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Speaker 1: On the business of take powered by two degrees business.

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Speaker 1: What could New Zealand look like in twenty fifty if

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Speaker 1: we got a little bit more strategic about plying to

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Speaker 1: our strengths in a few key areas that could fuel

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Speaker 1: economic growth.

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Speaker 2: We don't want to pick winners. Some of that is

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Speaker 2: maybe afraid to say no or afraid to be wrong.

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Speaker 2: I would frame it as we can gamble on potential

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Speaker 2: happy accidents and hope that something works out. And some

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Speaker 2: people will point to we're very good at being having

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Speaker 2: winners in very niche or industries or her applications that

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Speaker 2: no one else is looking at. But that's also really

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Speaker 2: difficult to develop any kind of expertise in because you

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Speaker 2: can't anticipate what that might be. My position would be

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Speaker 2: that those happy accidents can happen even if you're placing

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Speaker 2: some strategic bets.

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Speaker 1: I'm Peter Griffin from Business Disk and that was Kelly Newton,

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Speaker 1: co managing partner for Boston Consulting Group New Zealand. BCG

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Speaker 1: has just published what it calls an Investigation into the

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Speaker 1: Future of New Zealand Inc. The consulting firm points out

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Speaker 1: that our economy has been reshaped and bolstered by growth

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Speaker 1: as export industries such as dairy, film and tourism benefit

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Speaker 1: from a prospering middle class, particularly in Asia. They want

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Speaker 1: safe nutrition, rich cinematic experiences and beautiful places to holiday.

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Speaker 1: But those industries aren't going to serve us so well

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Speaker 1: in future. The local dairy industry says that New Zealand

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Speaker 1: has reached peak milk production. Film and television production is

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Speaker 1: limited to serving the outsourcing needs of Hollywood studios, and

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Speaker 1: travelers are choosing more affordable and lower carbon holiday options.

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Speaker 1: So what does little Old New Zealand do amidst a

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Speaker 1: war for talent, rapid technological innovation, and the growing impacts

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Speaker 1: of climate change. Kelly Newton was my guest today. She

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Speaker 1: says we should focus on five key areas where we

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Speaker 1: have a competitive advantage and can build highly valuable ecosystems

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Speaker 1: as we seek to reshape our economy.

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Speaker 3: Kelley Newton, Welcome to the business of tech. How's it going?

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Speaker 2: Oh great? Thank you for having me, Peter, It's great

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Speaker 2: to be here.

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Speaker 3: Yeah. And look, we've heard a lot about Boston Consulting

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Speaker 3: Group multinational all around the world offering advice and consulting

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Speaker 3: services to big companies governments. You've been in New Zealand's

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Speaker 3: with an office here what for a couple of years now?

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Speaker 2: Yeah. So we reopened our office here in New Zealand

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Speaker 2: in twenty twenty two, and then I joined the BCG

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Speaker 2: down here in twenty twenty four after many years in

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Speaker 2: the US. I feel like I'm ancient in the BCG

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Speaker 2: sense now.

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Speaker 3: Yeah. And interesting timing to be sort of opening your

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Speaker 3: operation in New Zealand pretty much into a recession. How

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Speaker 3: have things gone in the last couple of years that

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Speaker 3: you've been sort of operational on the ground here again, Yeah, I.

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Speaker 2: Think a lot of our strategy is about more longer

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Speaker 2: term and so whether there's a recession or the business

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Speaker 2: is looking good in any one year is kind of

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Speaker 2: less important. But I think there's a real recognition that

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Speaker 2: both the environment within New Zealand is different and it's

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Speaker 2: difficult to serve that from Australia. The ability to build

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Speaker 2: relationships with people understand the unique context here within New

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Speaker 2: Zealand is really important and so we viewed it as

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Speaker 2: a critical part of the strategy.

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Speaker 3: Yeah, that's great. And you're known for really high quality

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Speaker 3: insights and research into the advice that you give to countries,

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Speaker 3: in some cases big companies as well. You've been looking

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Speaker 3: at the future of New Zealand, which a lot of

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Speaker 3: people are sort of fretting over at the moment. You've

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Speaker 3: posed in a new report, really good report out that

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Speaker 3: we will link to in the show notes, quite a

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Speaker 3: provocative question, what will New Zealand be known for in

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Speaker 3: twenty fifteen. I think it's an open question at the moment.

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Speaker 3: We have a government with a growth agenda. Our Prime

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Speaker 3: Minister has recently been to India trying to do a

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Speaker 3: free trade deal all over Southeast Asia as well, so

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Speaker 3: very much this government is really preoccupied with growth. We've

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Speaker 3: had a stagnant economy, but you're looking a bit more

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Speaker 3: long term and sort of posing that question, what do

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Speaker 3: we need to put in place now to be more

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Speaker 3: prosperous and economically and socially advanced by the middle of

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Speaker 3: the century. And you start out in that report looking

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Speaker 3: at some of the challenges, frankly, that we face as

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Speaker 3: a country and maybe that's where we should start. For instance,

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Speaker 3: the traditional pillars are for our economy, dairy, tourism and film,

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Speaker 3: and a lot of people have been saying you point

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Speaker 3: out in your own report. They're facing real headwinds, aren't they,

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Speaker 3: even though you know, price daries up. At the moment,

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Speaker 3: the trend is towards these sorts of industries are really

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Speaker 3: not going to deliver the way that maybe they have

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Speaker 3: in the last few decades.

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Speaker 2: Yeah, that's absolutely right. So I think there are a

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Speaker 2: couple of trends. One is I think everyone is aware

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Speaker 2: of long term productivity trends within New Zealand, and I

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Speaker 2: think people are probably starting to become tone deaf to

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Speaker 2: the fact that New Zealand is falling behind and it's

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Speaker 2: somewhat accepted of that's where our position is, and that

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Speaker 2: hasn't changed that much since the earlier in the two thousands,

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Speaker 2: and so the question is, well, what starts to change

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Speaker 2: that trajectory, And it's not something that changes very quickly,

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Speaker 2: and typically to achieve better productivity you would think about specialization,

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Speaker 2: and so that's not necessarily groundbreaking, but in terms of

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Speaker 2: how we currently approach things, it's been more of being

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Speaker 2: very open to doing everything versus trying to place some

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Speaker 2: strategic bets on things that would lead to specialization. So

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Speaker 2: I think that's one aspect around productivity. And then some

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Speaker 2: of the traditional industries are more of those primary industries,

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Speaker 2: and we might be leaving some money on the table,

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Speaker 2: so to speak, in terms of how we're approaching those sectors.

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Speaker 2: And so I think one industry where you saw more

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Speaker 2: of a successful transformation was maybe what kind of John

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Speaker 2: Brackenridge did with New Zealand Marino and taking what was

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Speaker 2: a primary industry kind of commodity product and then turning

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Speaker 2: that into something where you did more of the value

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Speaker 2: add and thinking about how you participated in more of

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Speaker 2: that end product that was an export. And as we

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Speaker 2: think about some of the industries within New Zealand, is

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Speaker 2: there an opportunity to grow beyond maybe producing the milk

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Speaker 2: and the milk powder to something that would be more

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Speaker 2: value add or more in the technology space that's associated

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Speaker 2: with the EG sector that's growing much more quickly and

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Speaker 2: could be more of an export for New Zealand.

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Speaker 3: Yeah, And look, we've had commentary in our media for

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Speaker 3: probably decades now about moving up the value chain as

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Speaker 3: we call it, to try and do that, and with

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Speaker 3: very limited success in areas like dairy, you know, we're

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Speaker 3: still selling milk powder and sort of raw materials that

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Speaker 3: other companies are then turning into products. You know, Fonterra

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Speaker 3: is even sort of floating the prospect of selling its

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Speaker 3: consumer brands, which I thought, wow, what a great sort

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Speaker 3: of resource. We have this direct relationship with consumers around

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Speaker 3: the world. So it seems that may not be in

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Speaker 3: Fonterra's future. So we've got challenges facing those Industry tourism

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Speaker 3: really hasn't recovered since COVID the film Sick. There's still

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Speaker 3: going gangbusters and here in Wellington we just saw James

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Speaker 3: Cameron really talking up Wellington as a great place to

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Speaker 3: make films. But you know, very much linked to who's

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Speaker 3: going to pay the biggest subsidies and we continue to

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Speaker 3: pay them. But that one is sort of a fickle industry,

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Speaker 3: isn't it. Those productions are going to go to the

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Speaker 3: lowest cost destination, right.

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Speaker 2: It's kind of transitioning to say it's good to be

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Speaker 2: the location where the filming is taking place, but when

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Speaker 2: you look at the value across that industry, it's not

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Speaker 2: necessarily where the filming is taking place. And so what

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Speaker 2: opportunities do we have to actually expand across that and

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Speaker 2: what needs to be in place to enable it. There

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Speaker 2: are some great success stories with wet a workshops and

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Speaker 2: what they've done, but creating the ecosystem that goes around

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Speaker 2: it and then connects it so that the value isn't

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Speaker 2: all leaving New Zealand. I think the the gaming industry

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Speaker 2: has also been somewhat successful in how they've set up.

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Speaker 2: They have the development that's based here in New Zealand.

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Speaker 2: It might not be as many. There are a lot

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Speaker 2: of jobs, but is it as many as we would

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Speaker 2: like it to be and things that wrap around it.

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Speaker 2: There're probably some additional opportunity in how we think about that,

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Speaker 2: but that's been a good export and a lot of

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Speaker 2: the value is retained here within New Zealand. So I

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Speaker 2: think for those creative industries, is there something that would

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Speaker 2: is there some synergy across both gaming as well as

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Speaker 2: what we see within film. Do you need to pick one?

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Speaker 2: That might be still an open question, but what are

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Speaker 2: the other elements of the ecosystem that would help to

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Speaker 2: develop those industries into those larger kind of profit pools

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Speaker 2: as you might consider it in the future.

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Speaker 3: Yeah, and look, with the rise of artificial intelligence, I

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Speaker 3: think we're just going to say the blurring of the

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Speaker 3: line between what is a game, what is a film?

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Speaker 3: What is augmented reality. What is a digital avatar that

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Speaker 3: does all of those things?

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Speaker 2: Absolutely?

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Speaker 3: Yeah. Some of the other challenges climate change you talk about,

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Speaker 3: and often this is just sort of a rote mention

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Speaker 3: in a lot of these reports about the future, a

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Speaker 3: token thing that you have to mention. But there are

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Speaker 3: some serious threats, aren't there, Not only to our agriculture

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Speaker 3: and tourism things like that that we do rely on

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Speaker 3: as pillows off our economy. What are some of the

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Speaker 3: other threats that climate change poses to New Zealand according

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Speaker 3: to your research.

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Speaker 2: Yeah, so I think we didn't dive as deeply into

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Speaker 2: climate change necessarily in this report, But as you think

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Speaker 2: about broadly, there are changes to where and what type

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Speaker 2: of agriculture and what you can grow as a result

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Speaker 2: of climate change. There can be rising sea levels that

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Speaker 2: would impact any island, including New Zealand. I think there's

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Speaker 2: also an opportunit unity in the near term with the

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Speaker 2: renewable energy that we have within New Zealand And. Is

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Speaker 2: there a way for us to leverage that as a

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Speaker 2: benefit or potentially is a comparative advantage versus other countries

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Speaker 2: to kind of be on the leading edge. It's probably

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Speaker 2: less so just in the technology itself, but is there

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Speaker 2: something in how we deliver it or what is made

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Speaker 2: here or that would allow us to benefit. So data

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Speaker 2: centers is one example of Yes, there could be an

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Speaker 2: opportunity for us to house data centers here in New Zealand.

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Speaker 2: There's already some momentum going in that direction. But is

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Speaker 2: that sustainable when you look out kind of twenty years

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Speaker 2: or is it just something over the next kind of

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Speaker 2: five to ten that is a good wave for us

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Speaker 2: but might not provide sustainable growth in the long term.

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Speaker 3: Yeah, so there's that. The other one you mentioned is

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Speaker 3: the growing talent gap. And when I talk to people

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Speaker 3: in the tech sector and that you know, this is

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Speaker 3: just a I say, what are the big things preoccupying you?

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Speaker 3: They don't really talk about the stagnant economy. They talk

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Speaker 3: about getting the right people on board. It's a continuous

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Speaker 3: problem and the government is trying to address this with

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Speaker 3: various visa changes to make it easier for highly skilled

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Speaker 3: people to come to New Zealand. But obviously you see

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Speaker 3: this as absolutely integral. If you want to have a

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Speaker 3: better country by the middle of the century, what do

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Speaker 3: we need to do to retain and attract talent.

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Speaker 2: Yeah, So on the talent side, it is multi fascinating.

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Speaker 2: It's really hard to fix, and I think education is

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Speaker 2: one that's traditionally very hard to address because something you

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Speaker 2: do today you might not see some of the benefits

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Speaker 2: for ten years or more. And so one of the

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Speaker 2: sectors that we mentioned in the report is space and satellites.

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Speaker 2: And when I think about the time to grow and

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Speaker 2: a PhD student that's going to be able to go

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Speaker 2: into that industry as an engineer, well, first you need

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Speaker 2: them to get the PhD, which is several years in

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Speaker 2: and of itself. In order to get into the PhD program,

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Speaker 2: you need the master's programs and the undergraduate baseline around engineering.

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Speaker 2: And then just getting into engineering at the university level,

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Speaker 2: you need to be taking the STEM classes all the

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Speaker 2: way through high school and elementary school. And so I think,

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Speaker 2: when if I'm a university that's here in New Zealand,

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Speaker 2: that can be a very overwhelming thought to try to

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Speaker 2: train every student to cover every industry that we might

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Speaker 2: be in within New Zealand. And so if we're looking

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Speaker 2: to attract talent from other countries, then why would they

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Speaker 2: come to New Zealand to study here? It's probably not

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Speaker 2: enough to say, well, we speak English and we're in

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Speaker 2: English speaking country, but you want them to come here

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Speaker 2: because we have the best programs in a particular sector.

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Speaker 2: And we can't all be great at offering agriculture and

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Speaker 2: programs and food science programs across every university. And so

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Speaker 2: is there some specialization that we want to consider at

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Speaker 2: the university level. And I think that there's been some

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Speaker 2: exploration of that. I know Peter Gluckman is in the

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Speaker 2: process of looking at what some of those sectors might

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Speaker 2: be and the universities and how those might be aligned,

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Speaker 2: and that process is ongoing. But I think a recognition

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Speaker 2: of it might be good for us to have a

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Speaker 2: university that's going to be very dedicated to the kinds

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Speaker 2: of skills that would be good for space and satellites,

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Speaker 2: and a partnership between the businesses that are starting up

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Speaker 2: with in New Zealand to say these are the skills

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Speaker 2: that we want to have with and the businesses would

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Speaker 2: be a great conversation to have with the universities to

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Speaker 2: make sure that they're actually preparing people to work in

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Speaker 2: these sectors going forward.

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Speaker 3: Yeah, and that's probably the central theme off your report,

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Speaker 3: really is that concept of we need to do some

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Speaker 3: level of specialization. And the way that you sort of

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Speaker 3: term it here is an ecosystem approach. You've identified basically

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Speaker 3: five areas, including agriculture four point zero and we'll talk

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Speaker 3: a bit more about that, space and satellites, as you've mentioned,

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Speaker 3: green tech, the future of medicine, and the creative industries,

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Speaker 3: which we touched on as well. And this is a

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Speaker 3: perennial argument that goes on in New Zealand. Should we

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Speaker 3: pick winners, some would say, or you know, put our

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Speaker 3: resources into certain areas where we have strength, or should

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Speaker 3: we strengthen the system in general? And stuff will bubble

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Speaker 3: up and people point out that, you know, sir Peter Beck,

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Speaker 3: who would have thought that he would create, you know,

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Speaker 3: a very successful commercial rocket company from New Zealand that

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Speaker 3: if you'd tried to pick that winner twenty or thirty

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Speaker 3: years ago, it would have been impossible. So yeah, interesting

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Speaker 3: in your view, you guys, obviously thinking you've looked around

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Speaker 3: the world and seeing where this is successful, that focusing

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Speaker 3: on these ecosystems where you have pre existing strengths as

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Speaker 3: really the way forward.

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Speaker 2: Yeah, So I think this is a question. It is

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Speaker 2: a question that comes up across New Zealand of we

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Speaker 2: don't want to pick winners. Some of that is maybe

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Speaker 2: afraid to say no or afraid to be wrong, and

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Speaker 2: I would frame it as well a couple of ways.

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Speaker 2: One is we can gamble on potential happy accidents and

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Speaker 2: hope that something works out. And some people will point

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Speaker 2: to we're very good at being having winners in very

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Speaker 2: niche or industries or applications that no one else is

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Speaker 2: looking at. But that's also really difficult to develop any

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Speaker 2: kind of expertise in because you can't anticipate what that

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Speaker 2: might be. And my position would be that those happy

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Speaker 2: accidents can happen even if you're placing some strategic bets.

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Speaker 2: And those strategic bets are what do we have an

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Speaker 2: advantage in and what do we think could be successful,

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Speaker 2: And we're going to place some of those bets. They're

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Speaker 2: not all going to pan out, because innovation is actually

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Speaker 2: about trying some different things and learning from it, and

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Speaker 2: they're not all going to work out, but you hope

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Speaker 2: that some do and you can adjust along the way.

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Speaker 2: And as successful as we've seen Rocket Lab beat like

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Speaker 2: that's great, but I would love to see four or

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Speaker 2: five of those coming up within New Zealand, And I

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Speaker 2: just think of are there others that could have been

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Speaker 2: successful but haven't quite gotten there yet because maybe they

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Speaker 2: didn't have those different elements of the GO system. And

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Speaker 2: so while there are going to be some that are

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Speaker 2: successful regardless of what you put in place, think about

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Speaker 2: what are the others that you want to encourage. So

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Speaker 2: within kind of space and satellites, there's some other companies

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Speaker 2: that are popping up and getting some good traction. But

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Speaker 2: you would love to see it's not just the ones

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Speaker 2: that are launching the rockets that is the kind of flashy,

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Speaker 2: super fun. We all love to see a rocket go

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Speaker 2: up in the air. Some people love to watch them

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Speaker 2: explode to but thinking about, well, what kinds of materials

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Speaker 2: are used in rockets and we should have that kind

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Speaker 2: of advanced material capability here within New Zealand. And what

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Speaker 2: are the things that go into the design and the engineering,

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Speaker 2: the launch, the monitoring, the repair, the services, everything that

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Speaker 2: wraps around it, because that's what creates that stronger ecosystem

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Speaker 2: and will support other businesses. So you see Kia Aerospace

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Speaker 2: and Don Aerospace coming up like that's great, Like how

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Speaker 2: do we get more that are building on some of

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Speaker 2: that success.

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Speaker 3: Yeah, yeah, really good point there, and there's some great

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Speaker 3: companies as you mentioned Zeno Astronautics another one. It's technology

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Speaker 3: to shift satellites around in orbit. So a scene has

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Speaker 3: happened off the back of Rocket Lab and it's partly talent,

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Speaker 3: but it's partly also international players going well. In New

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Speaker 3: Zealand actually now has a reputation for space applications. So

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Speaker 3: let's go and explore there to what extent. And we've

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Speaker 3: tried this before. Other country Scandinavia, Europe are very successful

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Speaker 3: about at clustering. So the ecosystem has a physical manifestation

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Speaker 3: in infrastructure and companies cohabit together. Is that an important

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Speaker 3: part of the ecosystem approach in New Zealand one percent.

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Speaker 2: So it's it's really important that that the ecosystem please

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Speaker 2: off of each other and starts to create that flywheel.

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Speaker 2: So you start to see more and more companies and

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Speaker 2: it's very difficult to operate within a vacuum if you're

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Speaker 2: just an established company and you're trying to do something

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Speaker 2: but you don't have the talent that's coming in, you

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Speaker 2: don't have investors looking to where you are to make investments.

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Speaker 2: You don't have some of the startups that in some

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Speaker 2: places would be good candidates for you to acquire or

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Speaker 2: those startups are developing new technologies and pushing the envelope

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Speaker 2: that you might want to use within what you're doing.

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Speaker 2: So having that ecosystem actually, I would actually say co

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Speaker 2: located would be important. So while it would be great

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Speaker 2: if it's just generally within New Zealand, I would even

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Speaker 2: go so far to say, like picking a place within

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Speaker 2: New Zealand would also be helpful, But it is when

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Speaker 2: you look at other countries. I think we talk about

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Speaker 2: the example within Switzerland, and Switzerland is not that big,

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Speaker 2: but they have all of the elements of getting that

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Speaker 2: biotech together and it's the universities are doing research in

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Speaker 2: that area. You have other institutions doing research. You have

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Speaker 2: all those major companies that are co located, so you

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Speaker 2: can talent is moving in between them and that they

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Speaker 2: have opportunities to collaborate.

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Speaker 3: Yeah, you mentioned in the report, probably one of the

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Speaker 3: biggest ecosystems, the most successful one is in the Cambridge

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Speaker 3: area in the United Kingdom, where you have that incredible

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Speaker 3: R and d IF it going on. You have academia

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Speaker 3: some of the best scientists and engineers in the world,

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Speaker 3: and it's created one of the biggest tech hubs in

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Speaker 3: the world.

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Speaker 2: Yeah, you're absolutely right. So creating those tech hubs and

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Speaker 2: whether it's in the UK is yes, it's much bigger.

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Speaker 2: But when you look at just this one ecosystem, it's

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Speaker 2: very specific in terms of where it is within the UK.

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Speaker 2: And when you have people that are at the top

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Speaker 2: of their field and pushing the envelope, scientists frequently ask

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Speaker 2: where is the best place in the world to do

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Speaker 2: this thing? And that's where I want to go, And

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Speaker 2: whether that is in a small town or it's in

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Speaker 2: a different place, most of those scientists are willing to

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Speaker 2: move if they can progress the science in that area.

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Speaker 2: And so that's why I view kind of our goal

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Speaker 2: is to be well, where which scientists are we trying

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Speaker 2: to attract to New Zealand because they're going to want

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Speaker 2: to know where's the best place to do my thing?

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Speaker 2: And I think that's what these other successful ecosystems have done,

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Speaker 2: is they're attracting that top talent into where they are

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Speaker 2: because they've set up they have the best infrastructure that's

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Speaker 2: supporting that particular set they have the students that are

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Speaker 2: interested in the universities around that and other businesses that

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Speaker 2: they can be a part of.

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Speaker 3: Yeah, and I guess the obvious one. We talked at

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Speaker 3: the start of this conversation about leaving value on the table,

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Speaker 3: and that's definitely been our agricultural story. So one of

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Speaker 3: the ecosystems you're suggesting what you call agriculture four point zero.

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Speaker 3: And we've talked a lot about industry four point oh,

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Speaker 3: which is really around sort of advanced manufacturing. We don't

387
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Speaker 3: really have a huge manufacturing base in New Zealand, but

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Speaker 3: we do have a pretty thriving agritech scene, the likes

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Speaker 3: of Halter Robotics Plus, which was just acquired by Yamaha

390
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Speaker 3: a couple of weeks back. So that is a fledgling scene.

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Speaker 3: I guess how do we really ramp that up? And

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Speaker 3: in the same way as you're talking about the space

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Speaker 3: sector as well.

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Speaker 2: Right, I think, And again, like the sectors that we've

395
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Speaker 2: shared within the report are just a starting point, So

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Speaker 2: I don't know everything about which sectors we should definitely

397
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Speaker 2: do within New Zealand, but I think there is support

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Speaker 2: around something that's related to ag tech. I think there's

399
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Speaker 2: some choices. Is this hardware related to AG? Is it

400
00:24:15,320 --> 00:24:19,119
Speaker 2: software related to AG? Is it kind of services that

401
00:24:19,200 --> 00:24:23,440
Speaker 2: are related to AG And I think some of what's

402
00:24:23,480 --> 00:24:26,720
Speaker 2: been done is relevant to here in New Zealand. Do

403
00:24:26,800 --> 00:24:29,320
Speaker 2: we try to take a lens that's more outward looking

404
00:24:29,480 --> 00:24:34,000
Speaker 2: about what would be relevant that we could export in

405
00:24:34,080 --> 00:24:38,680
Speaker 2: the ag tech space? But right now there's some ag

406
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Speaker 2: tech that's spread across New Zealand and I'm not sure

407
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Speaker 2: if that there yet some of those centers of this

408
00:24:46,520 --> 00:24:49,439
Speaker 2: is the place where you would go if you want

409
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Speaker 2: to do ag tech. And from an investor standpoint, do

410
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Speaker 2: I know where to go if I want to invest

411
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Speaker 2: in ag tech? I could say, oh, well, I can

412
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Speaker 2: come to New Zealand, but is there one organization that

413
00:25:02,880 --> 00:25:06,200
Speaker 2: I can go to? Maybe maybe Agritech can help us

414
00:25:06,240 --> 00:25:11,560
Speaker 2: to navigate that. But some people would say, oh, there's

415
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Speaker 2: this going on in the White Catto, there's this going

416
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Speaker 2: on in Palmston North, there's this going down down in

417
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Speaker 2: the South. So it's it is a bit fragmented and

418
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Speaker 2: that maybe that's okay, But could we say that there's

419
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Speaker 2: a certain element of ag tech that each of those

420
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Speaker 2: places is known for.

421
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Speaker 3: Yeah, I think that's one sector in particular, where they

422
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Speaker 3: just get on and do it and they hid down

423
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Speaker 3: sort of they're in the fields and they go, oh,

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Speaker 3: if I came up with this device, it would improve

425
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Speaker 3: my life. That's the story of Gallagher and other great

426
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Speaker 3: New Zealand companies. So we have seen in the US

427
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Speaker 3: some really good ecosystems in agritech, everything from satellite remote

428
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Speaker 3: sensing technology to look at soil moisture through to actual

429
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Speaker 3: automated combine harvesters. You know, there's des Moines and other

430
00:26:02,080 --> 00:26:07,600
Speaker 3: places around the US where they're leveraging really well based

431
00:26:07,640 --> 00:26:09,320
Speaker 3: on being physically together.

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Speaker 2: Yeah, and I think even when you look at a

433
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Speaker 2: company like John Deere in the US that has obviously

434
00:26:15,640 --> 00:26:18,399
Speaker 2: been around for a long time, but they also have

435
00:26:18,480 --> 00:26:21,560
Speaker 2: been doing a lot on the tech innovation side. They

436
00:26:21,600 --> 00:26:28,159
Speaker 2: have their hardware which is generally still based there around

437
00:26:28,200 --> 00:26:32,439
Speaker 2: Illinois Iowa border, but then they do a lot of

438
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Speaker 2: their tech innovation in other tech hubs within the US.

439
00:26:36,680 --> 00:26:39,000
Speaker 2: So they're going over to Silicon Valley or down in

440
00:26:39,040 --> 00:26:42,359
Speaker 2: Austin because that's where they're attracting some of the talent,

441
00:26:42,840 --> 00:26:46,720
Speaker 2: and so in that instance, they're still connecting it back

442
00:26:46,720 --> 00:26:50,600
Speaker 2: to the core business. But they've actually chosen to locate

443
00:26:50,720 --> 00:26:57,240
Speaker 2: where some of the ecosystem is around the specific innovation

444
00:26:57,400 --> 00:26:58,440
Speaker 2: that they're looking to do.

445
00:27:00,080 --> 00:27:03,159
Speaker 3: On the future of medicine. This is one where we

446
00:27:03,200 --> 00:27:07,640
Speaker 3: actually have a lot going on. If you read the

447
00:27:07,680 --> 00:27:12,040
Speaker 3: Tech Investment Networks report every year on the biggest sort

448
00:27:12,040 --> 00:27:15,280
Speaker 3: of sectors off of tech by revenue in New Zealand,

449
00:27:15,480 --> 00:27:18,119
Speaker 3: health tech is right up there and we've had some

450
00:27:18,280 --> 00:27:23,919
Speaker 3: very successful tech companies. Ian McCrae's company Orion was recently acquired,

451
00:27:24,040 --> 00:27:27,160
Speaker 3: so a lot of great companies there, but that one

452
00:27:27,280 --> 00:27:32,000
Speaker 3: feels very fragmented and dispersed. It really clustered around Otago

453
00:27:32,240 --> 00:27:35,400
Speaker 3: and Auckland University where a lot of the medical research

454
00:27:35,520 --> 00:27:37,919
Speaker 3: is going on. I think if there's that one, if

455
00:27:37,920 --> 00:27:40,560
Speaker 3: there's one on your list that could really benefit from

456
00:27:40,920 --> 00:27:42,919
Speaker 3: a more of an ecosystem approach, it's that.

457
00:27:44,760 --> 00:27:49,720
Speaker 2: Yeah. I think the kind of medicine mad tech is

458
00:27:49,760 --> 00:27:52,680
Speaker 2: a sector that I think has a lot of promise

459
00:27:52,800 --> 00:27:55,879
Speaker 2: and a number of different countries around the world are

460
00:27:55,960 --> 00:27:59,879
Speaker 2: choosing to participate in some way. There's narrowing in on

461
00:28:00,080 --> 00:28:05,080
Speaker 2: which part of that sector you want to grow. I

462
00:28:05,119 --> 00:28:09,320
Speaker 2: think there's a risk actually that while we've included it

463
00:28:09,320 --> 00:28:12,280
Speaker 2: it has some relevance here in New Zealand and some

464
00:28:12,320 --> 00:28:14,840
Speaker 2: things that we can build on, but it's also a

465
00:28:14,840 --> 00:28:20,080
Speaker 2: sector where you've seen other countries really pull ahead. And

466
00:28:20,560 --> 00:28:25,480
Speaker 2: so in the report I kind of mentioned looking back

467
00:28:25,520 --> 00:28:28,320
Speaker 2: and back in two thousand and one, there was the

468
00:28:28,640 --> 00:28:31,680
Speaker 2: Catching the Wave conference here in New Zealand. This was

469
00:28:31,720 --> 00:28:36,160
Speaker 2: way before my time here, and it highlighted this need

470
00:28:36,320 --> 00:28:41,160
Speaker 2: to specialize and to place some of these strategic bets

471
00:28:41,200 --> 00:28:46,800
Speaker 2: around ecosystems, and I think that health technology space was

472
00:28:46,840 --> 00:28:49,960
Speaker 2: one of them. And if you think about a country

473
00:28:50,080 --> 00:28:54,240
Speaker 2: like Switzerland, that's around the time that they were switching

474
00:28:54,320 --> 00:28:57,240
Speaker 2: gears and starting to say, no, this is where we're

475
00:28:57,240 --> 00:28:59,800
Speaker 2: going to be focused. And now we're twenty five years

476
00:28:59,880 --> 00:29:02,880
Speaker 2: later and Switzerland's done a really good job of that,

477
00:29:03,440 --> 00:29:05,560
Speaker 2: and I think it's an example of what we could

478
00:29:05,600 --> 00:29:09,640
Speaker 2: have achieved if we had decided this is a place

479
00:29:09,680 --> 00:29:13,520
Speaker 2: that we want to double down, so medtech going forward

480
00:29:13,720 --> 00:29:17,520
Speaker 2: and you know, health technology. I still think it's a

481
00:29:17,560 --> 00:29:22,640
Speaker 2: great area, but how do we kind of as a

482
00:29:22,720 --> 00:29:25,280
Speaker 2: community decide this is what we want to go after.

483
00:29:26,000 --> 00:29:27,880
Speaker 3: It's sort of been the story for the last twenty

484
00:29:27,880 --> 00:29:31,280
Speaker 3: five years in New Zealand. Really since the knowledge wave,

485
00:29:31,320 --> 00:29:34,680
Speaker 3: which I only vaguely remember, but we sort of knew

486
00:29:34,800 --> 00:29:37,400
Speaker 3: the direction we needed to go, and we saw what

487
00:29:37,480 --> 00:29:41,840
Speaker 3: other advanced countries were doing, and we didn't really do it.

488
00:29:41,880 --> 00:29:43,800
Speaker 3: And I keep asking the question why. And you know,

489
00:29:44,000 --> 00:29:46,440
Speaker 3: Rowan Simpson, the startup found a co founder of trade Me,

490
00:29:46,560 --> 00:29:49,320
Speaker 3: was on the show a couple of weeks back and

491
00:29:50,120 --> 00:29:54,080
Speaker 3: he just said, you know, and others Andy Hamilton, former

492
00:29:54,680 --> 00:29:57,600
Speaker 3: CEO of the Ice House, just said that we just

493
00:29:57,640 --> 00:30:01,200
Speaker 3: have this attitude to risk anything government. Really, if government

494
00:30:01,360 --> 00:30:04,480
Speaker 3: is driving it, of course they're not going to take

495
00:30:04,600 --> 00:30:08,640
Speaker 3: risks because it could cost them their political careers, it

496
00:30:08,680 --> 00:30:12,000
Speaker 3: could cost bureaucrats their jobs. So I guess the big

497
00:30:12,080 --> 00:30:14,520
Speaker 3: question is we sort of know as a country where

498
00:30:14,560 --> 00:30:17,440
Speaker 3: we need to go. Who's going to drive it? And

499
00:30:17,480 --> 00:30:20,120
Speaker 3: what does the evidence suggest when you look around the world,

500
00:30:20,400 --> 00:30:23,479
Speaker 3: where is it most successfully sort of manifested. Is it

501
00:30:23,560 --> 00:30:26,600
Speaker 3: businesses saying look, we're just going to take the initiative

502
00:30:27,120 --> 00:30:30,200
Speaker 3: and build an ecosystem, or does it need to be

503
00:30:30,320 --> 00:30:34,480
Speaker 3: seeded by government? That's another big argument that just seems

504
00:30:34,480 --> 00:30:36,080
Speaker 3: to go around in a loop in New Zealand.

505
00:30:36,640 --> 00:30:41,880
Speaker 2: Yeah, so I think that you know, it's great if

506
00:30:41,880 --> 00:30:44,480
Speaker 2: the government can be on board, but that can really

507
00:30:44,600 --> 00:30:48,760
Speaker 2: vary because of the limited terms that any one person

508
00:30:48,920 --> 00:30:53,680
Speaker 2: or administration is in power. And so actually one of

509
00:30:53,720 --> 00:30:57,440
Speaker 2: the risks to these ecosystems is that change in government

510
00:30:58,040 --> 00:31:02,320
Speaker 2: and the whiplash that kind of her in terms of focus,

511
00:31:02,640 --> 00:31:05,960
Speaker 2: because if you have a group that's focused on one

512
00:31:06,000 --> 00:31:08,800
Speaker 2: thing and then a new administration comes in and they say, no,

513
00:31:08,960 --> 00:31:12,120
Speaker 2: we should be focused on something else, then you're never

514
00:31:12,160 --> 00:31:17,120
Speaker 2: giving enough time to actually develop that specialization and to

515
00:31:17,240 --> 00:31:20,800
Speaker 2: see that through, and so that's actually worse. So I

516
00:31:20,800 --> 00:31:24,560
Speaker 2: think in many cases that's why I would say, like,

517
00:31:24,600 --> 00:31:28,240
Speaker 2: you can't necessarily wait for the government to determine what

518
00:31:28,360 --> 00:31:31,440
Speaker 2: these ecosystems are going to be, because if there's a

519
00:31:31,560 --> 00:31:34,480
Speaker 2: change in government, you don't want to change that focus.

520
00:31:35,000 --> 00:31:38,200
Speaker 2: And so bringing together, yes, it's good to have some

521
00:31:38,400 --> 00:31:42,520
Speaker 2: representation from people that might be within the government, but

522
00:31:42,600 --> 00:31:50,840
Speaker 2: it's more about people that already participate as businesses, startups, investors,

523
00:31:52,080 --> 00:31:55,640
Speaker 2: research that happens here in New Zealand. All of that

524
00:31:55,720 --> 00:31:59,760
Speaker 2: can actually kind of help you to coalesce around things

525
00:31:59,760 --> 00:32:04,560
Speaker 2: that we have comparative advantage and then we can develop

526
00:32:04,600 --> 00:32:07,680
Speaker 2: the ecosystem around that. And I would say that that

527
00:32:07,920 --> 00:32:11,480
Speaker 2: orchestrator is playing the role that could help to go

528
00:32:11,560 --> 00:32:13,880
Speaker 2: back to the government to say, oh, well, for this

529
00:32:14,040 --> 00:32:17,640
Speaker 2: ecosystem to be successful, these are the parts that we're

530
00:32:17,640 --> 00:32:21,360
Speaker 2: trying to build up, because otherwise the government is doing

531
00:32:21,400 --> 00:32:27,440
Speaker 2: the best that they can. But they are guessing. It

532
00:32:27,480 --> 00:32:30,360
Speaker 2: could be more generous than a complete guess, but they

533
00:32:30,400 --> 00:32:34,240
Speaker 2: are essentially guessing at what the businesses need or what

534
00:32:34,680 --> 00:32:40,840
Speaker 2: those potential ecosystems need and then making investments versus there

535
00:32:40,880 --> 00:32:45,200
Speaker 2: being the pull from that ecosystem to say, this is

536
00:32:45,200 --> 00:32:47,840
Speaker 2: what we need to be successful and it's something that

537
00:32:47,920 --> 00:32:52,080
Speaker 2: only the government can help to provide. So for example,

538
00:32:52,400 --> 00:32:57,320
Speaker 2: the visas and opening up immigration in New Zealand, that

539
00:32:57,480 --> 00:33:01,320
Speaker 2: is something only the government can help do. But it's

540
00:33:01,320 --> 00:33:05,480
Speaker 2: great if one of those ecosystems said like we need

541
00:33:05,520 --> 00:33:08,600
Speaker 2: people with these types of skills or this is the

542
00:33:08,640 --> 00:33:13,000
Speaker 2: barrier for us being successful. You might see other things

543
00:33:13,040 --> 00:33:17,560
Speaker 2: in terms of you know, I think in the space sector,

544
00:33:18,120 --> 00:33:20,440
Speaker 2: you're going to face things around when can we lant

545
00:33:20,760 --> 00:33:25,600
Speaker 2: where can we lant developing those launch sites. Those are

546
00:33:25,600 --> 00:33:29,240
Speaker 2: sometimes things that the government can help to facilitate.

547
00:33:30,600 --> 00:33:32,640
Speaker 3: I think you've put your finger on one of the

548
00:33:32,640 --> 00:33:35,840
Speaker 3: big problems is you know that orchestration and we haven't

549
00:33:35,920 --> 00:33:39,160
Speaker 3: really a lot of these fledgeling ecosystems haven't been well

550
00:33:39,240 --> 00:33:44,640
Speaker 3: served by having an orchestrator actually going making a really

551
00:33:44,680 --> 00:33:47,840
Speaker 3: coherent argument to the government for what they need or

552
00:33:47,840 --> 00:33:50,720
Speaker 3: are pockets off it like the space sector. I mean

553
00:33:50,760 --> 00:33:54,880
Speaker 3: that was literally so Peter Beck going to Steven Joyce

554
00:33:54,920 --> 00:34:00,160
Speaker 3: and John Key off the national government off the time, saying, look,

555
00:34:00,160 --> 00:34:02,440
Speaker 3: I've got all this business potentially coming, but I need

556
00:34:02,440 --> 00:34:04,840
Speaker 3: a launch site. Can you what I need is new

557
00:34:05,360 --> 00:34:08,840
Speaker 3: space legislation. I need an agreement with the US and

558
00:34:08,960 --> 00:34:13,000
Speaker 3: New Zealand around space technology. And that's how informal it

559
00:34:13,120 --> 00:34:16,160
Speaker 3: sort of was at the beginnings, and that led to

560
00:34:16,200 --> 00:34:18,799
Speaker 3: an industry taking off here. But if we can sort

561
00:34:18,800 --> 00:34:22,920
Speaker 3: of formalize that sort of orchestration so that we actually

562
00:34:22,920 --> 00:34:26,200
Speaker 3: get the things that these ecosystems need off the ground.

563
00:34:26,960 --> 00:34:31,040
Speaker 2: Yes, So if I kind of go back to the

564
00:34:31,320 --> 00:34:34,640
Speaker 2: example in Chicago that I was involved with when I

565
00:34:34,760 --> 00:34:38,239
Speaker 2: was there, In that instance, it was a couple of

566
00:34:38,239 --> 00:34:43,760
Speaker 2: philanthropists or business people that said, this is our vision

567
00:34:43,800 --> 00:34:46,520
Speaker 2: for what we want to do in Chicago. But they

568
00:34:46,560 --> 00:34:50,280
Speaker 2: recognize the gap of having some kind of orchestrator in place,

569
00:34:50,960 --> 00:34:53,880
Speaker 2: and so decided that they were going to set up

570
00:34:53,920 --> 00:34:57,560
Speaker 2: an entity that would help to be that orchestrator. And

571
00:34:58,239 --> 00:35:03,240
Speaker 2: they're probably there can be so institutions within New Zealand

572
00:35:03,239 --> 00:35:09,600
Speaker 2: that could play that orchestrator role. But it's understanding, yes,

573
00:35:09,719 --> 00:35:13,080
Speaker 2: this is part of our mandate and who is it

574
00:35:13,120 --> 00:35:16,040
Speaker 2: that we need to bring in because it's tough to

575
00:35:16,160 --> 00:35:21,440
Speaker 2: coordinate across established businesses and startups and try to look

576
00:35:21,480 --> 00:35:27,960
Speaker 2: at investors and look at universities. But without that orchestrator

577
00:35:28,000 --> 00:35:30,680
Speaker 2: whose job it is to be thinking about how do

578
00:35:30,719 --> 00:35:36,120
Speaker 2: we make this successful and continue the flywheel, no one

579
00:35:36,160 --> 00:35:38,799
Speaker 2: else is thinking about that because they have five other

580
00:35:38,920 --> 00:35:41,600
Speaker 2: things that are top of mind for just keeping their

581
00:35:41,640 --> 00:35:46,000
Speaker 2: business running. And so that's why that orchestrator is really important.

582
00:35:46,800 --> 00:35:51,279
Speaker 3: You make note in the report of our underperformance on

583
00:35:51,480 --> 00:35:55,480
Speaker 3: R and D spending we underspand compared to other countries.

584
00:35:55,520 --> 00:35:58,800
Speaker 3: Is there anything in Boston conselling groups sort of research

585
00:35:59,040 --> 00:36:03,080
Speaker 3: around the world that that gives us some suggestions for

586
00:36:03,600 --> 00:36:06,480
Speaker 3: how we get that level of spending up. You know,

587
00:36:06,560 --> 00:36:09,960
Speaker 3: the fifteen percent R and D tax incentive. Is there

588
00:36:10,680 --> 00:36:13,839
Speaker 3: smaller business asides too unwheel leaves too much red type

589
00:36:13,840 --> 00:36:16,200
Speaker 3: involved in going after it. Our bigger companies seem to

590
00:36:17,160 --> 00:36:19,680
Speaker 3: like it, but it's not really adding up to shifting

591
00:36:19,719 --> 00:36:22,920
Speaker 3: the needle towards two percent and then probably more realistically

592
00:36:22,960 --> 00:36:24,960
Speaker 3: three percent of GDP where we need to be on

593
00:36:25,080 --> 00:36:25,840
Speaker 3: R and D spending.

594
00:36:27,160 --> 00:36:34,080
Speaker 2: Yeah, so I think that it's difficult to support a

595
00:36:34,120 --> 00:36:36,640
Speaker 2: lot of additional R and D spending if you don't

596
00:36:36,680 --> 00:36:40,080
Speaker 2: have a direction or a strategy about where that's being applied.

597
00:36:40,640 --> 00:36:44,919
Speaker 2: And so those benchmarks are helpful reference points. And yes,

598
00:36:45,040 --> 00:36:48,080
Speaker 2: we might be under spending. We are smaller, and so

599
00:36:48,200 --> 00:36:50,560
Speaker 2: where is that going to come from? And I think

600
00:36:50,560 --> 00:36:53,120
Speaker 2: when you're looking at that fixed pool that might be

601
00:36:53,200 --> 00:36:57,000
Speaker 2: available for investment, you want to pick the places where

602
00:36:57,280 --> 00:36:59,240
Speaker 2: you're going to get the biggest bang for your buck.

603
00:36:59,320 --> 00:37:03,440
Speaker 2: And and we can't be good I would just suggest

604
00:37:03,480 --> 00:37:06,920
Speaker 2: we can't be good at everything all the time. And

605
00:37:07,320 --> 00:37:11,040
Speaker 2: so having some of those ecosystems would help, I think

606
00:37:11,080 --> 00:37:15,520
Speaker 2: people to feel better about I'm investing into something that

607
00:37:15,560 --> 00:37:20,239
Speaker 2: we have a vision about where that's going. And it

608
00:37:20,280 --> 00:37:24,440
Speaker 2: doesn't mean that we won't invest into services that might

609
00:37:24,480 --> 00:37:28,680
Speaker 2: be offered locally or startups that are outside of these

610
00:37:29,080 --> 00:37:33,800
Speaker 2: specific ecosystems, but you want a majority kind of going

611
00:37:33,880 --> 00:37:34,880
Speaker 2: in the same direction.

612
00:37:35,480 --> 00:37:39,760
Speaker 3: Yeah, so, Kelly, you've sort of framed the report as

613
00:37:39,920 --> 00:37:43,719
Speaker 3: the start of a dynamic conversation. You want to hear

614
00:37:43,800 --> 00:37:46,360
Speaker 3: from people who read it. You know, what are some

615
00:37:46,440 --> 00:37:49,160
Speaker 3: of the concrete things you think that the business leaders

616
00:37:49,160 --> 00:37:52,279
Speaker 3: in the business community can be doing as they look

617
00:37:52,360 --> 00:37:56,760
Speaker 3: towards hopefully a better future coming out of for sessions,

618
00:37:56,840 --> 00:37:59,600
Speaker 3: starting to invest in that growth that everyone wants. What

619
00:37:59,640 --> 00:38:01,440
Speaker 3: are some of the things they can be doing now

620
00:38:01,480 --> 00:38:05,279
Speaker 3: to try and achieve that sort of outlook you have

621
00:38:05,440 --> 00:38:07,120
Speaker 3: for where New Zealand could be in the middle of

622
00:38:07,120 --> 00:38:07,640
Speaker 3: the century.

623
00:38:08,520 --> 00:38:13,080
Speaker 2: Yeah, I think beyond selecting what would be the best ecosystems,

624
00:38:13,120 --> 00:38:16,279
Speaker 2: which I think is one of the next challenges, is

625
00:38:17,400 --> 00:38:20,279
Speaker 2: how do you decide or get some clarity over what

626
00:38:20,360 --> 00:38:25,160
Speaker 2: those are? The next step is, well, how do what

627
00:38:25,239 --> 00:38:27,960
Speaker 2: are the gaps in the current ecosystem that we need

628
00:38:28,000 --> 00:38:31,719
Speaker 2: to fill and how would we go about filling them?

629
00:38:32,320 --> 00:38:36,839
Speaker 2: And so, is it something that's related to attracting investors.

630
00:38:37,400 --> 00:38:41,839
Speaker 2: Is it something that's around helping some of those startups

631
00:38:41,880 --> 00:38:45,480
Speaker 2: to continue to scale and why are they not able

632
00:38:45,560 --> 00:38:50,080
Speaker 2: to scale into that larger size? Is it about talent?

633
00:38:50,840 --> 00:38:56,960
Speaker 2: Is it about kind of creating the research institutions, kind

634
00:38:56,960 --> 00:38:59,800
Speaker 2: of figuring out what the gaps are in the current ecosystems,

635
00:38:59,840 --> 00:39:02,359
Speaker 2: and then well, what's the plan for us to fill it.

636
00:39:03,600 --> 00:39:07,400
Speaker 2: So it's very easy to say, well, I want the

637
00:39:07,440 --> 00:39:10,640
Speaker 2: government to tell us what it is or what are

638
00:39:10,640 --> 00:39:13,759
Speaker 2: they going to do to help support our ecosystem, But

639
00:39:13,800 --> 00:39:15,879
Speaker 2: I would just kind of flip it around to say, well,

640
00:39:15,880 --> 00:39:19,120
Speaker 2: what is it that we need and how could we

641
00:39:19,160 --> 00:39:20,800
Speaker 2: go about filling it?

642
00:39:20,920 --> 00:39:25,560
Speaker 3: Good advice, get on the front foot, get that orchestration going, Kelly.

643
00:39:25,640 --> 00:39:29,040
Speaker 3: That's been really fascinating. Thanks so much for coming on

644
00:39:29,120 --> 00:39:31,799
Speaker 3: the Business of Tech, and we'll, as I say, link

645
00:39:31,840 --> 00:39:34,600
Speaker 3: to that report and hopefully get some feedback from our

646
00:39:34,640 --> 00:39:38,280
Speaker 3: own listeners about that dynamic conversation that you're just starting

647
00:39:38,280 --> 00:39:39,919
Speaker 3: to spark. So thanks very much.

648
00:39:40,320 --> 00:39:44,520
Speaker 2: Yeah, thank you, Peter, welcome a lot of additional discussion

649
00:39:44,600 --> 00:39:46,719
Speaker 2: on it, and appreciate you having me on.

650
00:39:52,640 --> 00:39:54,960
Speaker 1: Thanks to Kelly Newton for coming on. You'll find a

651
00:39:55,000 --> 00:39:58,560
Speaker 1: link to the Boston Consulting Group report in the show notes.

652
00:39:58,600 --> 00:40:01,600
Speaker 1: Go to the podcast section at business deesk dot co

653
00:40:01,880 --> 00:40:06,040
Speaker 1: dot nz. Stream the Business of Tech podcast on iHeartRadio

654
00:40:06,320 --> 00:40:10,560
Speaker 1: or wherever you get your podcasts. Next week Trump's approach

655
00:40:10,760 --> 00:40:13,879
Speaker 1: to artificial intelligence. We get the lowdown from a top

656
00:40:13,960 --> 00:40:17,600
Speaker 1: government AI policy expert who was in the US looking

657
00:40:17,640 --> 00:40:21,640
Speaker 1: at AI policy and regulation as Trump won the election

658
00:40:22,000 --> 00:40:23,520
Speaker 1: that would return him to the White House.

659
00:40:23,600 --> 00:40:24,920
Speaker 3: That's next Thursday.

660
00:40:25,239 --> 00:40:26,040
Speaker 1: I'll catch you then