NZ awards, IPENZ, Morgo PLAN ● Completed three year business case, statement of intent, operating agreements, implementation plans and now have well established processes CATEGORIES ● 381 Project grants which provided to the firm a discount of doing R&D of up to 50 per cent ● 40 Growth grants which generally are for bigger companies, larger amounts, typically provided a discount of 20 per cent on their R&D ● 343 Internships, to cover the cost of students or Post-Docs — the business applies for the grant

Hi-tech PPPs can deliver economic growth Ingenuity and invention are characteristics that define our country. The success of our hi-tech sector has put New Zealand on the world stage of innovation at a time when capital markets globally are flush with cash and searching the high growth investments. These investments create the high value companies and high value jobs that create high growth economies. Less recognised is the innovation in our public sector. Frequently criticised for being bureaucratic, unimaginative and late adopters, I regularly see pockets of genius in our government departments. Those departments are not mandated or resourced to commerialise or sometimes even operationalise their inventions so they frequently gather dust on the shelf of good ideas, are given away to other countries or stolen by opportunistic international consulting companies who charge us eye watering daily fees to pick our pockets. One way of leveraging publicsector innovation, successfully operationalising and commercialising public-sector innovation and creating fulfilling careers for our brightest workers is through publicprivate partnerships. The private sector has the knowledge, skills, experience and drivers to help the public sector exploit its innovations.

Craig Richardson discusses the potential for New Zealand sourced public-private partnerships in global markets. Public-private partnerships are not rocket science. They are built on relationships. They are not about aligning objectives, they are about creating opportunities . . . Their survival depends on them knowing what the rest of the world wants; they have the capability to package know-how as products and services; they have channels to market and the drivers to maximise returns. So why aren’t we doing it? Well, we are, but we can do much more and our thinking shouldn’t be constrained to long lead-time, resource intensive, complex agriculture, aquaculture or education publicprivate partnerships. We can get other hi-tech ideas to market much, much faster. Two of New Zealand’s most suc-

cessful hi-tech companies, Orion Health and Wynyard Group have proven the value of public-private collaboration through their partnerships with the New Zealand health and justice sectors respectively. Wynyard is commercialising the digital forensics know-how of New Zealand Police and has already successfully commercialised Australian Federal Police investigation knowhow it its advanced crime analytics platform. Together the public and private sector can solve local problems ranging from high volume crime, children at risk, cyber and organised

crime, while at the same time commercialising these methods, products and services for export. To this end, Wynyard is already working with NZTE and MFAT on opportunities in emerging countries which look to New Zealand’s enviable record on crime reduction and justice sector know-how. Public-private partnerships are not rocket science. They are built on relationships. They are not about aligning objectives, they are about creating opportunities where private and public sector objectives can co-exist for a better outcome. By definition, that means a high level of trust, openness and commitment from both participants to outcome, and to solve conflicts if and when they arise. At the end of the day, publicprivate partnerships are about leadership. In my role as a director of Callaghan Innovation and as managing director of Wynyard Group, I see significant social good and commercial opportunities for partnerships between New Zealand’s hi-tech companies and the public sector. It’s not about buying and selling more to each other, it’s an opportunity to solve local problems and sell the answers to the rest of the world. ● Craig Richardson is Wynyard Group Managing Director

continued from D1

England-Hall echoes this, saying his ideal skillset would comprise undergraduate study in computer science, statistics and philosophy with postgraduate training in data science as that is ‘‘the combination of skills we need’’. To meet the current shortfall in formally trained data scientists, New Zealand businesses are taking it upon themselves to educate and upskill staff so they are capable of working with data. KMPG’s Ohri says the firm does onthe-job training where it partners graduates with industry experts who impart the benefit of their 20 years of experience in three years, teaching them frameworks, technology and algorithms that KPMG uses.

We need to attract talent to create talent, so we have to do a lot around creating an environment for that talent to want to be here. Create the right sandpit and the right kids will play. Stephen England-Hall

This style of training data scientists has unique benefits when compared to a tertiary programme, enabling a plethora of disciplines to become adept with data. ‘‘Data analytics is very much dependent on understanding the business and the future requirements of the business,’’ says Ohri, and with such a broad array of uses for big data, having data scientists with expertise in a secondary field is an extremely attractive proposition. ‘‘People of different talents have different ways of thinking, so having a broad range of backgrounds and disciplines means we are able to match the best talent to the client requirements.’’ Though getting the right programs in place to train domestic data scientists is a great first step, England-Hall says it is only one part of the equation. ‘‘We need to attract talent to create talent, so we have to do a lot around creating an environment which is a political environment, an economic environment, a legislative environment and a business environment for that talent to want to be here. ‘‘Create the right sandpit and the right kids will play. We need to create that drawcard.’’ ● Additional reporting: Fran O’Sullivan. ● Alexander Speirs goes DataMining — D8-9

Innovation 2014 Executive Editor: Fran O’Sullivan. Writers: Bill Bennett, Potaua Biasiny-Tule, Brierley Penn, Alexander Speirs. Subeditor: Isobel Marriner. Graphics: Isobel Marriner, Richard Dale. Advertising: Sandra Evans. Advertising Co-ordination: Nancy Dudley. On the web: nzherald.co.nz

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Another B on the bucket list C

Fran O’Sullivan

allaghan Innovation chief executive Mary Quin reckons more New Zealand companies should position themselves as global players from Day One. Quin has got to know all the key players in the local innovation ecosystem in the period since she returned from Alaska to New Zealand last year to become Callaghan’s founding CEO. She’s noticed the increasing trend for NZ firms to go global and bypass the traditional proving stage in the domestic market by leveraging high technologies and networks to access international markets. Another trend Quin has noted is a desire by some companies to aspire to the ‘‘4 Bs’’ — to have that boat, that bach and the BMW — and to also be a billion-dollar company. ‘‘The fourth ‘B’ is what we need — to have a lot of those companies that have fantastic ideas and have already made inroads.’’ Getting more NZ companies even above the $100 million mark is the starting point. ‘‘The good news is we have a good seed crop of many small and diverse companies; we don’t have to build that baseline of businesses, the challenge is how to grow these companies big-

ger and in a faster timeline. Obviously, not all companies want to become very large companies, and that is the prerogative of the founders, owners or leadership team.’’ That latter point was borne out by a recent report by ManufacturingNZ which undertook case studies of 15 successful, high-growth NZ manufacturers. The firms — which were well shy of the billion-dollar mark — were predominantly locally owned and privately held and wanted to stay that way. Callaghan Innovation is identifying industries where NZ already has a critical mass of innovative companies. ‘‘Our mission is high-value manufacturing and services companies, and we will support all that need help. ‘‘I don’t want to pre-empt what the board might decide about industry focus, but we have analysed using data such as the TIN 100, and 100+ companies and we see larger groupings of companies in some areas than others.’’ The healthcare sector and process food and beverage sectors will be likely priorities, but Quin has been ‘‘quite surprised’’ to see how many companies are building modes of transport, aircraft, boats, unmanned vehicles, quad bikes — Yike Bikes as an example — and companies building

We have a good seed crop of many small and diverse companies ... the challenge is how to grow these companies bigger and in a faster timeline. Mary Quin

software around fleet management and parking spaces. ‘‘I think there are quite a few groupings of companies that need capability from a number of technology platforms we are building — certainly the ICT and robotics, automation and sensing, and the advanced materials technology platforms and networks across all the R&D providers, across New Zealand.’’ Like Cabinet Minister Steven Joyce, she stresses the importance for businesses to understand that the grants Callaghan administers are across ‘‘totally open access’’. ‘‘If you need R&D help, we will connect you, within our own capability or outside. It doesn’t matter what sector you are in, as long as it is in high-value manufacturing and services. We were not set up to help

tourism or the commodity end of the primary industries.’’ Quin has found a collaborative spirit among companies. But when she asks the big question — ‘What is holding you back from growing bigger, faster?’, it’s always one of two things. Talent shortages — such as the people to write software codes in the ICT sector or who have the engineering skills to work in high technology. And capital for when companies hit the stage when they need to access investment of $3 million and $5 million. ‘‘Often that funding is not so much about showing that the prototype works and having worked out the R&D,’’ says Quin. ‘‘But it is about investing in distribution channels, in the sales and expertise they need. Because they are going to global

markets they need that capability whether they are going into the US or Asia, Europe or South America. ‘‘I think that is an opportunity and challenge for young New Zealanders because a lot of companies are anxious to give them challenging jobs and for them to be part of the growth of those businesses. ‘‘ Callaghan is also focused on developing some collaborative innovation projects. Quin cites the ‘‘Sensing Cities’’ project related to the rebuild of Christchuch. Callaghan has contributed funds and personnel to supporting the project. And in the Maori economy it is in dialogue with the Federation of Maori Authorities around their interest in accelerating the growth of more technology orientated businesses .’’ There’s obviously a lot on Quin’s plate. Asked how she will be judged, she says ultimately the important metrics are the number and size by revenue (‘‘hopefully by profitable revenue’’) of New Zealand companies that are in the high-value manufacturing and services she thinks of as technology intensive products and services. Rigorous benchmarks are being developed by Chief Scientist Sir Peter Gluckman. ‘‘Sir Peter is doing a lot of work around very useful benchmarks for us. I think an important metric to success is also businesses saying, ‘it is really helpful having Callaghan Innovation — someone from Callaghan Innovation or one of their programmes has helped us get to where we are’. ‘‘Sometimes many of the ways we help will be in partnership with other organisations, or we might be in the background, but hopefully visible enough so that firms see we have contributed.’’

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Banking on a new world of opportunities The banking industry has a key role in helping business reach its new potential in a technology driven world, writes David Green

ne of the greatest benefits of technology is that it is making the world smaller. Geographical distance need no longer be the disadvantage it once was, for individuals or businesses — or indeed countries. This technology-driven revolution opens up opportunities for a nation like NZ, which has historically faced challenges that arise from our distance from key markets. Many of these opportunities have been further heightened by the reweighting of New Zealand’s trading relationships towards the growing economies in the Asia Pacific region. Eight of New Zealand’s top 10 trading partners are now within this region, which has reduced the physical distance to our key markets. Geography is now increasingly on New Zealand’s side. As enablers of business, which increasingly operates without borders, modern banks have a key part to play in helping New Zealand reach this new potential, by bringing the country, its businesses and people closer to the world. They need to challenge the industry’s reputation for conservatism and become leaders in new technology and innovation that connects customers and provides new ways for them to do business seamlessly around the world, around the clock. To be effective, this innovation needs to reflect the new ways com-

panies in the 21st century are electing to do business. Growing numbers of business leaders are adopting mobile technology based tools and solutions in many aspects of their lives, and many are looking to use the same technologies in their business dealings. They want to be able to conduct business and make payments wherever they are and from the device of their choice. The challenge for banks is to continually innovate and invest to enable this. It was in recognition of these evolving business needs that ANZ became one of the first banks in the world to launch a wide-ranging mobile cash management solution, Transactive-Mobile. This enables businesses to use iPhone or Android devices to remotely monitor realtime account balances, view current and prior-day transactions, approve and release payments and obtain live FX rates across different countries. One user — an Auckland-based food exporter — typifies how modern companies expect to do business. The business owner has accounts in New Zealand and Australia with ANZ, and with a local bank in Hong Kong. He views balances and transactions on all of them from his smart phone. He uses his phone to approve payments from all his bank accounts, including the local bank in Hong Kong, for example to pay an offshore

Business leaders want to be able to conduct business and make payments wherever they are and from the device of their choice. supplier or source materials. He can make payments in a range of currencies, including Chinese renminbi, from anywhere in the world where he can get a mobile or internet connection, using a laptop, tablet or mobile. Locations to date have included hotel rooms in several countries and even, on occasion, from his bach in the Coromandel. The ultimate aim of a modern global bank in an ever more connected world should be to enable any customer to make any payment, any time, anywhere, and on any device. Future banking solutions will need to be developed with the full range

of digital devices in mind — a change from the traditional model which has seen them rolled out to mobile following an initial launch via more established channels. Another evolving area of businessenabling innovation is using the information banks build up in dealing with individual clients to offer firms new solutions better tailored to their needs. Banks will also have a growing ability to assist actively by providing clients with notifications that help them successfully run their business. For example, a text or other alerts from their bank to let them know

when action is required, such as when the balance on a foreign currency account falls below a certain level. Such alerts will empower businesses to act swiftly on information that would otherwise require them to log in and manually check their accounts. In adopting these innovations, larger clients will be looking to their bank to provide these services based on a global view, which mirrors the international, often complex, operations of the business. But a world made smaller by technology is not without its challenges. One significant risk is that the same connectivity that makes life easier for global consumers and businesses is also attractive to international fraudsters. The threat of data theft and other cyber crime is ever-present in any part of a global operation. Banks must ensure they stay ahead of the criminals and fraudsters, and can reassure their customers that global digital solutions continue to be secure and that client data will be handled with care. Banks must continue to invest in technology to monitor and identify fraud and use the tools and information at their disposal to actively alert clients of suspicious activity. The challenges and opportunities presented to this country by global innovation are growing as rapidly as the world it enables is shrinking. What is clear for the banking sector is that banks play a very important role in ensuring New Zealand, its businesses and economy can reap the full potential of this new world of opportunities. ● David Green is Managing Director, Institutional, ANZ New Zealand

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

NZ well-placed to inspire We need to build on our performances as leaders in the utilisation of cloud computing, writes Rod Drury

ight years into our cloud journey and we’re finding new opportunities for innovation that can only happen in New Zealand. Our small size, deep relationships and pervasive design-led thinking, after years of the Better By Design programme run by NZ Trade and Enterprise, puts us at the forefront of the cloud revolution. Internet banking is one example where New Zealand has already led in the cloud. From Bank Direct in the 1990’s, New Zealand has seen a high proportion of people and their businesses banking online. The rapid adoption of mobile banking is clear, with many of our local banks offering world class customer experiences. When we designed Xero we took a design-led approach and followed hundreds of small business owners around. We discovered the first business activity almost all of them did each morning was to head to their online bank account — simply to see who had paid them overnight. We also noticed that business owners don’t process those transactions at the time; rather, they work late at night often right before a GST return is due and have the horrible task of back-loading all their bills and invoices. That is the horror of small business. Our design process awoke us to the idea of ‘‘automagically’’ loading bank transactions into accounting software each night. Your bank’s servers can send your statements to us and we can put those transactions in the right place, and do much of the dreary bookkeeping work for you or reduce data entry to a simple confirmation ‘‘click’’. The impact of this has been remarkable. We’ve seen many businesses that used to balance their books only every few months, now having an accurate view of their money every day. People are ‘‘bank reconciling from bed’’ with their mobile phones. Thanks to Xero, businesses are more productive and business is more fun. ASB was the first New Zealand bank to support direct bank feeds into Xero and we now receive

Rod Drury: The progress Xero is making here is New Zealand is being noticed by overseas banks

We’ve seen many businesses that used to balance their books only every few months, now having an accurate view of their money every day.

live data from thousands of banks around the world. This single feature, developed in New Zealand, has had huge impact on the world of accounting. Direct bank feeds are a must-have feature for any accounting software. As we gained customers in our small market, we found ourselves in an exciting position. As we approach 100,000 customers in New Zealand, we have been able to get a glimpse of the massive small business economy. Our customers sent and received 20 million invoices totalling $30 billion in the past 12 months, a meaningful portion of GDP. That sort of information just hasn’t

existed before, but over the next few years we’ll begin to surface those insights to our customers, allowing them to opt in to anonymous benchmarking allowing them to map their performance against their peers. Another exciting development as we get to scale is that the traditional industry leaders, like the banks, are now taking us and innovation seriously and collaborating on new services. Our insight that online banking and online accounting are intimately related is now obvious to the banks and together we’re able to invest in defining the next generation of bank-

ing — where business and banking systems communicate directly. For example, the ability to set up bank feeds from inside internet banking, have an accountant or bookkeeper process your payables so you only need to approve them on your mobile, and businesses making payments electronically without having to re-key data. These are projects all in progress. This linking will save small business millions of hours in productivity. What is super-exciting is that the progress we’re making in New Zealand is being noticed by the Australian, British and American banks. New Zealand is being seen as the global leader in business connectivity. Business-to-Government interactions are also lining up for a strong period of innovation, and this is ‘‘move the needle’’ stuff. If you look at the IRD’s $1.3 billion project, you can see immediate savings. Why should the Government develop tax return software? The private sector already does that and is competing for the same development resources. A better model would be for the Government to become a wholesaler of services and just publish the rules. The private sector would be more than happy to invest and is well-placed to cost effectively host the free public access forms at a fraction of the cost to Government. Each Government department website is a compliance silo. Having business software talk to Government servers reduces Government investment and dramatically reduces compliance costs. For example, when GST changed from 12.5 per cent to 15 per cent recently, the impact on our customers was minimal; the software could do all the hard bits. New Zealand is uniquely positioned. We are already leaders in the cloud and our big institutions and Government already work well together. Our vision is that, working together, New Zealand will become the reference model for how businesses connect. We’re already well along on that journey and the opportunity is ours to take. ● Rod Drury is chief executive of Xero

Alliance speeds service for customers Instead of waiting until something happens, we can support customers, share ideas and even anticipate matters. It reduces a lot of the noise and overheads.

Bill Bennett

Tens of thousands of ASB Bank customers use a service integrating the bank’s FastNet Business accounts with Xero online accounting. ASB executive general manager Steve Jurkovich says the number is about to jump when ASB extends the service to the small businesses and sole proprietors using the standard retail FastNet online banking. The service is part of an alliance between the bank and Xero that has seen ASB customers get facilities not seen elsewhere, such as being able to run credit cards, term deposits and foreign currency accounts through Xero. Jurkovich says the take-up has been in line with expectations. ‘‘At first it was just about early adopters and the people who get it. They moved quickly. Then more joined as their accountants and bookkeepers encouraged them and told them how it can make dealing with money so much easier.’’ Integration between ASB online banking and accounting software is highly automated. There’s no need to fill out paper forms or visit a branch

Steve Jurkovich

to connect an account to Xero. There’s much less double-handling of data: Jurkovich says information now flows seamlessly between companies, their accountants and the bank. This then introduces the ability to do things that were either timeconsuming or otherwise complex before the service was first introduced: ‘‘Accountants, bankers can collabor-

ate on planning. Instead of waiting until something happens, we can support customers, share ideas and even anticipate matters. It reduces a lot of the noise and overheads. Suddenly we are all taking about the same set of data’’. In practice, this might mean the bank noticing a pattern to the way cash flows in and out of a business and offering to set up a facility to manage money. He says this is about taking a forward-looking approach to serving customers rather than basing offers on what has happened in the past. Next up are moves to extend the links between ASB, Xero and customers so that other professionals and advisors can see the same single view of a business’s financial data.

Jurkovich says: ‘‘In the past banks have been insular, the job has been about building walls around the data. Now we’re building bridges. Of course there’s still a need for privacy and security, but we’re looking at ways of giving people safe, secure access to data.’’ Jurkovich sees potential in adding payroll processing to the ASB-Xero mix. He says until now this has been a fragmented market, however there is potential for seamless integration. Customer feedback has been positive. Jurkovich says they find it much easier to work with accounts and perform simple tasks like scheduling payments. It’s good for bank professionals who now get instant insights into customers in place of lagging

reports. He says: ‘‘We get quicker, clear information; that will mean reduced costs and savings for customers’’. There are pockets of resistance — not everyone is comfortable with the Xero-ASB way of working. Jurkovich sees this as a challenge and quotes Xero’s Rod Drury, who says: ‘‘So what if you’ve always done it that way?’’ He says this spurs the bank to attempt further simplification; ideally, customers will eventually be able to perform complex tasks with a single mouse click. Simplification is also behind extending the service to mobile banking, now the main way many customers communicate with the bank. By April customers will be able to load and schedule a long list of payments without a lot of manual form-filling from a remote location while using a smartphone. The Xero partnership extends to Commonwealth Bank of Australia and BankWest, who belong to the same group. Jurkovich says each bank operates in a slightly different way, but there’s a commonality at group level and a sharing of best practices.

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Software does the heavy lifting The cloud services industry is expected to grow by 20 per cent this year. Bill Bennett reports

atacom CEO Greg Davidson says there’s a growing awareness of software’s power to reinvent business. He says if you want to understand how software unlocks value, look at the way Air New Zealand and ASB Bank used it to transform the way they deal with customers. The two are among Datacom’s biggest accounts. Davidson says they are the tip of an iceberg: ‘‘For every company making sweeping, visible changes, there are six or so doing just as much behind the scenes’’. Using technology to fuel business change isn’t new. Companies have been doing it since computers first moved into commerce more than 50 years ago. Every decade or so there’s fresh cycle of activity with successive waves of technology. This time the biggest change is that the hardware powering systems has moved so far into the background that, in many cases, the companies using IT neither own nor operate their own servers. They tap into networks of data centres or cloud computing. Others hand their hardware over to facilities management specialists. Seeing companies switch from inhouse computing to IT services has been good to Datacom. Two years ago the company’s outsourcing, datacentre and facilities management operations saw it leap-frog HewlettPackard to become New Zealand’s second largest information technology service company. Analyst firm IDC Research says New Zealand’s overall IT services market is worth about $3 billion a year and is growing at close to three per cent annually. Datacom accounts for roughly 10 per cent of the total services market. Datacom is the nation’s biggest player when it comes to IT outsourcing, with a roughly 20 per cent market share. The company has a 23 per cent share in software development and is a major player in custom app development and systems integration. To get past HP, the 50-year-old privately held IT services company took a giant leap of faith. Davidson says just as the global financial crisis was getting under way and New Zealand was heading into a scarylooking recession, Datacom decided to make the biggest investment in the company’s history and commit to Orbit, a major datacentre in Auckland. The almost $100 million investment paid off. Now the Auckland facility is approaching capacity and

Transtasman operation

Greg Davidson says Datacom’s commitment to Orbit was a giant leap of faith that has paid off.

For every company making sweeping, visible changes, there are six or so doing just as much behind the scenes.

the more recent Kapua datacentre in Hamilton is expanding. Both are what Datacom calls ‘‘collaborative open’’ facilities. There are facilities in Wellington, Christchurch and Australia. Davidson says an advantage of having datacentres is Auckland and Hamilton is that they are far enough apart to be in distinct geographic regions. If a major disaster happens in one location, it won’t affect the other so they won’t both go off line. But they are close enough for what he calls ‘‘ubiquitous high-speed networking’’ — in data transfer terms it is almost as if the two buildings were next door to each other. Much of the IT industry — mainly involving hardware — has gone from being high value, high margin to becoming a commodity business. The IT business model is no longer based on the boutique but on the supermarket. This means scale and operational

excellence are important. Davidson says in spite of this there’s still plenty of scope for an organisation to offer something different. ‘‘Companies come to us to apply IT intelligently, so they can get an advantage’’. This is vital in an age when cloud computing has effectively flattened the playing field. He says an ability to understand a customer’s business needs is still anything but ubiquitous. One thing in Datacom’s favour is its local expertise — while small in global terms, it is large in both New Zealand and Australia. The two operations run autonomously, mainly with local staff. Datacentres are now big business. Depending on definitions, companies are expected to spend more than US$170 billion on cloud and related services in 2014. The market is growing at a clip: this year it is expected to put on 20 per cent and it should

Datacom is a New Zealand technology giant with its feet planted on both sides of the Tasman. The company now has as many staff working in Australia as in New Zealand. CEO Greg Davidson says though the two divisions share a ‘‘commonality of practice and workplace culture’’ the two companies are quite distinct. He says Datacom Australia is very much an Australian business — it grew from different roots with many staff joining the company through acquisitions. There are important market differences between the two countries. Davidson says the Australian business spends most of its time competing with major global IT services companies. He says the company’s nimbleness often gives it an edge when it rubs up against these rivals — so does the ability to wheel out Datacom top brass in front of customers. It also helps that Datacom cut its teeth in New Zealand. Davidson says the market here is far more competitive with local firms chasing every lead. In comparison he says much of the Australian demand for IT services remains unmet and customers are desperate to form close relationships with committed service providers. reach US$235 billion in 2017 — three times as much business as in 2011. Amazon Web Services dominates the global market; more traditional companies like IBM, HP and Microsoft are racing to catch-up. Most big players have broad cloud offerings but their main focus is a version known as public cloud. Davidson says public cloud is right for some customers, but it is relatively difficult to move from existing inhouse infrastructure to this kind of service. In many cases it requires expensive rearranging of existing software licences and considerable work. Datacom’s main thrust is in what it calls the virtual private cloud. Davidson says this is set up to ease the process of moving from in-house to the cloud. ‘‘We go for 90 per cent of the benefits of cloud computing while retaining all the advantages of existing systems.’’

How to see eye-to-eye with colleagues Bill Bennett

There’s more to cloud computing than storing data in a warehouse on the other side of the planet, or offloading large-scale data processing tasks. Among other things, software, infrastructure and even platforms can be sold as services. This means businesses can now buy computing as they need it, in much the same way they buy electricity or water. Now Telecom’s Gen-i unit has added video-as-a-service to its ReadyCloud portfolio, giving customers on-tap video conferencing. Gen-i propositions manager Nigel Wilson says it changes the economics of high-definition workplace video. Most high-definition video conferencing services require a considerable investment before anyone can start talking. Wilson says because it is cloudbased, Gen-i’s ReadyCloud Video means customers only have to pay

for what they need on a per month, per subscription basis. The ‘‘high-definition part’’ is important. Wilson says it means much more realistic communications. That makes it more engaging and helps when it comes to collaboration. He says high-definition also opens up other uses — for example health professionals can perform remote diagnosis. Wilson says customers don’t need to invest in new hardware to use the service. ‘‘ReadyCloud Video lets customers use video communication on a range of devices, over fixed or mobile networks. People can use communications rooms equipped with highdefinition cameras and screens but the service also works with personal computers and mobile devices like tablets and smartphones.’’ Normally, video conferencing works for companies at the big end of town, but isn’t practical for smaller firms. Wilson says ReadyCloud Video

is practical for companies with as few as 20 employees and can work with relatively thin data connections. The timing is important. By the end of 2014, the Government-subsidised UFB network will reach most of the nation’s business districts. That means companies will have affordable fibre connections. Though everyday broadband and mobile data networks can cope with basic video conferencing, fibre is best — and necessary for high-definition images. Unlike most copper-based broadband connections, fibre is symmetric — traffic can go up the line as fast as it comes down. This makes a huge difference to the video experience. Though there are low-cost, or even free, options for smaller companies, like Skype or Apple’s Facetime, Wilson says ReadyCloud Video has the advantage of working with a much wider range of devices. It is also based on standards — which, he says, means users can take

Savings plan in just

months, Gen-i’s own internal use of the technology has saved the company around

$580,000

in travel costs and the time people would have spent travelling. That’s

175

days in total. calls from people on other networks following the same standards. A browser app is coming, which does away with the need to install special software to use the service. ReadyCloud Video dovetails with other cloud applications including ReadyCloud collaboration which gives users an advanced phone system and the ability to use unified communications or UC — effectively

a way of pulling together a variety of channels under a single banner. With UC teams of people can talk, see each other and collaborate on electronic whiteboards or shared text documents, spreadsheets or presentations. UC is simpler because everything is controlled by a single user interface, and cheaper because all the communications go down a single pipe. It also means greater flexibility. Wilson says some other UC services are based outside New Zealand, which can mean issues with performance and quality. Gen-i launched ReadyCloud Video at the end of last year. It already has a dozen clients with more aiming to move from traditional video conferencing services. Wilson says in just three months of use, Gen-i’s own internal use of the technology has saved the company around $580,000 in travel costs and the time people would have spent travelling. That’s 175 days in total.

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

‘Whenever, wherever’ — a new digital world We all have to find new ways of doing business, says Tim Miles

lients are telling us they’re looking to take advantage of the incredibly rapid pace of change in their business environment, and the digital world that is our new reality. Our focus is on helping them achieve this through technology solutions that deliver flexibility, agility, control over costs and the ability to do business anywhere, anytime. As clients embark on the critical journey from their current state to this new digital world, each is transitioning at their own pace, and in the most relevant way for their business. They are questioning whether they want their people or capital tied up in owning and managing standard IT infrastructure. They typically want to focus on the strategic applications that really create value for the business, and this is driving uptake of cloud and mobility solutions. Some of our clients are shifting away from devices, towards services. And they’re also actively looking at how they can take advantage of mobility, which is a concept that has been around for a while, but is moving at real pace at the moment. We’ve progressed well beyond the notion that you have a laptop or desktop, and base your working world around that device. In the new digital world, the personal cloud is the new hub, and it can be accessed

Tim Miles

anywhere, anytime, using a variety of devices — smartphone, desktop, tablet or laptop. This means organisations can now do business and deliver services to their customers on whatever device they want, whenever and wherever they want it — as long as they are tapped into the right mix of technologies and infrastructure, all working together. This mix includes an advanced digital network, the Cloud, mobile applications and ICT services. This is why we’ve been investing hundreds of millions of dollars every year to ensure we have New Zealand’s leading digital network, and

the best cloud and mobility capability in the market. These investments include a powerful platform for mobility that brings together 3G, 4G, WiFi and fibre, underpinned by a brand new core data network using optical transport technology. We’ve also significantly boosted our cloud capabilities, having acquired Revera last year and completed new data centres in Christchurch and Dunedin, with two more state of the art facilities under construction in Auckland and Wellington. And we’re bringing innovative new services and business applications into the New Zealand market through partnerships with some of the world’s best known technology providers, including Cisco, SAP, Microsoft, Samsung and HP. I believe the current growth of mobility and cloud uptake in the New Zealand market is a natural response to the very real opportunities that organisations are seeing out there. To ensure we’re best placed to help our clients seize these opportunities and unleash their full potential, we’ll continue to invest, partner and make bold strategic decisions to reshape our business for the digital world. The new reality for business is that we all have to find new ways of doing things and it’s no longer just about what you do, but how to do it really fast. Time is of the essence. ● Tim Miles is CEO of Gen-i

Technology to set the pulse racing Bill Bennett

Can technology bring to the healthcare sector the disruptive change and efficiencies that have transformed other industries? Gen-i health sector lead Jo-Ann Jacobson says it can, but there are formidable barriers. Five technologies are sweeping through private industry and government: fibre-based broadband, the rise of mobile devices, cloud computing, big data and the internet of things. All have a place in healthcare. Fibre is the most obvious candidate. When government first planned the UFB network, it named healthcare as a priority customer. All urban health centres are to be connected to the network by the end of 2015. This makes high-definition videobased doctoring a reality. Jacobson says one ENT surgeon working on a link in Hawkes Bay said he could see the membrane in a remote ear better than he could if he were treating the patient in his own office. The internet of things is seeing a wide range of devices being connected to networks. In healthcare this often means using remote sensors. They don’t just monitor people. Gen-i is involved in an air monitoring programme in Christchurch which tests air quality and links this to data collected from inhalers. The information can be used to identify problem areas, improve air quality and ease the strain on people with breathing disorders. Jacobson sees huge potential for the internet of things with home-based healthcare. Video-doctoring also has a role here, but sensors monitoring patients can do a lot of heavy lifting for health professionals.

A device may check to see if an elderly person is moving around the house in a normal pattern — if not, it can trigger an alarm. Remote heart and temperature monitoring can detect early warnings of problems. Mobile devices like smartphones also have a role. Jacobson says there’s a New Zealand-developed app that can turn around a blood analysis test in an hour. That can make a huge difference. Though these changes are exciting, the healthcare sector is a relative laggard when it comes to adopting the latest technologies. This has more to do with the structure of existing systems than any luddite tendencies. Jacobson says healthcare organisations spend more of their IT budgets on infrastructure and keeping systems running than their counterparts in other sectors. On top of this they face problems with funding and all the challenges of maintaining patient privacy and data integrity. One route around these problems has seen Gen-i buy back infrastructure from healthcare companies and wrap the assets into its own services. Jacobson says that gives capital back to healthcare companies allowing them to invest in, among other things, cloud services. ‘‘Not just any old cloud. It has to meet stringent privacy and security requirements.’’ She says Gen-i’s Revera unit is one of three governmentcertified infrastructure service providers able to tick all the right boxes. Once infrastructure problems are solved, healthcare providers can look at other innovative approaches. There is a huge potential for big data analysis, making planning, forecasting and healthcare purchasing more efficient.

Since 1965, we’ve got on with solving complex and challenging IT problems. Along the way we’ve built relationships,

3600 employees. 23 offices. 4 countries. 49 years in business. 750 developers. and this is only the second ad we’ve run in 25 years.

employed staff, opened offices and pushed into other countries. We’ve made a point of hiring the best people and giving them a high degree of autonomy to solve the hardest problems. What we haven’t done is made a song and dance about it. We’ve been far too busy getting on with getting it done to blow our own trumpet. So if you’re like us – more impressed by elegant IT solutions than self-congratulation – we believe we can help.

www.datacom.co.nz

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

A new way to think Data sourcing

Kevin Spacey plays Frank Underwood in the award-wining series House of Cards. Netflix used big data to help with its decision-making around casting.

As our information pool grows exponentially, new technology enables us to process big data to provide stunning insights in many fields, writes Alexander Speirs

ig data has been a big buzzword for the past several years. Rapid changes in technology are creating a new frontier for computing and innovation, one which has the potential to revolutionise everything from healthcare and security to education and business. The applications are seemingly limitless and evolving every day. New Zealanders have been pioneers in the data space for decades, with Ross Ihaka and Robert Gentleman developing R, a programming language and software environ-

ment for use by statisticians in data mining and analysis. The pair developed the language while at the University of Auckland. It first appeared in 1993 and remains one of the most used data mining solutions globally. But overall, New Zealand business has been slow out of the gate. ‘‘I think there’s a lot of opportunity for us in that space to leverage our roots, plus, with what’s happening with big data internationally, to create some really interesting economic opportunities for New Zealand,’’ says Stephen England-Hall Hall, CEO of

Loyalty NZ. ‘‘New Zealand as a country is in a really unique position because we’re highly connected and already familiar with data being part of our decision-making process. So the opportunity for us, from a big data point of view, is pretty vast.’’ ‘‘There’s an abundance of data there, there’s some ideas around how you could leverage it, but there’s still some questions around how you get value from it,’’ adds Craig Richardson, managing director of Wynyard Group. The company, founded as an offshoot from Christchurch software firm Jade, has emerged as one of the

early superstars in the big-data space. Wynyard uses an innovative approach to advanced analytics, data mining and crime science for use in risk management, investigations and intelligence. Founded in 2012, Wynyard already boasts a client list of 400, featuring governments, Fortune 500 companies and national infrastructure providers. It is recognised as a thought and market leader in the industry at a global level. The market has been quick to back the latest cab off the Kiwi high-tech

Data today comes from all types of sources, from traditional numeric data in databases and spreadsheets, through to email, social media posts, videos, geo-location based data from mobile phones, transactional data from invoices and deliveries, even real time data from sensors — part of the internet of things. The cumulative amount of data collected is doubling every 18 months and as storage and processing power become more efficient and cost-effective, the potential for what could be achieved continues to expand. Virginia Rometty, CEO of IBM, told the Economist that by one estimate there will be 5200 gigabytes of data for every human on the planet by 2020. ‘‘Powerful new computing systems can store and make sense of it nearly instantaneously. A new generation of ‘cognitive’ systems, built for big data, can keep up with the flood because they aren’t programmed, they learn — from their own experience and from our interactions with them,’’ she said. Globally, big data is being used to address a plethora of issues in a wide variety of industries. American heavyweight Xerox uses complex algorithms in conjunction with personality tests and big data sets to hire call centre employees. Netflix are using big data sets to support decision-making around creation of original programming, leading them to license BBC miniseries House of Cards for a remake. They correlated fans of actor Kevin Spacey and director David Finch to fans of the original series, leading to the casting decisions for the Emmy Award winning series. Mt Sinai Medical Centre in the United States is using big data to analyse the entire E. coli genome sequence, including in excess of one million DNA variants, to study why some strains develop resistance to antibiotics.

Definition

Big data refers to the exponential growth and availability of both structured data and unstructured data. As more information is created and collected, software is able to organise the data before algorithms process it and decipher stunning insights. As the data becomes more diverse and information-rich, the more valuable and meaningful the results generated can be.

continued on D9

Tradecraft ‘now on steroids’ Wynyard Group is making waves internationally with industry-leading crime analytics and big data software ‘‘Fifty years ago you might have had 1000 documents to review for a homicide, which could be everything from witness statements to telephone records,’’ says Wynyard managing director Craig Richardson. ‘‘Now we’re doing hundreds of millions of documents that our algorithms are processing. We haven’t replaced a tradecraft, we’ve put it on steroids. ‘‘We’re providing the technology and tools to manage an abundance of data from a variety of sources, organise the data, analyse it and present it on a client-facing platform for use by law enforcement. ‘‘What’s different about us is the

crime science and the algorithms that exploit that data, looking for particular patterns, anomalies, trends and relationships between data,’’ Richardson says. ‘‘The methods we’re using are not dissimilar to a fast-moving consumer goods company or a premium brand looking to find a particular consumer so they can target them with an advert, but the execution is different. ‘‘We’ve approached big data very differently — we do play in the area people would typically describe as big data — but we’re adding the smarts to it. We’re not doing mass collection, we’re not using it for consumers,

we’re using it for very specific, targeted purposes. We’re part of a shift from big data to smart data.’’ Wynyard takes a multi-faceted approach to innovation, combining market-driven developments and leading academic research to stay at the forefront of crime analytics. ‘‘The real secret to our innovation is that we’ve built really close relationships and engagements with our customers because it is in their interest to share as much information as possible with us so that we’re able to build it into our products,’’ Richardson says. Those innovations can then be turned around and implemented

The advanced gun crime analytics software just rolled out in the United States took less than two and a half months from concept to market launch. quickly to address the market needs. Wynyard’s software is a framework which can be modified or added to, compressing the innovation pipeline from years to months. The ad-

vanced gun crime analytics software just rolled out in the United States took less than two and a half months from concept to market launch. ‘‘The rest of the innovation has been about sales and marketing. I think one of the key things which we constantly miss in the New Zealand market is that you can have a great product but unless you can execute on the sales and marketing, you never win. People in New Zealand get caught up on the idea of inventions and great ideas, but unless you can execute on the marketing, it’s not worth anything.’’ — Alexander Speirs

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

BIG continued from D8

rank, with the company’s share price reaching a high of $3.21, a significant jump from the $1.15 offer price when it listed on the NZX last July. Wynyard estimates the market for the services it provides is worth $5.3 billion globally. But they are competing with the likes of IBM and Thomson Reuters for market share. Richardson credits the New Zealand Police as innovators with the way they are using data, describing their thought leadership and use of data to prevent crime as ‘‘some of the best in the world’’. The police first showed evidence of their big data acumen with the implementation of Signal at the 2011 Rugby World Cup, using purpose-built software to mine social media for information. Police Director of Intelligence Mark Evans previously told the Herald that the software is used to help police ‘‘identify and analyse social media feeds relevant to crime and public safety,’’ including the time and the location. ‘‘Social media occurring in the public domain is just another public space and police need a presence in that space in the same way we need to be seen in neighbourhoods and on the roads,’’ said Evans. Following the Rugby World Cup, the software has been used in emergency response, crime detection and at big events. In a recent incident, Signal proved the diversity of its applications, being the first to detect a plane in distress by picking up on the Twitter postings of one of the passengers. New Zealand Police have notably deployed Signal during the Royal Tour. It has been used to monitor the London Riots and the 2012 London Olympic Games. Despite the success with big data in New Zealand in academia and at public-private partnership levels, businesses have not been in any hurry to jump on the bandwagon. A survey of New Zealand and Australian IT professionals by ISACA revealed only 22 per cent were confident their businesses had a policy with regards to big data and only 45 per cent were confident in their businesses’ ability to ensure effective governance and privacy of big data. ‘‘We are a bit behind the curve, which isn’t necessarily a bad thing,’’ says England-Hall. ‘‘A lot of money has been wasted on the wrong stuff. ROI (rate of return on investment) at the moment is about $1 for every $1.50 of investment, but people have spent a lot of time hunting down the wrong paths which haven’t really been well thought through. ‘‘New Zealand businesses are only

just starting to figure out and learn that data is more than a basket analysis. It’s more than two analysts sitting in a basement somewhere doing some programming. It’s a sophisticated way of driving business performance and it’s going to become a boardroom topic.’’

Talent Shortage

At the forefront of New Zealand’s issues with data is the severe lack of available talent domestically. Though the data scientists New Zealand has are seen as ‘‘some of the very best,’’ hiring more is proving to be a serious challenge for businesses. Loyalty NZ’s England-Hall estim-

New Zealand businesses are only just starting to figure out data is more than ... two analysts sitting in a basement somewhere doing some programming. ates New Zealand is going to be short of 1800 data scientists by 2017. ‘‘Where are they all going to come from and how are we going to ensure that New Zealand maintains a foothold internationally in this space?’’ he asks. ‘‘At the moment it’s really throwing the net as wide as we can and seeing what we reel in. Domestically there’s a very small number of people so we have to look everywhere.’’ That situation doesn’t seem to be set to improve at an adequate rate either. The University of Otago will, for the first time, offer a Master of Business in Data Science this year after an ‘‘examination of market needs and opportunities,’’ says programme coordinator Michael Winikoff. ‘‘We considered a number of potential foci for the Masters degree, and in the end felt that Data Science was the most promising area, in terms of meeting a real need, but also in terms of being an area where we had sufficient critical mass of relevant expertise on staff.’’ The University of Auckland offered a Master of Professional Studies in Data Science for the first time last year, tailored for those already in the workplace. The initial programme ran with five students but interest for this year’s intake is said to be ‘‘significantly higher’’ as the university looks to build a more flexible schedule to fit around people with professional commitments.

Innovation is part of the DNA for Kiwibank says Sam Daish.

Quick on the uptake ‘‘Banking is all about having great customer relationships, understanding customers and making good credit decisions, so naturally that’s where we’ve focused our analytical efforts,’’ says Sam Daish, Head of Enterprise Information at Kiwibank. Kiwibank has been a fast mover in the data and analytics space, adopting a dual-pronged strategy focused on improving the customer experience and making more intelligent credit and lending decisions. With an innovation process incorporating Kaizen business principles, Kiwibank looks to its employees at every level of the business to contribute to improvement through innovation. ‘‘Kiwibank is pretty successful at having innovation as part of its DNA and it comes from everywhere within the bank,’’ says Daish. ‘‘Because it’s generally pretty clear as to what we’re trying to achieve, assessing new ideas and choosing which to pursue rapidly becomes clear. ‘‘The most advanced part of the bank is around portfolio analytics and

credit analytics but beyond typical applications of this information, it’s also improved the ability to process customers more efficiently. Twenty years ago it would take days before you’d get a credit decision; now it’s a within a day, if not minutes.’’ For Kiwibank, part of the solution

Twenty years ago it would take days before you’d get a credit decision, now it’s a within a day if not minutes. to making quick credit decisions is being able to predict what their customers wanted from them and when they would want it. ‘‘We should always be ready for customers to come to us for a conversation and be prepared for what we expect that conversation to be about.’’ The other part of the equation for Kiwibank is knowing when it is the right time to approach a customer

directly. Recently, Kiwibank used predictive analytics to identify customers currently active, or soon to be active, in the home loan space. ‘‘We started with over 100 sets of data points to try and figure out what was important, and that was rapidly brought down to 7 or 8 crucial factors,’’ says Daish. Through the use of their analytics and the ability to target the right customers at the right time, Kiwibank were able to reach out to customers about their home loans, 60 per cent of which resulted in a positive outcome for the ban — a staggering result when compared with a typical positive response rate of 10 per cent. ‘‘Customers appreciated the call and that was all down to having excellent insight into what customers wanted to achieve and having the analytics to support that. ‘‘I think that is the direction we are going to be going in more and more, and I think that’s pretty typical of what most organisations want to achieve from their data.’’ — Alexander Speirs

Long-time champion of consumer data

Stephen England-Hall

The Fly Buys customer loyalty scheme has been a mainstay in Kiwi wallets for nearly two decades, but Loyalty New Zealand also happens to be well ahead of the curve with its use and development of data technologies. Since its establishment in 1996, Loyalty NZ has rewarded customers in exchange for gaining unparalleled access to data and information about them and their spending behaviours. ‘‘Loyalty is in a really interesting spot because we’ve almost been the consumer champion of data in New Zealand to the extent we have been around for a long time looking after consumers’ data, permissions, and behaviours in a commercial context with great care,’’ says Stephen England-Hall, CEO of Loyalty New Zealand. With more than 70 per cent of New Zealand households actively engaged in the Fly Buys programme and a

network consisting of thousands of retail outlets, Loyalty NZ generates an enormous amount of data every day. ‘‘What we have found though, is that it’s not always the biggest data which is the most useful; it is all about the ability to contextualise the data to a particular problem,’’ says England-Hall. Loyalty NZ still invests significantly in the innovation process around its use of data. ‘‘We’ve spent a lot of time and money developing intellectual property to use data sets in smarter and smarter ways where the outcomes are more directly linked.’’ Its approach to using data differs by working backwards — having an end goal and then working from there to collate the appropriate data and decide how best to analyse it in order to gain the insight it set about to achieve. The innovation process is predicated on perpetually aspiring to

The New World campaign wasn’t unique, it’s still an email. What was unique was the algorithms, segmentation modelling and underlying use of data sets. remain relevant to consumers and businesses. Says England-Hall, ‘‘In order for the programme to stay relevant and for the consumer to get more value, we have to constantly probe how the programme works, how we use data, and evolve our offerings.’’ Loyalty NZ put some of its new technology on display in a campaign

for New World last year that drew international attention and a slew of awards. Promoting New World’s latest wine sale, consumers were ‘‘hypertargeted’’ with bespoke advertising based on their wine preference, shopping and spending patterns, and previous time and seasonal variations. ‘‘Every single one of those communications was individualised right down to the glasses, so the images of the glasses were different whether you bought red or white wine. It was hugely successful,’’ said England-Hall. The marketing efforts were used in three campaigns for New World, which resulted in an 8 per cent overall average sales lift. ‘‘The campaign itself wasn’t unique — it’s still an email. What was unique was the algorithms, segmentation modelling and underlying use of data sets.’’ — Alexander Speirs

D10

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Flying towards the future our best opportunity to engage with customers in a context and timerelevant way. It is the intersection of geospatial technology and rich customer data supported by real time IT architecture that provides a significant opportunity for us to add value to the customer experience. But we are serious about providing our customers with more than a mobile platform to transact on and navigate the customer journey. We are investigating concepts designed to assist our customers at the planning and inspiration and sharing phases of their journey and naturally we see tablets as a key device to build our success around.

Air NZ is in one of its most exciting periods of consumer engagement for decades. writes Mike Tod Air NZ customers

The way in which companies, brands and products connect with people will be radically different when we look out 10 years. It’s an exciting ride ahead and one that Air New Zealand is resolutely focused on. In fact, this whole space is one of the executive’s key priorities. We have a deep focus on knowing our customers better than ever to understand what it is we can do to deliver better experiences and increase their preference or loyalty to Air New Zealand. Alongside this we have been bringing into the company world-class people with strong technical and international experience to play key roles in the consumer engagement journey. Areas they are leading include setting strategy, customer loyalty, customer experience and technology. We’ve also put a significant effort into sourcing some of the best thinking not just from within New Zealand but from specialists in Europe, Asia, Australia and the United States. Underpinning everything in the consumer engagement journey is

Internet of Everything

technology, and we believe that innovation applied at the discovery and planning phases leads to superior delivery and a better customer experience.

Mobile

Mobile is clearly one of the core focuses and our customers are already seeing some of the benefits with our world-class app that will become even more personalised and relevant to each customer with future releases. As a channel, mobile represents

The Skycouch ● The Skycouch is an example of the product innovation style which has earned Air NZ a reputation as an industry trendsetter and frequent award winner. ● China Airlines is the first airline to use Air New Zealand’s Skycouch, or ‘‘cuddle class’’, design following the expiry of the exclusivity period adopted when the product was launched in 2011. ● The innovative Skycouch combines a row of three seats along the window sides of the aircraft, which can be configured into a bed wide enough for two people lying on their side. ● The airline is looking to license the technology to other carriers on noncompeting routes.

Discover the possibilities of the Microsoft Cloud A cloud should remove limits, not create them. Do more, faster, and get time back to focus on more important tasks with the cloud solution that fits your business. The future is in the Cloud and Microsoft can take you there. To find out more go to www.microsoft.co.nz/cloudOS

The ability for physical objects to talk to each other creates an incredible world of possibility for any business and this is a curve Kiwi firms must be at the front of. With more device-to-device connectedness, we will become less fixated with and absorbed in our gadgets and begin moving through a world where services ‘‘just happen‘‘. At all points along our journey, such as entry into an airport lounge, we’ll receive service based on our chosen preference, and special offers which delight us. If we wish, our travels will be recorded in the background, and our friends, family and colleagues will be automatically kept in touch with our progress and experiences. To give an example of the possibilities in an airline context, imagine if the wine, beer and spirit bottles could talk to the glass on your tray. And that glass could talk to the cabin continued on D11

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Innovation

A sustainable success story tion better and meet their financial goals in retirement. In New Zealand we are delivering this through Managing Your Money workshops, upskilling our own employees to share this knowledge and through the Financial Education Centre — a joint partnership with Massey University aimed at improving New Zealand’s financial literacy. Our commitment to providing products and services for customers facing environmental challenges and boosting new lending to the CleanTech sector also contributed to our high ranking.

Simon Power looks at economic solutions for environmental challenges

n the not-to-distant future New Zealand will be a vastly different place than it is today. It will be older, more diverse, even more will be done digitally and an increasing premium will be put on our natural resources. These trends will affect our lives, our workplaces and the economy as a whole. As a bank, we’re focused on identifying and addressing these emerging issues so we can help our customers adapt and thrive. To do this successfully we need to innovate to ensure we are tapping into new growth opportunities and solving the challenges these changes create for our customers. This is critical to sustainable success over the long-term.

Westpac’s Sustainability Strategy

To ensure we are living up to this expectation we have put in place a sustainability strategy, which includes a concrete set of actions across a range of emerging issues, alongside measurable targets which we can use to determine success. Innovating to improve processes and develop new products and services is vital to achieving success. In our latest 2013-2015 sustainability strategy we’ve looked at material emerging issues and developed five key areas to help us roadmap and benchmark our contribution to longterm sustainability. These are not just environmental and cover a range of areas. We want to provide economic solutions to environmental challenges through investment in the clean technology and environmental services (‘‘CleanTech’’) sector; we want to build sustainable financial futures for our customers by improving their financial education and supporting better access to social and affordable housing; we want to ensure our workforce represents New Zealand’s changing population and has access to flexible work options;

we want to contribute to our communities locally and we want to ensure our own operations are sustainable by reducing in our carbon footprint.

Lending to the CleanTech sector helps us play a Sharing our success There are a number of critical success meaningful role factors in improving sustainability in supporting performance. first is ensuring the commeraffordable cialThe viability of the idea. Sustainability solutions that initiatives that do not stand up commercially are not sustainable in the will enable a long term. The second is to address issues transition to a that are most relevant to your low carbon stakeholders and that best use your skills to make a meaningeconomy. commercial ful impact. For example, Westpac

Business case for sustainability

Over the next century demand for natural resources will increase as developing economies continue to grow. For a food producing nation like New Zealand, this is good news, but it will also throw up a number of environmental challenges such as climate change, water allocation and quality, and how to manage and reduce our waste. Westpac is committed to using our financial expertise to help find sustainable economic solutions to some of these challenges. Earlier this year we announced a partnership with the CleanTech sector as we look to support the sector by targeting 15 per cent lending growth over the next two years. We see CleanTech as a sector of the New Zealand economy with strong growth prospects. It is also an important catalyst in supporting the transition to a low carbon economy. With over $1 billion invested in the CleanTech sector already, we’re looking to grow that by about $150 million in new lending by the end of 2015. To achieve growth in this sector we have had to take an innovative approach. Westpac and environmental consultancy, The Greenhouse, are undertaking a survey of up to 500 New Zealand CleanTech & Environment Network (NZCEN) members to provide a basis for establishing a New Zealand CleanTech certification programme. This will give potential clients, investors, and equity partners of these businesses a robust standard for benchmarking CleanTech opportunities. We are also looking to develop specific financial solutions and support for certified organisations and to promote these organisations to our own key clients, suppliers and

Simon Power

partners. Lending to the CleanTech sector helps us play a meaningful role in supporting affordable solutions that will enable a transition to a low carbon economy. It also provides us with a head start in developing ‘‘intel’’ on the risks and opportunities within the CleanTech sector. Meanwhile, by championing financial solutions to environmental challenges, we can share our insights and leadership to support others who are looking to do the same thing in the future. This has also increased staff engagement by finding tangible and meaningful proof points on Westpac’s commitment to sustainability, a value we know is important in attracting and retaining talent.

Ranked number one

Westpac Group was recently ranked number one in the ‘‘Global 100 Most Sustainable Corporations in the World’’ at the World Economic Forum in Davos, Switzerland.

The ranking recognises work we have undertaken over a number of years to embed sustainability principles into all areas of our business. For example, in New Zealand, women make up just 9 per cent of directors on NZX-listed boards, and just 21 per cent of managers who report to NZX top 100 Chief Executives. At Westpac NZ, 40 per cent of our executive team are women and 43 per cent of all senior leaders in the business are women. This puts us in a strong position to achieve our aspirational target of 50 per cent of women in leadership roles by 2017. As an employer of more than 4500 people, employee engagement is critical to our long-term success. Our group-wide engagement rose to its highest level of 87 per cent, above the global high performing norm of 85 per cent. As a group, Westpac is committed to delivering financial education to ensure customers have the tools to understand their own financial posi-

recently partnered with Meridian Energy to offer farmers a solar panel solution to help reduce their on-farm energy costs and achieve a return on their investment. Thirdly our sustainability initiatives are led from within, by our business managers. Developing and delivering a sustainability strategy that harnesses the right skills and experiences is best done via the people who have them, who know your customers and the intricacies of how your business operates. Meanwhile, collaborating with others to address complex challenges creates a shared value which is ultimately going to be more enduring and successful. Finally, you need to measure what you manage. Sustainability can often end up being a philanthropic ambition, with no tangible outputs unless you set targets. Metrics-driven strategies bring focus, drive momentum and deliver measurable outcomes. ● Simon Power is General Manager Business Banking and Wealth, Westpac

Air NZ flies towards the future continued from D10

crew’s device on the aircraft, which talked to the customer relationship management system on the ground. Over time the airline would intimately know your preferences. Then just imagine getting on the plane every time and having someone serve you who knew when you last flew, what your drink preferences were on your last flights and had ensured your favourite meal and wine were to hand, all the information gathered by devices talking to each other rather than it being noted manually on a device. In another scenario, imagine getting off the aircraft and receiving an alert on your phone to tell you exactly where your bag is, another alert to tell you when it is when placed on the baggage belt and then a countdown of how many metres away it is from you while you are waiting for it.

Wearable Devices

These new styles of seamless service will be enabled not only via today’s smart phones or their future derivatives, or even the prominent examples of ‘‘wearable‘‘that are beginning to make an appearance today,

customers could be constrained if there is not an ongoing informed and healthy debate around data-sharing and responsible use of data.

such as glasses and watches, but also via a vast array of small inexpensive devices containing sensors which can detect movement, sound, light, temperature, geographic location and other variables, all working together to assist the traveller.

Security

The fast pace of change alongside a broad range of new technological trends introduces opportunity as well as challenge, and strong governance that focuses on key areas like everevolving security, regulatory and compliance requirements remains paramount and vital to our success.

Data

Data enables us to understand our customers, make more effective business decisions, and communicate more clearly and more personally. There are four legs to our data strategy to ensure we extract the right information to drive commercial outcomes and enhance the customer experience. 1. Use the data to enable us to understand our customers intimately. 2. Use these insights to communicate more intelligently with our customers. 3. Leverage the data to make better and faster business decisions to help our customers. 4. Use data to enhance the customer experience. (This can range from sharing a customer’s data back with them by providing simple things like an annual map of where they have flown, through to letting them know in real time how far away their

Our People

Mike Tod

luggage is after they land.) One of the great risks or opportunities for New Zealand competing with other countries in the future will be around legislation governing the ability of organisations and products to share information on each other’s customers behaviour patterns whether it be derived from direct purchasing or the products they use. The ability to deliver truly innovative solutions that enhances the lives of

We encourage innovation through our brand values; our ‘‘Can Do’’ value encourages a culture where ideas are valued and people are proactively encouraged to think about better ways of doing things. It’s more important than ever that a company doesn’t forget its staff. They must be taken on the journey so they understand the rapidly evolving consumer engagement landscape. The key to this is strong and engaging communication through channels that reflect how people live and interact today — and that’s on computers and mobile devices like smart phones and ipads. To engage ‘‘Air New Zealanders’’

we have developed a world-class intranet, named in the top 10 globally by Intranet Design Annual 2014, and we are developing mobile apps for staff. But equally we need to empower our people with the information and access to line-of-business systems they require to be productive in their roles, anywhere and any time. So we are in market for an application development partner who can assist us to deliver real time applications to our people on either corporate or bring your own devices in a secure environment.

Wynyard Quarter

Air New Zealand’s Customer Innovation and Collaboration Centre is a gateway to the Wynyard Quarter. The centre was established late last year to provide a place for Air New Zealand to collaborate with partners on innovation, to identify mutual opportunities and solve problems. We’re extremely pleased with the way it has been embraced by our business partners. And, interestingly, we are getting many requests from a variety of Kiwi companies wanting to use the space for innovation activity. ● Mike Tod is chief marketing and customer officer at Air New Zealand.

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Microsoft cloud seeds next start-up wave Giant corporation’s local arm is offering a hand-up for young, tech-oriented businesses, writes Bill Bennett

ero proved New Zealand software startups can take on the world. All you need is a smart idea, an even smarter team and an easy way of tapping into cloud computing resources before the dollars start flowing. When it comes to the first two elements, entrepreneurs are on their own. Software giant Microsoft is keen to help local start-ups with the cloud part. BizSpark is a five-year old Microsoft initiative that supports young tech-oriented businesses. Companies that sign on to the programme get free software, including development tools and free use of Microsoft’s Window Azure cloud services. A little background promotion and community activity is thrown in for good measure. Nigel Parker, who oversees Microsoft New Zealand’s BizSpark programme, says start-ups stay on the programme for up to three years. Those who hit more than $US1 million in sales, go public or get snapped up in an acquisition have to move on. The rest move on to graduate status where Microsoft sends them on their way with the right to carry on using the software. To date some 655 New Zealand companies have joined BizSpark and 212 have graduated. The graduate roll call includes some of the brightest young stars in our tech sector, among them are: Pingar, GreenButton, Find.ly, TranscribeMe and Timely. Parker says: ‘‘Microsoft is a large company. People have become skilled at basing their businesses around the opportunities we create. In some cases they do very well. Rod Drury got his start as New Zealand’s first representative on the Microsoft MSDN Regional Director programme”. He says that in the past those opportunities were in software development, first for the desktop, then continued on D13

Garden app team grows NZ’s reputation Auckland start-up is US-bound after international e-commerce contest win Questions of where New Zealand sits in the global technology start-up picture were answered in December, when the Auckland-based Garden Genie team took first place in an international competition for e-commerce entrepreneurs. Significantly, the competition organisers said the Auckland event had by far the highest per-capita participation. The team, which first came together at the Auckland Start-Up Weekend, beat 20,000 other contestants to win the Global Startup Battle e-commerce category. This month team members are in Austin, Texas where they’ll receive their prize: a month-long e-commerce coaching experience complete with an e-commerce coach, office space and an online store. Developer Mohit Singh says it is too soon to describe Garden Genie as an app or a product — that’s what he is now working on — but the project aims to make it easier for people to grow their own organic fruit and vegetables. Singh joined the Garden Genie team in November while at the Auckland Startup Weekend. Part of the process at the event is designed to pull teams together. They then had a day to prepare

a pitch and walked away as event winners. He says that’s when the real work started. They were given just 24 hours to prepare a one-minute video pitch for the global competition. He says: ‘‘There were 200 similar events around the world. ‘‘Teams have to submit entries in various circles, we were in the e-commerce circle.’’ Judging for the competition took place in rounds. Initially the public was asked to vote for the top 15 entries. Garden Genie made it past that stage and the after judging took out the top spot. Singh says the idea for Garden Genie was developed at the startup weekend. As the person with programming skills, Singh had the job of leading the technical execution in Auckland. He says: ‘‘The job was more than just coding. Other team members didn’t have the technical skills, so I had to guide them through the app.’’ At this stage Garden Genie is still at the customer discovery stage. The Auckland Startup Weekend prizes helped get the ball rolling. Singh says the team got a BizSpark package from Microsoft, which includes software and cloud comput-

The winning Garden Genie team: Kiet Vo, Perrin Reilly, Mahsa Dordahan, Nick Co, Laura Kerrison, Jennifer Clamp, Mohit Singh.

ing services: ‘‘This means our IT costs just go away’’. There was also advertising money from TradeMe, money for legal expenses, a Xero account and office space at the BizDojo. Singh says the team is providing the rest of the finance, covering costs out of their own pockets and their own time outside work. He has a day job as a software developer at Datacom, where he works on Windows Phone and Windows 8 projects. He says the company has been really supportive: ‘‘Entrepreneurship is promoted inside the company’’. Like other team members, his main personal challenge has been finding enough time to sleep. Garden Genie’s plan is to build a global business from the ground up. That means starting in New Zealand, where team members still live, and in the US because that’s where they will be for the next month. Then they plan to tackle the rest of the world. While in Austin, Singh and the team will work on developing a ‘‘minimal viable product’’. Singh has something of a track record already. He is part of the Sealord Windows 8 app team at Datacom that was partly behind the company winning last year’s Microsoft Partner of the Year Award. He was a presenter at Microsoft’s TechEd conference and a mentor at the University of Auckland’s Summer Student Programme. — Bill Bennett

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

A supportive partnership

continued from D12

web apps and more recently mobile apps across devices. There was e-commerce and building web content. Now things have moved on to the point where platform-as-a-service (PaaS) is the cutting edge. Parker says the big opportunity is no longer in developing software from scratch but in solving problems by assembling new services from smaller building blocks. He says: ‘‘This might be something as simple as adding someone else’s accounting service to an existing app. Most of the time you don’t even need to worry about operating systems or programming languages.’’ If you spend a lot of time online, you’ll see how this works with identity management. In the past, each site would ask you for a unique user name and password. Now, many sites allow users to sign-up using their Facebook, Google, Microsoft or Twitter identity. It neatly shortcuts what would otherwise be a time-consuming, irritating process. Parker says the sign-on process is simply a component that developers can quickly plug-in to their PaaS systems. Another advantage of the PaaS approach is that apps automatically scale. That is, the same systems that can serve a handful of users are instantly able to deal with a million customers if there’s a spike in demand. In the past, companies wanting to handle these loads would need to buy enough capacity to handle peak demand and have them sit idle the rest of the time. Today, they can just buy the capacity they need.

People have become skilled at basing their businesses around the opportunities we create. Nigel Parker (above)

Provoke Solutions started business 13 years ago with five people, one PC and an empty office in central Wellington. CEO Mason Pratt says the five founders each tipped in $5000 of their own money, asked the bank to match the investment and spent it on a year’s rent and a single computer. Today the company employs more than 100 people with offices in Singapore, Manila, Seattle and Auckland as well as headquarters in Wellington. Pratt says the company came out of Glazier Systems — a small client server shop operating out of Wellington in the 1990s. One of that company’s directors was Rod Drury, who now runs Xero. Provoke’s founders, Pratt, with Brendon Ford, Doug Taylor, Gabrielle Lovering and David ten Have, left Glazier after that business was acquired by the Advantage Group. It went from being a small, tightly knit and highly focused start-up to part of a much larger operation — not necessarily a bad thing, just not where Provoke’s founders wanted to be. Pratt says they wanted to recreate the good things about Glazier in the new business: the culture and the exclusive focus on supporting Microsoft products and services. He says the culture is still there and so is the relationship with Microsoft. Provoke is so embedded as a Microsoft partner that Pratt says the company often finds itself brokering relationships between different parts of the software giant. It helps to have an office in Microsoft’s hometown, Seattle. Provoke’s timing was good. In 2001 the idea of user-centric software design was only starting to get traction. Pratt says over the years the company has worked to maintain a bal-

Mason Pratt

Starting small Provoke began with

5 1 1

people PC and empty office; now they have more than

100 staff

ance between design and technology. For most of its history Provoke has been about pulling together Microsoft technologies for its customers and packaging them in easy-to-use, attractive looking ways. This can mean, for example, building complex websites. The company numbers The All Blacks, Xero and Telecom among

its customers. The complete list is a roll-call of well-known New Zealand brand names. Provoke’s customer list also includes Microsoft. To describe Provoke as a loyal Microsoft partner is putting it mildly. As Pratt says ‘‘we dog food ourselves’’. This can mean signing up for and using Microsoft products or services long before they hit the market.This can be painful, but it tends to pay dividends — there are Microsoft products Provoke knows better than most Microsoft employees. Take the company’s Lync communications service — think of it as a business class version of Skype. Pratt says Provoke was the first New Zealand organisation to use Lync: ‘‘In the early days there were challenges — not least bandwidth problems between Wellington and Auckland. Today, three product generations later it has made such a huge impact on the business that we now think of video as the most natural way of communicating.’’ Microsoft has always been better at partnering with small companies than most of its rivals. Yet Pratt says in the past 18 months Microsoft has renewed its efforts to get closer to partners. One part of this is an emphasis on joint-development and, what the company calls ‘co-selling’. Getting up to scale has been a challenge for Provoke; the business has been self-funded, which is a constraint when it comes to bulking up. It became easier in recent years thanks to Microsoft’s Azure Cloud Computing service. Pratt says the technology’s robustness helps underpin Provoke’s growth. And the costs help. He says Azure cloud storage is about a quarter of traditional costs and there’s no need to worry about capital expenditure.

“BECAUSE

MATT IS LOCAL HE CAN TAKE ME THROUGH THINGS ON THE SPOT.”

LUKE IRVING, FINGERMARK

Sometimes in business it can feel like you need to do everything on your own. Wouldn’t it be great if someone offered a helping hand? Fingermark in Parnell provide touch screen kiosks, digital signage and interactive mobile and tablet solutions to a range of clients in New Zealand and Australia. Because Luke travels a lot, the plans that Matt recommend are especially important. Luke’s data cap has literally changed the way he does business when he’s overseas. So it’s nice that Matt from the Telecom Business Hub Auckland drops by whenever Luke is in town, to take him through any new developments and to check if there’s anything else he can do to help.

MATT, TELECOM BUSINESS HUB AUCKLAND CALL YOUR LOCAL TELECOM BUSINESS HUB ON 0800 BUSINESS (287 463) AND WE’LL COME TO YOU AT A TIME THAT SUITS. How nice and easy is that for a change?

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Looking for the love factor On January 15, 2103 Snodgrass made another play to put the two together. Moutter gave him 24 hours (‘‘make your choice’’). He relates that the next day Moutter said, ‘‘I want you to do the growth one because it’s a bit like when you ran Xtra — and also you’ve been in the core too long and you’re a little bit boring — you need to get back’.’’ War stories aside — and Snodgrass has plenty of those — it required a board mandate to give the Digital Ventures boss the clear scope to take a different approach. Says Snodgrass, ‘‘At the core we’re going to do disruptive processes.’’ That means engaging talented people. ‘‘We have to be awesome at digital. Awesome at social and ultimately we have to create a working environment to get these guys.’’ So what could be on offer next? Here are three potential innovations.

Telecom’s Rod Snodgrass is out to create a whole heap of happy mobile addicts

elecom Digital Ventures’ boss Rod Snodgrass is on a roll as he waxes lyrical about how he wants to deliver connected digital experiences that customers love. ‘‘If you ask me to be honest what I want to do in the job? I tell the board I want to make lots of money and create shareholder value,’’ he laughs. ‘‘But what I really want to do is to finish this job and leave a bunch of experiences out there that Telecom has created that customers are almost addicted to.’’ Snodgrass was appointed to headup Digital Ventures last April. The PR announcement talked the move up as creating a dedicated growth business unit ‘‘with an arm’s length operating model and the necessary scope and resourcing to be open, agile and fast in pursuit of its goals.’’ It’s all of that. But within Telecom other terms like ‘‘skunkworks’’ and ‘‘Digital Vultures’’ have sometimes been used (‘‘because we get to spend all the money and have all the fun . . . we take that as a compliment’’). Snodgrass won’t divulge the size of his budget. He’s got his own capital. It’s significant. It is a lot. That was clear when Telecom — to be rebranded Spark in a couple of months — unveiled ShowMeTV promising it will be the ‘‘Netflix for New Zealand’’ and inked a partnership deal with Spotify to offer some mobile customers free premium accounts with the online music giant. Snodgrass says when he put his small growth team together it first looked at the big things happening in the market and quickly learnt ‘‘it’s all around mobile’’. ‘‘You can connect anywhere on the globe — it is just ubiquitous and it’s a great experience. ‘‘ ‘‘It doesn’t mean fixed is dead. But we all carry one ... we’re doing more and more on it and that’s where the consumers are. ‘‘ Snodgrass refers to the convergence of on-the-go technologies that underpins SoLoMo (Social Local Mobile) applications. Much of this is aimed at ‘‘Generation C’’ a connected force that is not age-based and spans generations. One of Digital Ventures’ early

Creating a smart farm

Snodgrass says this comes down to creating a web portal and connecting a whole bunch of sensors. ‘‘So farmers can get real time data on their phones about thing like water supply and potentially milk vat monitoring in real time within a closed loop. Imagine the NZ Inc possibilities around Smart Farm.’’

Creating a smart life

Digital Ventures has launched a website to test what appeals to potential customers about the smart home. Key questions: Do they want to see their pet? Have the doors been opened or a garage door not closed. Is the swimming pool pump is not working’’ ‘‘We will work out is there a business here’’. Digital Ventures’ Rod Snodgrass (left) and Sir Ray Avery’s Vigil joined forces on a wristband health monitor.

ROD SNODGRASS ‘‘You can’t shrink your way to victory.’’ ‘‘Walking backwards slowly is actually quite hard.’’ ‘‘In past knowledge was power now dispersal is power.’’

moves was to make an opportunistic $5 million investment in Vigil, Sir Ray Avery’s technology startup, which is developing a wristband which constantly monitors vital health activities and stores the information online. ‘‘With that we didn’t really have a strategy. It ticked our boxes. It was about using mobile devices and crossdata networks. It forced us to think about what value we bring to it beyond cash.’’ There have also been the innovations to take friction out of the system like Skinny Mobile and Big Pipe. It all entails a fundamental business culture change. Digital Ventures has a bias for action — Move Fast. Fail Fast. Fail Cheap — with customer preferences

probed before the product is bolted down. Snodgrass pitched hard to be in charge of the company’s growth agenda. When Simon Moutter returned to Telecom as CEO in 2012, he was running product and a ‘‘bit of strategy’’. ‘‘We sat down and we wrote the new strategy around the four planks — revolutionise customer experience, simplify the business, win key markets and then win the future.’’ That’s when Snodgrass began to ‘‘push hard’’. ‘‘I’d been angling to create the growth unit under my product area. So he goes: ‘So you have to decide by the 15th of January whether you are going to do growth or whether you are going to do product’.’’

Loyalty cards go mobile

Says Snodgrass: ‘‘All Loyalty cards should be on your phone. There’s no reason to have to carry them things around. You should be able to transfer data across different loyalty systems.’’ Digital Ventures is in discussions with banks and health facilities as it explores the boundaries of data mining. ‘‘If you find likeminded people who share the vision you can get going a lot faster,’’ says Snodgrass. ‘‘But we’re are picking winners in each category. People used to talk about the last mile. It’s actually about he first milimetre for us to create a better experience. You need big data and analytics in the back end but you’ve got to deliver the right experience to the right person in the right place.’’

Three consumer technology trends to watch in 2014 Top technology trends are not new. They’ve all been around for years. However, 2014 will see these budding technologies mature and grow beyond anything we could have imagined a few years ago. What they all have in common is that the mobile device is the perfect controller for each technology. So here are the three consumer technology trends Telecom suggests to watch in 2014. They all centre around your smartphone.

Wearables are the new frontier Wearable computing, or wearables, is quickly moving from niche to broader use, led by the growing health and fitness markets. Everyone is curious about the avalanche of smart watches and wristbands, intelligent glasses (such as Google Glass), e-health patches and other similar devices.

The wearable devices industry will be worth $19 billion by 2018, according to Juniper Research. Analyst firm Berg Insight estimates the total number of wearables shipped globally in 2012 hit 8.3 million, and predicts they will hit 64 million units by 2017. Samsung, Sony and Pebble have already launched smart watches and Apple, Google and Microsoft are expected to join the party later this year. really useful. Soon organisations will be grappling with wear-your-own-devices

expected to reach 123 million in 2014.

(WYOD) in the workplace. Companies need to make WYOD an opportunity and assess how their people can use wearables to do new things and increase productivity and efficiency.

Connectivity enables smart homes The ‘‘smart home’’ will move mainstream this year. A lot of consumers are interested in getting these types of systems and services, with Arthur D. Little estimating that smart home revenues will grow by 12 per cent a year until 2020 in Europe. The smart home has a connected platform that enables its occupants to remotely control and programme an array of automated home electronic devices. These range from home automation (security, comfort and entertainment) and home cloud (management of content and data), through to e-Health services.

3 Home automation and security is one of the hottest areas right now. This includes home security, energy and utility management (such as smart meters), home automation (alarm systems and devices such as August locks or Nest thermostats), and lighting and entertainment (such as smart TVs). Smart TVs are big, with more than 60 per cent of US broadband households reporting at least one TV connected to the internet. We are poised to see explosive growth in this area, with global smart TV shipments

Predictive apps get personal Many will be using mobile apps to boost productivity and make life easier. In 2014, we’ll see growing use of predictive apps that sense their environment and respond in real-time, anticipate user action and meet user demands in their moment of need. These apps provide you with timely information, even without being directly asked for it. Air New Zealand’s mobile app lets travellers manage their travel itinerary with their smartphone, which acts as a boarding pass at airport kiosks. Although not a predictive app, another app that’s really useful is the Countdown shopping app, which can scan products in the kitchen cupboard and save them into a shopping list.

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Let’s do things differently here Innovation should be integral to business, writes Michael Barnett

t concerns me that with all the creativity New Zealand businesses claim to have, we have not come up with a storyline that puts innovation at the top of our minds and as part of a standard behaviour pack for business. It should be of concern to the small and medium end of the business market that we seem to agree with the principle, ‘‘innovation is key to success’’, yet we do little to put in place behaviours which challenge the status quo in our firms. We like the concept of doing well for a nation our size and we like the bumper sticker strategy that suggests ‘‘we do things differently here’’, but my sense is that we are going to need to lift our pace of change and point of difference, if we are to either compete in our end of the world or supply to it. Small and medium enterprises are widely referred to as the engines of economic growth. They make up 95 per cent of registered businesses and, even though an SME is defined as a business employing 20 people or less, they are credited with more than half New Zealand’s jobs. What constantly surprises me is how many SMEs regard delivering innovation and raising productivity as being the business of big business. Not so. It is innovation which converts the entrepreneurial spark, the

ideas, and its close cousin, invention, into business opportunity. It is innovation that has driven the improvement of our quality of life since the Stone Age. It is at the heart of every successful business, and what gets a new business — often an SME in the garage or living room of someone’s home — off the ground in the first place. Innovation is the new idea; the new product, the new approach, the new system, the new technology that allows something to be done that couldn’t be done before, or to be done in a new way which greatly reduces the cost of doing it. Above all else — it is innovation that is the key to business success. It follows that every business should put a definition of innovation into their firm’s business plan. If you do, you have a tool to apply innovation across all facets of the business — to access a ready market, to access capital, to

Small and medium enterprises employ

20 95%

people or less but make up

of registered businesses hire skilled staff, to more efficiently use resources, and to locate where infrastructure can best support you. If innovation is an integral part of the business plan and culture, the business owner and everyone else works together with an expectation that change is part of the environment. Logically, innovation must be a

component of any firm’s HR strategy. If we are to get difference in our firms as we build new teams, we need to employ difference, not clones of those who are already there — we all know what we will get if we keep on doing the same old thing we have done in the past. That difference will apply to gender, ethnicity and a range of other factors that will ensure we respond to a changing customer base with quickly changing demands.Within our firms we need to promote the fact that there is an innovation role for everyone and when we recruit new people they should be encouraged to challenge what is and introduce change. Innovation is critical to a firm’s marketing strategy, whether domestic or export. The globalisation of product and service markets is accelerating. In particular, Kiwi SMEs face increasing competition, not only for sales, but also for technical know-how and skills. The competition could well be an SME in another country — almost anywhere in the world. Equally, the opportunity exists for small and medium New Zealand companies to compete for business in virtually any city or market in the world. Our distance from the rest of the world used to be a constraint. But no longer — and no longer is New Zealand a remote backwater for the rest of the world; we may be a small market, but for any SME with aspirations to have global reach, New Zealand is an obvious target. The point: In this global environment, competitiveness of any business, but especially an SME depends crucially on the speed with which new products can be brought to the market place and new cost-saving improvements made. Isolated decisions to upgrade tech-

What’s next?

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nology, set up a website, or have an innovative marketing and HR strategy are not enough — an innovative approach to tap ready supplies of finance is also needed. In short, what is needed is a dynamic, self-sustaining culture of innovation across every aspect of the business. In many fields, innovative SMEs have advantages over larger firms. They provide the channels along which new products and services develop. In sectors such as biotechnology and information technology, software development, and Auckland’s innovative marine sector, relatively small but creative, innovative businesses have developed and become key suppliers of new technology-based products and services . Their ability to develop new technologies, and to respond quickly to changing market needs, has given SMEs a pivotal role in the success of the New Zealand economy — going back to the adaption of refrigeration technology, the jet boat, fibre composite yacht hulls, through to electric fencing and more recently the Ike Bike, the skeletal frame to enable disabled people to walk, and the Martin Jetpack flying machine. ‘‘We do things differently here.....’’ Well some might, but what we really need is a culture of doing things differently and encouraging change within all our firms. We need a pipeline of new people and new ideas that we are prepared to take to market in a way that delivers a sustained long-term difference, not just the few moments in time we occasionally get to celebrate. ● Michael Barnett is Chief Executive of the Auckland Chamber of Commerce and Industry.

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Innovation

Printing, but not as we know it When first encountering a 3D printer, any sense of scepticism that an industrial revolution could be standing before you should be quickly forgiven, writes Alexander Speirs In what could only be attributed to deliberate irony and someone’s wry sense of humour, the machines, which are layer-by-layer creating more complex and intricate structures than ever thought possible, are remarkably bland and unimpressive. With the appearance of a quirky bar fridge or an overgrown microwave, they’d be far more at home in the kitchen than on the set of Star Trek. 3D printing or additive manufacturing, is not all too dissimilar from the regular printers most of us interact with every day. Much like a normal inkjet printer, 3D printers work by printing an extremely thin layer of material. Athough instead of ink the printers typically use plastic resin. More complex machines however can use a

With the appearance of a quirky bar fridge or an overgrown microwave, they’d be far more at home in the kitchen than on the set of Star Trek.’ plethora of materials, from metals and glass to sugar and chocolate. Instead of stopping at a single layer like a paper printer, 3D printers continue to print layer by layer on top of the previous layer to create three dimensional structures. Like traditional 2D printing, 3D printers are controlled by computers which interpret the designs and instruct the printers how to create the structure. Instead of documents or pictures though, the designs are modelled in computer-aided design software packages. Researchers at Washington State University have printed replacement bones for patients in both orthopedic and dental procedures. Nasa unveiled a printer late last year that used dehydrated ingredients that last for 30 years to literally print a pizza. Scientists in California are working on technology that will be able to 3D print entirely custom, multi-levelled houses in under 24 hours. The possibilities are endless. The variety of implementations of 3D printers is impressive for a technology not far removed from its infancy. Doctors have used 3D printers to model organs from a patients CT scans to practice for complex surgeries and prepare for any hiccups prior to opening a patient up.

nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Going flat-out toward a 3D future . . . F

isher & Paykel Healthcare is just one New Zealand business that has seen a significant impact in their innovation processes with the implementation of 3D printers. ‘‘In terms of the innovation process, the turnover of ideas is much quicker,’’ says Peter Graham, product development manager at Fisher & Paykel Healthcare. ‘‘Where previously you might have been able to test one idea per week, now it’s well within reason to trial ten. Sometimes innovation is having an idea and then going through the trial & error, and the faster that can be achieved the better.’’ In the past an engineer needed to have a lot of information in order to create a prototype for an idea; a process which previously required in-depth knowledge of how a part would be designed and then built which was both a knowledge and time intensive process. ‘‘For us now the prime thing is to have a good idea and the ability to create and prove that idea is rapidly truncated because as long as they can draw it, they can make it and have it on their desk the next day,’’ says Graham. ‘‘If you can see a result fast, it’s natural to be more enthusiastic about it. If you have an idea and it takes quite a long time to play out, you lose your chain of thought and the innovation process can stutter.’’ F&P Healthcare took a cautious approach to assimilating 3D printing into their business, testing the waters with a second hand machine because of the unknowns and risk associated with purchasing a new printer. ‘‘I had seen a couple of example where it was working well in other companies and I thought with a second hand machine it was low risk and we would have enough work to keep one printer going,’’ says Graham. ‘‘Very quickly though we couldn’t keep up. We were having to work late into the night to keep the printer running which allowed us to argue the case to get a second.’’ Today F&P Healthcare boasts a number of 3D printers at their Tamaki headquarters, each with different capabilities and purposes. Graham estimates that they were producing 250 items in their printers every week that would be ‘‘the most of any company in New Zealand’’. For F&P Healthcare, 3D printing is not only delivering significant cost and time savings, but better products as well. ‘‘If you have a timeframe, often there’s a constraint there on when the product is expected to be released. If you can do more in that time frame with a lower number of people and less capital, that means you can afford to do more iterations and trials.’’ Where previously time and money constraints would limit the number of prototype products which could be produced, the cost and time frame required by 3D printers has enabled the company to test a bevy of ideas that previously might not have made it off the drawing board. Using traditional manufacturing technologies, the turn around time could take up to 2 months and $20,000 to produce a prototype, making mistakes and further adjustments an expensive process. Using 3D printing, prototypes could be produced overnight and cost as little as $100 to produce. ‘‘It’s allowed us to take alternate paths. If you’re constrained by traditional manufacturing techniques the innovation and development process takes so much longer and you don’t have opportunity to explore all of the different paths and ideas that

Top, Peter Graham at Fisher and Paykel; below a centrepiece confection made with a ChefJet Pro 3D food printer on display at the International Consumer Electronics Show in Las Vegas.

could make for a better product,’’ explains Graham. The next frontier for Fisher & Paykel Healthcare and their 3D printers involves the use of 3D scanners, which analyze objects and replicate them as digital files that could then be used as a design for 3D printers. ‘‘You could use scanning to work out the shape of what something might be or to try it out specifically for a person. If these devices are used to customize products specifically for one patient then that’s when a scanner becomes the most important. That’s a developing thing

If you’re constrained by traditional manufacturing techniques the innovation and development process takes so much longer.

for us, marrying up scanning with printing.’’ For business in New Zealand, 3D printing is not limited to the realm of big corporates. Vivenda, founded by Daniel Dillen, is bringing 3D printing to the masses by working with business and individuals for small run projects. ‘‘Big companies like Fisher & Paykel have their own machines but overall if you need a one-off job done there’s only two or three places you can go to, but what we deliver is a finished product that can be tested or shown to clients, ready for large scale manufacturing,’’ says Dillen. What initially began as small jobs to help Dillen justify the purchase of a printer for his personal design work has become a fully-fledged business. ‘‘I have people coming from architectural and engineering firms, designers, artists, inventors, marketers. People who don’t come from backgrounds familiar with 3D printers who want to utilize the unique abilities of the printers.’’ ‘‘I’m thoroughly surprised that more small businesses don’t have high-end consumer level printers. Architectural and product design firms could use these relatively inexpensive pieces of technology to be able to do more work in-house and rapidly improve their production processes’’. Dillen thinks that previous encounters with 3D printers and rapid prototyping in the past that haven’t been effective are discouraging their widespread adoption amongst businesses. ‘‘A lot of people are still stuck in the older model of thinking with 3D printers and haven’t quite caught on that the machines are affordable and the materials are getting really cheap. It’s just continuing to progress in leaps and bounds too.’’ New Zealanders have been at the vanguard of 3D printing for a number of years. Tim Carr established Mindkits in 2008 and has worked with Vik Olliver and Diamondage to develop New Zealand made 3D printers. They come pre-assembled or as kit sets and their affordability is seeing them find their place at both the consumer level and in the classroom. — Alexander Speirs

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

A prescription for good health Atlantis quickly ended up in the healthcare space after recognising huge opportunity and a very big need to be addressed which is essentially, how do you keep patients taking their medication?

A healthcare firm has found a way to engage patients in managing their illness. Alexander Speirs reports

tlantis Healthcare might not be a household name for most New Zealanders, but with the contributions they’re making in the medical sector, that could be soon to change. Atlantis is focused on combining innovations in healthcare psychology with technology to deliver improved healthcare outcomes, address patient non-adherence and reduce wastage in medical spending. ‘‘The business grew out of a customer relationship management background, focusing on how to keep people loyal to a particular activity,’’ says Aunia Grogan, CEO of Atlantis. ‘‘Through accident rather than design, Atlantis quickly ended up in the healthcare space after recognising huge opportunity and a very big need to be addressed which is essentially, how do you keep patients taking their medication?’’ Initiating and continuing behaviour change over the long term is at the core of Atlantis’ business, with an approach founded in psychology. Their unique approach applies principles of health psychology and uses them to address non-adherence to their prescribed treatment plan by targeting a patient’s belief systems. Hamish Franklin and Michael Whittaker, who both remain involved with the business, established the company 15 years ago in New Zealand.

Atlantis remains a New Zealandbased company with offices here and in Australia, Germany, Spain, Britain and the United States. Atlantis’ programmes work through a combination of psychological modelling to assess medication beliefs and illness perceptions across a patient population. Specialist health psychologists then work to develop highly targeted programmes that engage patients and work to change the way they think around managing their illness. As many as one in three patients never fill their prescriptions for medications and nearly three out of four don’t take their medication as directed. ‘‘We’re all about behaviour change: putting together programmes which understand why people behave in the way that they do, figuring out what the desired behaviours we would like patients to be exhibiting are and how to close the gap between those two things,’’ Grogan says. ‘‘What fundamentally underpins our approach is that if you don’t understand the reasons why people behave in the way they do which are often entirely logical, you haven’t got much of a chance of changing them.’’ Research from the University of Auckland’s Professor Keith Petrie shows that as many as 60 per cent of women struggle to keep up with their ongoing breast cancer treatments, particularly in the face of a

Aunia Grogan

barrage of side effects. According to Atlantis’ own research, by the third year of treatment, more than a third of patients have discontinued their treatment entirely. The results speak for themselves. After 12 months, those enrolled in the programme saw persistence rates for medication use at almost 90 per cent, while those not enrolled had persistence rates under 70 per cent. Improving adherence to breast cancer treatment regimes is one of more than 80 programmes which Atlantis offers to their patients. ‘‘Lots of medications are prescribed to patients and they are perfectly safe — they have to be because

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otherwise they wouldn’t have got FDA approval or regulatory approvals,’’ Grogan says. ‘‘Broadly speaking, these medications have a good safety profile, but in a lot of cases the bottle has a multitude of warnings and a skull and crossbones on it, giving the impression that drugs are inherently dangerous. ‘‘The logic they’re applying makes complete sense to them, but it’s not producing the health outcomes the drugs are designed to address.’’ Continuing expansion is heading up the agenda for Atlantis, which now has offices in six countries after setting up shop in the US in early 2012. ‘‘A stake was taken in the business

by a private equity company three years ago and that capital coming on board enabled expansion as we opened up offices in Spain, Germany and the United States,’’ Grogan says. ‘‘Most of those openings were opportunistic, where we were working with a client in other markets and the client looked to work with us in a new market which we used as a trigger to set up elsewhere — which had huge benefits as we were starting up with a project to work with.’’ In 2013, Atlantis saw their income from Britain contribute the majority of its earnings for the first time, reflecting the size of the market and a comparative ease of accessing other international markets from the European headquarters in London. Atlantis provides unique, patientfocused, adherence and self-management programmes for patients and clinicians, which address the issue of treatment non-adherence. Healthcare costs as a percentage of GDP are growing (unsustainably) globally. Atlantis is therefore focused on delivering improved patient outcomes, at the same time as improving health outcomes for all stakeholders in the health system, through reducing wastage in medical spending.

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation Precinct operators set to create world-class hub

A space where magic can happen There is strong demand for places in Auckland’s Innovation Precinct

he innovation precinct at Wynyard Quarter for ICT and digital media companies recently reached an exciting milestone with BizDojo and The Icehouse — both highly respected in the innovation ecosystem — joining forces to become the operator. Ateed CEO Brett O’Riley says there has been strong demand from potential tenants and the operator is busy ensuring an optimal mix. The first tenants, including Ateed’s central office team which will deliver a full business growth programme, will move to the first refurbished building next month. The next stage of the $20 million multi-year Council project being delivered by Ateed and Waterfront Auckland will be the fully refurbished Lysaght Building, due to be available for tenants late this year. ‘‘By the end of the year, we will have the foundations of what we expect to be a world-class innovation hub up and running, with an exciting mix of tenants supported by incubator and accelerator services and plugged into a programme of events and activations,’’ says O’Riley. In future years, Ateed will work with Waterfront Auckland and its development partner on the design and delivery of new buildings across the precinct, to grow existing businesses and attract new investment and jobs. O’Riley says the precinct will be the centrepiece of an innovation corridor which is taking shape from north to south across the region.

‘‘There are hotbeds of innovation including Albany and Takapuna, Henderson, Parnell, East Tamaki, and further south around the Auckland Airport. ‘‘For Ateed, it’s a matter of promoting connections and ensuring we work collaboratively with Auckland’s key growth high-tech industries from north to south.’’ At the southern end of the corridor is New Zealand Food Innovation Auckland Ltd, operating as The FoodBowl — Te Ipu Kai. The state-of-the-art food production facility opened in 2011, and was originally an Ateed subsidiary funded by the Government, and by Ateed on behalf of Auckland Council. Last year, Ateed and Callaghan Innovation signed a joint venture deal which saw The FoodBowl become a Crown entity, two thirds owned and funded by the Government. O’Riley says it was a significant boost for Auckland’s $3 billion-a-year food and beverage sector, and an important strategic and economic growth decision for Ateed. ‘‘Aside from the addition of Callaghan Innovation’s skills, resources and business networks, the joint ownership and funding model

Innovation partnership: Nick Shewring (left) and Ken Erskine

secures The FoodBowl’s long-term future and provides the support required for the facility to boost the region’s food and beverage sector.’’ The FoodBowl’s processing plant and supporting business development services has so far been used by more than 600 innovative food and beverage companies from Auckland and around the country — both start-ups and major companies, and typically, more than 20 at any one time. Leading poultry producer Tegel

We will have the foundations of what we expect to be a world-class innovation hub up and running, with an exciting mix of tenants, Brett O’Riley, Ateed

Foods successfully used The FoodBowl for trials when it wanted to extend the shelf life of its products to overcome the impact of longdistance travel from New Zealand. Tegel, based in Auckland, was able to produce a new chicken product for Asian markets using the revolutionary high pressure processing (HPP) system at The FoodBowl for yearlong trials. Experimenting with different combinations of the HPP system, the Tegel project team was able to extend the shelf life of the chilled product, a chilled manuka-smoked chicken leg fillet, without changing most of its properties including colour and texture. The product’s existing shelf life was nearly tripled, giving enough time for shipping (normally six weeks) to international markets and

The BizDojo and The Icehouse are excited to partner Auckland Tourism, Events and Economic Development (Ateed) to operate the innovation hub in Wynyard Quarter on Auckland’s waterfront. The operator partners believe that to foster a strong innovation culture in New Zealand, organisations which help businesses to grow need to collaborate to bring the innovation hub to life. BizDojo partner Nick Shewring envisages a hub that connects with local innovation partners, teems with energy and enthusiasm, is lean and agile and encourages smart thinkers to meet and naturally collaborate. ‘‘We want to create a space where ideas not only begin, but through support and network connections, they come to life,’’ says Shewring. ‘‘This is a fantastic initiative, and we’re proud to be creating an inspiring, exciting and fast-paced innovation hub.’’ Ken Erskine, Startup and Ice Angels director for The Icehouse, says the partnership brings the two companies’ complementary skills together to create a powerful environment that will support high-growth businesses. ‘‘The BizDojo holds significant expertise around developing a vibrant community and creating a quality experience for tenants. We bring experience in helping these companies grow, developing a strong brand and using a powerful network to add value back to the entrepreneurs who are giving it a crack,’’ he says. The two organisations were attracted to running the hub by its potential to put Auckland on the international innovation map — and create a central place to connect the New Zealand’s wider innovation community. Erskine says the precinct will put smart people around other smart people in collaborative spaces ‘‘where magic can happen’’. ‘‘A developer ends up sharing an idea with a marketer. They decide to start up an enterprise, and bam, you have another great collaboration built naturally around relationships.’’ for retailers to stock and sell the leg fillets. Sadia Seemeen, process improvement technologist at Tegel during the project, said The FoodBowl was important for companies wanting to explore new markets and develop new products. ‘‘To invest in a $500,000 HPP machine for testing is just not feasible. The FoodBowl has the technology to explore different ways of doing things — that’s a great asset in a country like New Zealand that relies on export sales to add to the economy.’’ Ateed’s key infrastructure projects are supplemented by its delivery of the Regional Business Partner programme across the region — which helps SMEs access more than $3 million of government R&D funding each year — and by seizing one off opportunities. For example, last year, Ateed was part of the ‘‘NZ Inc’’ programme during the America’s Cup in San Francisco and Auckland’s innovation became the focal point of its high-value industry showcasing. ‘‘While racing put the spotlight firmly on marine technology innovation from Auckland companies such as Cookson Boats, Core Builders Composites, and Salthouse Marine, we were able to showcase the region’s most innovative companies in ICT and digital — such as Booktrack, and high-value manufacturing,’’ says O’Riley. ‘‘The San Francisco programme and the reaction from influential potential investors and clients confirmed that our best innovators are world class, and are key to our economic transformation.’’

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Driven by a unity of purpose Auckland must support innovation-based entrepreneurs, says Brett O’Riley

he key to Auckland’s economic transformation is a thriving innovation ecosystem connecting ‘born global’ businesses, growth opportunities, smart thinkers, entrepreneurs, and investment. These businesses typically grow faster, employ more workers and generate export earnings — critical areas for Auckland. Auckland wants to continue to grow as an innovation hub of the Asia-Pacific region. Maximising the benefits of that ambition will depend on how well the region responds to the global drivers of innovation and change. At Ateed, as Auckland Council’s economic growth agency, we want to make sure we are focused on the areas where we can add the most value to innovation across the region. It’s important that we develop these opportunities with partners and we have just gone out to the innovation community to get its views. Auckland needs to start to seize opportunities provided by global technology trends such as ‘‘big data’’ and the cloud, and further develop key high-tech industries where we hold a competitive edge. At the heart

of our work is the partnering principle of kotahitanga — a unity of purpose — which drives our mission to collaborate on innovation. Ateed will continue to attract multinational companies to Auckland, help build small business clusters around them, and leverage their global connections. Our programmes are designed to increase the number of large-scale businesses in sectors where we have competitive advantage, and get them engaged with international markets and investors at an early stage. Momentum is starting to build around innovation in Auckland. Realising the city’s full potential will be based on core fundamentals including the right infrastructure, a highly skilled and international workforce, capital availability, and a connected ecosystem involving business working alongside research and educational institutions, and local and central government agencies. We need greater collaboration across the ecosystem. Industry led programmes and competitions develop and encourage entrepreneurs, but we need more. Ateed’s role in the growth of inno-

Auckland needs to seize opportunities, says Brett O’Riley.

vation includes investing on behalf of Council in two cornerstone projects, the precinct at Wynyard Quarter, and The FoodBowl — Te Ipu Kai, which form part of the city’s emerging innovation corridor. Auckland has a diverse range of thriving co-working spaces and innovation hubs, research and tertiary institutions. A great example is Massey University, which Ateed signed a Memorandum of Understanding with last year. Its e-centre is at the core of an

emerging innovation hub in Albany. Our North office is supporting locally driven initial discussions about ‘‘Techapuna’’ — an opportunity to try to emulate Venice Beach, California, where Google has led moves to attract high-tech entrepreneurs based on a fantastic urban coast lifestyle and collaboration opportunities. We work with Callaghan Innovation, through the Government’s Regional Business Partner programme, to support R&D across Auckland. Our

What global driver presents the biggest opportunity for Auckland? Technology and digital enablement Digital learning Cloud computing Big data Smart city

You tell us. Our brief is to ﬁnd the best ways to encourage economic growth in Auckland through business innovation. We’ve identiﬁed our priorities for action and we want to hear your opinions and suggestions. What should Auckland do to become a world-leading innovation hub? You tell us at aucklandinnovation.co.nz

R&D specialists help many innovative companies gain government funding to commercialise ideas and protect intellectual property. Companies such as Power Technology Components (turnkey solar systems for the Pacific Islands), D’Arcy Polychrome (powdered paint pigment systems), Steve Haythorne and his Mobot, and Unleashed Software’s inventory management software are emerging local success stories. There is no better example of Auckland’s innovative potential than the cloud-based education tools provider Hapara, which developed a fantastic Teacher Dashboard app for the Manaiakalani Education cluster in Tamaki. Auckland must support innovation-based entrepreneurs — known as IBEs — to develop and nurture early-stage companies in a small number of growth sectors. Ateed will help connect them with new programmes that support business incubation and acceleration, and with angel groups and individual investors. The international markets Auckland aims to break into are intensely competitive. Collaboration, co-operation and partnership will stimulate innovation and Auckland’s long-term economic success. ● Brett O’Riley is CEO of Auckland Tourism, Events and Economic Development (Ateed).

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Greatest show in town We need to get smarter about leveraging Auckland’s showcase events, believes Ateed’s new general manager

atrick McVeigh says major events like the Auckland Nines should be leveraged to showcase the city as platform for innovation and investment. ‘‘This year we had the Lantern Festival, the Rugby Nines and Eminem all happening at the same time,’’ says McVeigh. ‘‘How do we plan for the right sort of business exposure or exchanges, or, trade missions? We need to get smarter about leveraging scheduled international events.’’ In February, McVeigh stepped into the prime role of general manager economic growth at Ateed (Auckland Tourism, Events and Economic Agency). Already he has his hands full with the consultation period on the draft Auckland Innovation Plan that finishes on March 28. His own pedigree is fit for purpose. He spearheaded the preparation of London’s Economic Development Strategy and has worked alongside international cities expert Greg Clark, a longtime steward of Auckland’s development. The draft plan sets out some clear priorities. What is notable about these priorities is how it faces square on the big technology drivers that are creating major business disruptions such as big data and the Cloud, as well as the push to leverage the ‘‘Smart City’’ ethos. McVeigh is emphatic that Auckland should be a Smart City. ‘‘The opportunity is real.

‘‘The Cloud is another example, with weightless exports — we should be operating in that space like Xero.’’ McVeigh is also focused on digital learning that could provide the impetus for Auckland to Patrick McVeigh grow its international education sector and ‘‘translates to a skilled workforce’’. But he makes the point that government — both central and local — together with business, have to act in a tripartite fashion to achieve success. ‘‘We can’t do everything at once, but can’t do one thing in ignorance of the others.’’ Making a draft Innovation Plan sexy is another thing altogether. That’s where the major events come in. This is important because though the city is investing in Wynyard Quarter to form an innovation precinct, it is a 10-year project. The city has to balance two drivers. Making Auckland a launching pad for companies to grow and thrive internationally but also a landing pad for inbound firms and investors. ‘‘We want to engage in a conversation, talk to the innovation ecosystem, the companies, other stakeholders and

Fans lap up the Auckland Nines.

tertiaries, rather than writing,’’ says McVeigh. ‘‘We have the strategy, the Auckland plan, and the Economic Development Strategy. They talk about Auckland being an innovation hub. What is the value we can add as an organisation to that discussion? ‘‘We are always going to have scarce resources. The ambitions we have for economic growth in Auckland, Ateed can’t deliver it on its own. Ultimately the investment needs to come from businesses.’’ Complicating issues is the fact that Auckland’s economic performance is variable. ‘‘We don’t rate that badly on the international indexes,’’ says McVeigh. ‘‘We have good performance in terms of researchers per capita. Those innovation-based sectors can perform better in terms of revenue per

Picture / Richard Robinson

employee, and can translate well in terms of rate of exports. The technology sectors have doubled. But the number of companies reporting innovation has been a bit static. The portion of staff expenditure on R&D is not increasing at the same rate as we would like. The foreign direct investment (FDI) in R&D and the inflow of FDI is seen as an area of weakness. I think there is a juxtaposition between having really important innovation assets — good researchers, good tertiary institutions. We have some great entrepreneurs, but we need more of it.’’ The draft plan — A City of Change and Innovation — has been split into two halves: international trends and how well-placed Auckland is to compete within them, and what Ateed should do.

Innovation Priorities 1. Technology and digital enablement 2. Digital learning 3. The cloud 4. Big data 5. Smart cities Cities and regions recognised as innovation hubs have a common set of characteristics: ● world-leading innovative firms ● industries of competitive advantage ● political, regulatory and business environments — easy and cost effective to innovate ● a culture of innovation and entrepreneurship ● talent ● business and management capability ● R&D and capital for all stages of business development ● infrastructure — broadband ● manufacturing facilities for developing new products or processing methods ● incubators, co-working space, accelerator programmes ● collaboration and connectivity ● strong external links to prosperous cities and centres of innovation. The Government will initially devote funds to support two to four innovation incubators. ‘‘We would like to see space available in Wynyard Quarter for a new incubator, or just incubation and acceleration activity generally. That’s in our planning. ‘‘We are not saying that if it is going to be in Auckland, it can only be in Wynyard — it is not that sort of dialogue. What we have said in the innovation document is these are the sorts of things we should be doing: are these the right sorts of activities?’’ — Fran O’Sullivan

Auckland Chamber of Commerce • • • • • •

Growing your business Reducing business costs Expanding business networks Supplying business talent (at no cost) Providing business advice A voice to government for business

Did you notice there’s business in everything we do?

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

Practicality with potential Callaghan Innovation’s latest recruit is impressed with what he is seeing here

eet Chris Somogyi — the latest big-name recruitment to Callaghan Innovation’s executive management team. Boasting a CV a mile long and a slew of patents, businesses, IPO’s and degrees all bearing his name, Somogyi joins Callaghan as the general manager of Accelerator Services. Accelerator Services at Callaghan is focused on bringing innovation to market quickly and effectively, and providing the assistance required to make that a reality. This could involve research and technical expertise, business incubation, investment partnership or international distribution — the list is potentially endless. What new businesses need to get off the ground is extremely variable, and often one of the biggest hindrances to commercialising an idea. If Accelerator Services is to be effective, the role demands someone with the vision and tenacity to forecast ideas, project requirements and to formulate, then execute, on strategy. And it seems that Callaghan has their man. After spending his previous two years as chief executive at Etaphase — a spinout company from Princeton University specialising in proprietary engineered metamaterials, Somogyi sought change. ‘‘I managed to find a great CEO to run Etaphase and arranged a couple of term sheets to fund the company, so I felt done with that,’’ says Somogyi. ‘‘Both kids are out of the house now, so we’re at that point — 54 years old, time for a little adventure, always wanted to live abroad and New Zealand is a pretty easy gig from that perspective.’’ Less than a month into the role, Somogyi has hit the ground running, travelling the country to better his understanding of the context surrounding his new role. ‘‘I’m in listen mode. I want to

I’ve been highly impressed with projects ranging from unmanned aerial vehicles (UAV or Drones), projects in communications, computing, robotics and obviously agriculture. Chris Somogyi (above)

A visit to Christchurch resonated with Chris Somogyi.

understand the opportunities, what’s on fire, what’s not on fire — so far the prospects are limitless.’’ ‘‘The whole innovation ecosystem has many different players, universities, incubators, government programmes, but at the end of the day I’m a bid advocate for the entrepreneur and the businesses,’’ says Somogyi. ‘‘They’re the guys actually building the stuff, hiring people, making profits and helping the GDP. ‘‘So what can we do to help our heroes be as successful as possible? They’re our champions but they need somebody to build the shields, make sure the spear tips are sharp enough so they can go out and fight.’’

Somogyi says what he’s found so far confirms the rationale for coming to New Zealand in the first place. ‘‘The overwhelming practicality of Kiwis just oozes from everywhere. ‘‘I see all kinds of potential here — in just the first few days I’ve been highly impressed with projects ranging from unmanned aerial vehicles (UAV or drones), projects in communications, computing, robotics and, obviously, agriculture.’’ A visit to Christchurch resonated most strongly with Somogyi. ‘‘Visiting Christchurch and seeing the tragedy there was really sobering, but from there an amazing number of things can come forward. ‘‘There’s an opportunity for Christ-

church to build a city of the next century. It could easily be the most modern city in the world and the innovation and opportunities already emerging are exciting.’ Somogyi is now readying himself to take the next step with Accelerator Services. The next phase is to build a team around him, create and implement internal structures and policies, and work out how Accelerator Services fits into Callaghan. ‘‘Over the next 12 months the basic structure should all be in place, staffed up and on the same page moving forward, as we co-ordinate between Callaghan and stakeholders. ‘‘We’re all on the same team, this

is New Zealand Inc,’’ says Somogyi. ‘‘It’s good not to sit back and let others in Japan and the US sort things out and see if there’s room for New Zealand at the table. ‘‘We should feel completely comfortable elbowing our way to the front of the line and we should be a vanguard for anything we feel comfortable participating in.’’ ‘‘The population of Britain around 1650 or so is around the same as New Zealand right now and they dominated the world with that size of population. ‘‘I don’t think there’s anything about the population or location that should impart any degree or sense of limit.’’

Innovation lessons from manufacturing Businesses are looking for new ways to transform themselves to be successful in a fiercely competitive future. New research* shows successful New Zealand manufacturers are achieving advantage through innovation. There are insights for all businesses in this study of manufacturing success. Surveying the manufacturing sector and 15 high performing firms, our research highlights the critical part played by research and development and skills. New Zealand manufacturers share characteristics with those in other developed countries — their drivers of competitiveness are talent-driven innovation, the environment for business (the economic, trade, financial and tax system of the country in which they operate), cost and availability of materials, and the ability of their suppliers to innovate in products and processes. Like successful manufacturers elsewhere, they are showing a noticeable shift away from pure manufacturing towards a bundling together of manufacturing and services, and a blurring of the boundary between

We need more skilled workers and more support for R&D, writes Phil O’Reilly products and services offered. A particular characteristic of the New Zealand manufacturing sector is its strong interdependence with other sectors of the economy. And a common feature of high growth firms is their high degree of vertical integration in both domestic and offshore markets. An important characteristic of successful manufacturing firms is their propensity to engage in research, design and provision of services. Manufacturers tend to invest significant funds into research and development — much more so than other businesses. Although manufacturing makes up 11 per cent of economic output, manufacturing businesses account for 68 per cent of R&D spending. In the most recent survey of R&D expenditure, manufacturing busi-

nesses spent more than those in the primary and service industries. Approximately $1.2 billion was spent on R&D by New Zealand businesses in 2012, with $536 million of that contributed by manufacturing. R&D success and the ability to achieve talent-driven innovation are highly dependent on having the right skills. Our research shows most manufacturing jobs in New Zealand are relatively skilled, and fast-growing firms in particular have a highly skilled, specialised workforce. Manufacturing generally employs a mix of high-skill and low-skill workers — the mix is important for providing avenues for on-job training and advancement. The high growth firms in our survey provide sector and productspecific training, as well as at least

some training in technical skills, product design and development, basic or advanced computer skills, team and problem-solving skills, quality, lean manufacturing, or basic numeracy and literacy skills. The firms in our survey were asked what changes they needed in the general environment for business. The two big needs are for more skilled workers and more support for R&D. Despite New Zealand’s highly educated workforce, many manufacturing firms are finding it hard to get employees with the right skills, in particular engineering and industry specific skills. They want the education system to focus on providing more technical and trade skills applicable to manufacturing, more ‘‘work ready’’ young people, and more engineering graduates who want to work in New Zealand. They also want more lenient work permits to attract foreign workers to ease their skills shortage. They would like to see a more focused form of R&D support. Comments in the survey included

requests for more R&D funding for late-stage development costs and for R&D incentives for manufacturing in areas that contribute strategically to New Zealand’s growth. One area where there could be fruitful development is in fostering collaboration with research institutions and companies internationally. Though successful manufacturers are innovating through significant investment in R&D, few have collaboration arrangements in place. There is strong evidence to show industry collaboration networks can advance innovation and competitiveness through knowledge-sharing, benchmarking and global partnering. The world is becoming a more fiercely competitive place to do business. Focusing on innovation will help our manufacturing and other businesses achieve the competitiveness they need. ● Phil O’Reilly is Chief Executive BusinessNZ *NZ Manufacturing Sector: its Dynamics and Competitiveness by Castalia Advisory group is on www.businessnz.org.nz

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

A great time to be a start-up organisation’s life. What we do first of all is help the start-up work out whether their ‘‘idea’’ is actually viable and worth spending time on, and then if there is a green light, help them take it to market with early customers.

The Icehouse CEO Andy Hamilton talks to Brierley Penn about the innovation challenge for entrepreneurs

Q: Are you noticing any new trends in the way that New Zealanders are using business incubation services? Is this an increasingly popular way of building a business through its early stages? Of course, it is a great time to be a start-up entrepreneur. There are so many options to help you build your company, both in Auckland, wider New Zealand and offshore. The competence, networks and funding is there to help you if the ‘‘dream’’ is big enough and good enough to convince these groups that you can start the company successfully. So what is ‘‘on trend’’ is this optionality — you could come to an organisation like The Icehouse to help you move into a coworking space like Biz Dojo in Auckland or Kiwi Landing Pad in San Francisco, join an Accelerator (a 100- day programme like Lighting Lab in Wellington or JFDI out of Singapore), seek investment from the Global from Day One Seed Fund or a group like Ice Angels or just ‘‘do it yourself’’.

Q: What are the major challenges that New Zealand businesses face in their early stages, which The Icehouse seeks to assist with? When you are starting a company, the hardest aspect is finding customers who are prepared to pay you for solving their current pain point. Of course, in this process there are a number of challenges, including building the product, getting it tested, improving it and continuing to develop it. Building a team, raising money and then getting into key global markets are key challenges along the line. Q: How do you see that incubators can help NZ innovators convert their ideas into successful businesses? An ‘‘incubator’’ is another word for a verb that describes the process of helping a start-up get established, validate their market, build a product and team and turn a bright idea into a business. So they are just one of the options available to help you do this — the entrepreneur could do it themselves or come to an incubator, attend a Startup Weekend, raise funding from seed funds like Global from Day One or venture funds like Movac, work with groups like UniServices at the University of Auckland or be a part of an ‘‘accelerator’’ like Lightning Lab. There is a range of organisations out there, like The Icehouse, which help start-ups with this phase in their

Q: Are there any industries which you are particularly focusing on at the present time, or industries which you think lend themselves particularly to incubation? We all move with the trends and opportunities that are about the future — the markets that will demand delivery of products or services to meet their needs. Often, we are working with people who are probably one step ahead rather than one step behind. Right now we are seeing opportunities in so many markets, particularly in developing apps or web/social products, technologies in the food and beverage markets, and those markets that have ‘‘big data’’ which can be analysed, processed and returned back to organisations to deliver insight.

Q: How can innovative financing strategies add value to NZ entrepreneurs attempting to get their ideas off the ground? An entrepreneur is probably not too fussy about where or how the money comes from, as long as it turns up when they need it. The great thing right now is that there are quite a few options available in the market. These include government funding programmes like Callaghan Innovation, start-up challenges like Spark at the University of Auckland or the AUT Venture Fund, seed funds like Global from Day One Seed Fund, groups like Ice Angels or venture groups like Movac, as well as accelerator programmes like Lightning Lab or crowd funding groups like Kickstarter or Pledge Me. Q: Do you have any standout examples of businesses that the Icehouse has assisted in recent months? At The Icehouse, we are about helping both start-ups and established entrepreneurs take their company to the next level. In the start-up world, we have recently worked with some fantastic entrepreneurs, who have massive dreams and aspirations to see millions using their products. A couple stand out for me. Parrot Analytics was founded by three young guys from the University of Auckland, led by Wared Seger. They help organisations that purchase content like films or TV series to deliver to the likes of you and me, by understanding and delivering insight into future demand. They are providing the first empirically based predictive model in the market around future demand. Another cool new start-up is Snowball Effect, which is delivering an equity crowd funding portal to help Kiwi entrepreneurs raise money for growing their business. New regulations have been approved by the Government that mean that this area of the market will open up from 1 April. It is very exciting to see that Kiwi entrepreneurs will be able to raise small amounts of funding from the wider market.

The shared journey of Ma¯ori innovation An important feature of Ma¯ori innovation is its direct community benefit, writes Potaua Biasiny-Tule Ma¯ori innovation is a conversation of inspiration and determination. Over the past year a number of examples have made the newspapers, like Maraeroa C ginseng, or the Miraka milk company that owns the value chain, or Tuaropaki’s sustainable dairy farming. Perhaps the most important feature of Maori innovation is that it often has direct community benefit. A classic example of this is the technology relationship between East Coast iwi Nga¯ti Porou and 2 Degrees. The recent announcement of two iwi jointly purchasing the local and international dairy technology firm, Waikato Milking Systems shows Maori are not only owning the farms, but also the farm technology. It’s this type of innovative thinking that is taking the Maori nation forward. And yet this is not a new thing. Maori once were warriors, yes. But 180 years ago Maori once were integrated supply chain specialists, owning land, crops, flour mills and the ships that distributed their product internationally. It is easy to be inspired around our innovative spirit

when 1000 years ago our ancestors were harnessing the natural elements and utilising celestial navigation to chart the Pacific and journey safely to New Zealand. Ma¯ori innovation is a bit different to the mainstream. It’s about making connections between the old and the new; between the large and the small; between the wha¯nau, the hapu¯ and the iwi. It speaks to the transitional nature of change and looks to how Ma¯ori values can be retained throughout the entire process. And it is an essential part of bringing the culture into a 21st century paradigm. The potential for Maori is not just in innovative ideas, but in the innovative systems to support ideas that will benefit communities. Recently, I had the honour of attending a Ma¯ori Leadership Programme hosted by The Icehouse and came away with a real sense that innovation was crucial to small whanau as much as it is to large iwi. Maori businesses, including iwi, are now seeking out innovative networks like The Icehouse to help them build their business and innovation muscle.

At the macro-level, Ma¯ori are estimated to be worth $38 billion. Some of the larger Ma¯ori entities have the ability to mobilise people, resources and time to forge powerful relationships that matter. At the microlevel, Ma¯ori start-ups and small whanau businesses often struggle to survive. The Icehouse Ma¯ori Leadership programme identified that innovation linked the destiny of the iwi to the whanau by reminding participants that one cannot exist without

the other. That success is a shared journey, as much as failure is, and that informed leadership is crucial. And it highlighted the support systems to bring the innovation to life. Similar forums have highlighted innovation as a vehicle to create employment and alleviate poverty. One of the more significant trends not fully discussed is the changing demographic of Ma¯ori. Fifty percent of all Maori are aged 23 years or younger. This group are digital natives, often hyper-connected, and

savvy. The question of where job opportunities come from for them may be partially answered in the palm of our hands. Last month, two Ma¯ori apps were created and launched — Cimki, a social networking app created by Cintina Miki and Pumanawa by Dr Rapata Wiri, which helps to teach the Ma¯ori language. In this area, Ma¯ori could spark a mobile revolution. The newly announced $30 million Ma¯ori ICT Fund could also boost innovation. On my travels, I met a group of passionate Ma¯ori IT leaders who plan to build an indigenous communication network. For them, innovation is a contemporary way for whanau to navigate the tricky waters of today, to chart the course, make the journey and arrive safely at their destination of digital self-sufficiency. It’s part of a wider solution to connect, share, train and employ tribal members. They are modern-day ancestors, planting the seeds of hope today so that the children might enjoy the fruits of innovation tomorrow. ● Potaua Biasiny-Tule (Nga¯ti Pikiao, Nga¯ti Whakaue, Tuhoe, Wha¯nau-aApanui, Nga¯ti Kahungunu) is an innovator, academic and digital entrepreneur, founder of news website TangataWhenua.com and previous project manager of Google Ma¯ori.

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

Innovation

How to programme for success Women entrepreneurs have barriers, just like the corporate glass ceiling, to overcome

re you a female entrepreneur, whose company turns over more than $500,000 a year? Is your business stuck and struggling to reach the next level? Does it have high growth potential? You could be among the 12 women EY New Zealand is seeking to kick-start its inaugural Entrepreneurial Winning Women (EWW) programme. Between now and the end of March, EY is seeking nominations for female entrepreneurs with solid, established businesses. Those selected will join the EWW leadership programme, connecting them with the advisors, resources and insights they need to upscale their businesses. They will also attend a two-day boot camp in Auckland in May. NZ is among 10 countries to launch EWW. Others include the US, Japan, Indonesia, Brazil and Turkey. Beth Brooke, an EY global board member and Global Vice-chair of Public Policy, visited Auckland last month to launch EWW in New Zealand. She says women entrepreneurs become stuck in ‘‘the middle’’ of their development for the same reasons women in the corporate world hit the so-called glass ceiling: lack of visibility, and no access to networks and the inner sanctum of the business world. A lack of role models, mentoring and opportunities to hone business skills all play their part. That’s in spite of the fact that women tend to start businesses at a higher rate than men and, initially at least, grow them faster.

Beth Brooke

Too many female entrepreneurs can speak about their passion for their product and their brand but can’t tell the story around their bottom line. Diane Foreman (left)

EWW aims to redress the balance. The programme isn’t aimed at startups. ‘‘We’re not looking for microentrepreneurs,’’ Brooke says. ‘‘We want women who have a real business that

has plateaued and that we can scale up.’’ EWW operates alongside EY’s global Entrepreneur Of The Year (EOY) awards but is not part of EOY — a

programme where women still struggle to make the finals in Monaco each June. Last year, of the 52 country winners who gathered in Monte Carlo, only two were women. ‘‘They are not growing their businesses to the level where they are capable of qualifying,’’ Brooke says. As she sees it, entrepreneurship is the clearest path to progression for women in business and EWW is intended to provide a pipeline for EOY contenders. The patron of EWW in New Zealand is Diane Foreman, owner of Emerald Group, a former New Zealand EOY country winner and a judge at the EOY world event three years ago. A successful and high-profile entrepreneur who says participation in the EOY programme changed her approach to business, Foreman believes women wanting to be ‘‘part of the conversation’’ must learn to put their hands up. Currently they’re frozen out of the boardroom by the old boys’ network which, she says, is still alive and well in New Zealand. Progress in boosting the number of female directors is glacial and the gene pool of those who manage to get appointed is shrinking. It’s all about letting the ladder down to help other women into these top positions, but the problem is that too few of them are actually on the ladder, Foreman says. EWW is about giving women the tools they need to get there — tools like preparing and writing good business plans, learning how to interact with the bank manager and thinking bigger

about their businesses. Also important is learning to speak the language of business and the ability to discuss their company’s ‘‘numbers’’. Too many female entrepreneurs can speak about their passion for their product and their brand but can’t tell the story around their bottom line, Foreman says. EWW has worked particularly well in the United States, where revenues for programme participants’ companies have grown almost 50 per cent each year on average for the past five years, creating jobs at an average rate of more than 25 per cent annually, according to a survey done by Babson College. But while women own about 40 per cent of US businesses, only about 5 per cent of all equity capital investments go to businesses headed by women and just 3 per cent receive venture capital funding. Women also tend to use more of their own money to start their companies, rather than seeking outside financing. According to Babson’s research, if women entrepreneurs started with the same capital as men, they would add six million jobs to the US economy in five years. Women are the world’s largest emerging market and by 2028 will control 75 per cent of the world’s consumer spending. ● For more information about EWW and the nomination process, please contact EY tax partner Jo Doolan. Joanna.doolan@nz.ey.com

IDEAL SITUATION this is where you’ll come in

Innovation – New Zealand is famous for it. Callaghan Innovation is fully focused on converting our nation’s outstanding ideas into commercial success stories.

Client Solutions Managers (Auckland and Wellington)

For us, this is more than a vision; it is a passion. We are driven by the opportunity to enhance and accelerate the commercialisation of innovation by New Zealand businesses and entrepreneurial thinkers. To achieve our aspirations, we need to add further expertise to our team. Quite simply, it’s a great time to join us.

Investment Managers (Auckland)

With these pivotal roles in place, we’ll be on the way to the next stage of our evolution. It is an exciting time for us, and we invite you to be part of it. Together, let’s build the engine room of Callaghan Innovation and ramp up our efforts to turn New Zealand innovative ideas into commercial successes. For further information and to apply go to www.callaghaninnovation.govt.nz

Collaborate, innovate, accelerate – help Kiwi companies reach their potential.

A unique spin on a seemingly traditional role. Identify grant opportunities so clients reach their highest potential.

Senior Research Engineer (Wellington) If supercritical extraction, lipid, protein and microbial fermentation research interest you, contact us.

Communications Specialist – Online (Wellington) Use your passion for the online environment to build Callaghan Innovation’s online presence.

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nzherald.co.nz | The New Zealand Herald | Tuesday, March 4, 2014

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