European business models: a benchmark for New Zealand companies
By Sergio Formas,
Innovation is one of the main drivers of economic growth, but the OECD ranks New Zealand as a poor performer in this regard.
Based on factors like R&D and the level of collaboration between universities and businesses, our country is badly placed (23rd out of 30 countries). One of the principal reasons is local institutions simply do not work together to extract the potential and creativity of researchers and entrepreneurs. The few resources available to New Zealand businesses for innovation capital are aimed mainly at manufacturing products for the domestic market. This is exactly the opposite of what European businesses do, where efforts are concentrated towards producing innovation, and R&D focused on international markets.
The experiences of countries like Belgium, Netherland, Germany, Denmark and Sweden have a common denominator, namely, collaboration. In these countries, all parties are committed to transfer knowledge and innovation between them, generating strong synergistic networks. European business models support the transfer of knowledge within industries and regions, generating business opportunities. This leads to new centres of social activity, innovation and economic growth.
New Zealand is ranked at the bottom of the OECD in R&D tax concessions. Moreover, the country is positioned 21st out of 30 OECD nations regarding the registration of new patents. This lack of innovation can be explained by the low level of local and international capital investment, and because our economy is still primary industry-based, which requires a lower level of R&D.
Economic growth is also measured by the level of infrastructure development in a country. In this regard, New Zealand is ranked below the OECD average and is positioned 34th out of 125 countries for the period 2010-2011.Although the bigger cities in New Zealand, like Auckland and Wellington, have high standards and quality of life, their level of infrastructure are relatively poor compared to similar cities in the world, for example, Brisbane, Melbourne, Adelaide, Seattle, Vancouver and Copenhagen.
In this regard, we can learn from the experience of Copenhagen in Denmark. This city has been able to reinvent itself in the last few years, becoming a vibrant nucleus of economic activity in the Euro zone. The strategy used is simple: the city has created a network of services, resources and infrastructure, able to support different types of industries (financial institutions, innovation hubs and so on) offering advantages relative to other cities in the region, such as Hamburg, Amsterdam and Stockholm. This is an interesting model, and one worthy of being copied by New Zealand. The opportunity exists to convert New Zealand (especially Auckland and Christchurch) into centralised business hubs, and to be a future connection point between the Asia-Pacific region and the rest of the world.
European countries are a powerhouse of innovation and creativity thanks to the interaction of three parties – universities, private sector and government – that are tightly integrated and committed to knowledge creation. This allows them to capitalise on the platforms created by R&D transfer and economic development. The components supporting these parties and this model are:
· Governments, playing a vital role in creating the right environment to incentivise business growth through collaboration, and R&D promotion between the private sector and research institutions (universities). At the same time, governments are able to centralise efforts and allocate resources efficiently where required (e.g. skilled labour, infrastructure, communication and services)
· Universities are at the centre of research and development and knowledge transfer, and are able to network with other institutions at regional and international level
· Businesses operate using the distinctive blueprints of European business models, which are based on collaboration and co-operation. They are constantly investigating market niches and actively offering new solutions based on R&D and innovation. In this regard, the extensive knowledge of their customers’ needs allow them to deliver excellent services and quality, with a focus on being the best but not the biggest
In summary, European businesses facilitate knowledge transfer on three levels:
· Development of consensus platforms for an effective R&D creation
· Knowledge transfer at local and international level
· Value creation through a robust innovation space
New Zealand companies have much to learn from their European counterparts, adding value through focusing on core activities, creating long-term relationship with customers and key partners and promoting innovation as a key driver
Sergio Formas is the quality manager at Integro Foods NZ Ltd, a GrainCorp company, and MBA student at Massey University