Dairy dilemma an opportunity for NZ-specific solutions

22 May 2017
Head and shoulders and upper torso portrait of Kenneth, against the windows of a building. Kenneth is wearing a suit jacket, and open collared business shirt. His head is tilted on a slight angle, and looks as though he is about to smile. Kenneth is clean-shaven, with short light grey hair, a high forehead, and a widows peak.
Professor Kenneth Husted

Professor Kenneth Husted responds to a Newsroom story about shifting dairy cows into barns.

In the world of innovation, finding a worthy problem is often the biggest challenge. Some will call New Zealand’s primary industry a problem-rich environment, which is said in far from a negative spirit. Innovation thrives on problems – the important question is how we deal with the problems.

Ideally, these problems should be seen as innovation opportunities to develop solutions specific for New Zealand’s situation and to stimulate economic growth through a thriving technology sector that supports our primary industry. This would involve universities and other science-based institutions in providing advanced knowledge developed here or elsewhere. It would also involve firms that develop and manufacture technologies and solutions which can be implemented by primary industry and its stakeholders.

In some situations, it can be an advantage to look abroad and see if there is a ready “plug-and-play” solution which we can use to solve a problem at our end. The argument is we should not reinvent the wheel. This is true, but only if the problem solved is exactly the same at our end and abroad, and the offered solution is actually proven to be optimal. However, problems often differ on several dimensions across contexts.

Shifting dairy cows into barns and, in the same process, introducing automatic milking systems and similar technologies is an example of taking a solution developed in Europe and North America to solve some of our environmental and productivity challenges. In order for this solution to fit, we would need to make fundamental changes in the way we produce milk, most notably shifting from a grass-based system to grains. This shift will not only lead to the erosion of important competitive advantages of the NZ Dairy industry with wide range consequences, it will also be a lost opportunity for developing and growing our own technology sector through developing NZ-specific solutions.

The better and more forward-looking alternative would be to develop solutions which reinforce already established competitive advantages in the primary industry. There are at least three key advantages of this approach:

  1. It solves a specific problem in the primary sector without eroding existing competitive advantages.

  2. It stimulates growth and development in the local technology sector.

  3. Primary industry worldwide often uses technology providers to foster innovation and create new competitive advantages. A growing local technology industry will increase the ability of the local primary industry to innovate through the use of tailored technology.

The argument that is often put forward against developing technologies specific for New Zealand is that we are a too small market and it is difficult to scale solutions relevant for a small market to the global market. This is a myth for many technology-based industries. The reality is, more often than not, successful technologies are first developed with a particular scope in mind. Only after the knowledge and skill to master the niche market has been established, can the move be made towards more general purpose solutions.

The market diffusion of the tractor is a famous example in this regard. When the first more reliable and affordable tractors were introduced in the 1910s, they initially focused on wheat farming only. This was followed by tractor models that were adapted to corn farming. Twenty years later, the focus shifted away from these specific niches, towards developing general purpose tractors that were versatile enough to address a wide range of work needs on farms. The niches not only provide the interesting problems; they also help in maturing the technology.

Closer to home, Compac is an excellent example of a technology firm that started in a specialised niche – kiwifruit – and today develops, manufactures and installs word-class fruit sorting equipment across a wide range of fruits.

In summary, it is important to reframe our minds and see our problems as golden innovation opportunities. We can and should use science, technology and creativity to develop new solutions adapted to our unique context. We can and should use business development and entrepreneurship to embed these solutions in technology firms that see a competitive advantage by staying close to the golden goose – the problem-rich environment in NZ.

Professor Kenneth Husted
is a member of the Department of Management and International Business, in the University of Auckland's Business School.

Used with permission from NewsroomDairy dilemma an opportunity for NZ-specific solutions published on Monday 22 May 2017.