This doesn’t seem to be a universally accepted proposition in New Zealand. The total innovation rate for New Zealand businesses is less than 50%.

Total innovation rate for New Zealand businessesThink Walkman and iPod. Innovation can kill a product. Think Blockbuster and Netflix. Innovation can kill a company.

Admittedly those are extreme and often used examples of disruptive innovation and “replacing goods or services being phased out” is not a high ranking reason for innovating in New Zealand.

Reasons for innovating in New ZealandThe impact of more subtle innovation is perhaps less headline worthy. How do utility companies send you the invoice for their services? Do they come in the post or arrive by email? It’s probably your choice. This small innovation which changes the way in which the bill is delivered (to align with your preference) doesn’t change the core service (getting your power) but it improves the overall customer experience and reduces costs.

Responding to customers and reducing costs are both recognised by New Zealand businesses as important reasons to innovate. However, the number one reason New Zealand businesses say that they innovate (more than 80% of all innovating businesses) is to increase revenue. If this is going to happen, then innovation needs to create value for customers. If people can’t see the value in something then they won’t be paying for it.

Surely all New Zealand businesses want to survive and to thrive? What about the more than 50% of NZ businesses who say that they are not innovating? Why are they not innovating?

The two most significant barriers to innovation identified by New Zealand businesses are the cost to develop or introduce innovation and a lack of management resources.

Main barriers to innovation for businesses in New ZealandThese challenges can seem significant when viewed through the lens of innovation by New Zealand businesses getting global recognition. Xero is a high-tech business that is building a cloud platform offered globally to “change how you tackle the books”. It was named at number 1 on the Forbes Innovative Growth Companies List in both 2014 and 2015. At the helm, Rod Drury has been recognised internationally for his skills as an entrepreneur. Xero has recently confirmed that it will be able to break even without further capital raising but there has been a long period of significant cost. The company’s most recent round raised $147m. It is easy to see why cost and lack of management resources may be perceived as a barrier.

However, innovation does not only happen at that end of the spectrum or at that scale. Coffix sells cups of coffee in Auckland and Hamilton. It was started by an engineer who wanted to make buying a cup of coffee more affordable. The innovation came in the business model. It involved maintaining quality but reducing costs (by only offering take-away coffees and reducing the options available – no caramel soy decaf lattes on offer) and did not require any particular innovation management resource to develop. It is creating value for customers and revenue for the business.

New Zealand provides a very supportive environment for innovation. We score highly on the OECD’s ease of entrepreneurship index and the availability of venture capital to entrepreneurs. The most prevalent sources of ideas or information for innovation, existing staff and customers, are available to every business in operation.

At its essence innovation is simply making things easier, better or more convenient for customers. There are always opportunities to improve. A culture of innovation needs to permeate all New Zealand businesses.

See all of  Jonathan’s FigureNZ data boards for more insights.


Jonathan has a keen interest in innovation, commercialisation and entrepreneurship. He has worked in law and banking in New Zealand, Europe and Asia and is the CEO of boutique law firm TGT Legal. After completing a Master of Commercialisation and Entrepreneurship, he co-founded Wine Grenade, a company which has commercialised intellectual property developed by Plant and Food Research. Wine Grenade has been a finalist in the NZ Hi-Tech Awards and the NZ Innovator Awards.

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