The below article was published recently in the New Zealand Herald, New Zealand’s largest circulated newspaper. In it, Andrew Kelly shares his views on multinational engagement in this region as part of a special edition on Capital Markets.

Good at ideas, not so good at going global

Like them or hate them, multi-national companies are a fact of life. They now deliver the vast majority of the goods we consume, at the lowest prices ever seen, and with consistent and ever-improving quality.

Think about cars, phones, planes and TV screens – the trappings of modern life. They have all become more available, better quality and relatively cheaper every year.

But there’s one tiny place where multi-nationals are not having an impact in New Zealand, and that is innovation.

Ever since the drought of venture capital began in 2008, multi-nationals have become more important on the global stage as the largest single investors in emerging technologies. And they invest in many different ways, so it’s impossible to count the true total.

In the past 10 years the majority of multi-national companies have established an internal venture fund – a pool of sometimes hundreds of millions of dollars dedicated to investing in emerging technologies.

In the world of food and agriculture, the strong suits of our economy, this includes firms such as Nestle, Bayer, Syngenta, and GlaxoSmithKline.

Multi-nationals have also embraced “open innovation” – a frank recognition that their own research and development labs are tiny compared to the global effort from universities and entrepreneurs, and that they must look outside their own companies for the best new ideas.

Also, the multi-nationals’ R&D budgets are increasingly being spent outside their firms in collaborative research.

In the United States they even co-locate their research teams into university faculties so as to get synergies with academic excellence.

But New Zealand is failing to get their attention. There is no denying we live in a small country. But multi-nationals tend to equate population size with innovation and write us off as less than 0.1 per cent of the world’s innovation, and therefore not worth looking at.

Their global staff are mostly based in the US and Europe – and increasingly China, so this view is reinforced all the time – their internal conversations never mention New Zealand.

The tyranny of distance is also alive and kicking – I’ve heard multi-national leaders say “a good idea out of New Zealand has to be better than others, because it’s so damn hard to deal across those time zones.” I’ve had a teleconference request for 3am our time – just because they didn’t realise where we were.

Finally, and much to my chagrin as an ambassador for New Zealand innovation, they criticise us for having half-baked ideas. Multi-nationals, where expected growth rates amount to millions of dollars of new revenue every week, seek out fully developed products or technologies they can deliver to their global consumers quickly and easily.

New Zealand ideas are seldom like that. Our entrepreneurs often lack multi-national experience, and we can’t just walk down the road to learn from a real multi-national working environment. We are good at ideas but not so good at going global.

There are some strong trends in multi-national firms’ behaviour which we, as a nation, must learn to exploit. Due to their push into Open Innovation, most of the big companies publish lists of what they are looking for. These are usually new technologies that will improve or add to their global products, sometimes new technology platforms or capabilities they can envisage but no-one has invented yet.

If you’re an entrepreneur, read these lists, and see if your innovation can fit one of the (unmet) needs. Then try to frame it in their language.

Multi-nationals mostly divide the world up into regions and have “scouts” covering each region. Sadly New Zealand is always lumped in with a huge and disparate group. Being bundled in a region that includes China, India or Indonesia means we have to work harder for attention.

If you want to deal with a multi-national, find out how they are structured and who is responsible. Go in through the right door.

Multi-national firms are being swept up in a maelstrom of mergers. Nearly half the multi-national partners involved with our firm have recently gone through a major merger.

Kiwis often base a business relationship on a personal one. When that person suddenly disappears, you can face a real setback. Instead you should seek broad and robust relationships so you not only know the key person in that firm, but also their bosses, peers or subordinates. That way, when the inevitable happens, you have hugely increased your chance of continuing the relationship.

Finally, and maybe the hardest task of all, is that New Zealanders need to seek multi-national experience. We need to work in those high pressure, globally facing environments offshore.

We should reconceive the traditional kiwi OE to include mid-career experiences and find ways to welcome and encourage people to come back.

Like them or hate them, multi-nationals dominate our lives, and like the best of friends or the worst of enemies, it helps if you understand how they tick.

By Andrew Kelly, Executive Director and Co-founder of BioPacific Partners.

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