Have we stopped ourselves from being our best version because we’re scared of the unknowns we’ll have to cross or the outcomes it may or may not bring?
I recall a popular article that has done the rounds lately which highlights a hypothetical (yet highly likely) conversation between a Chief Executive Officer (CEO) and Chief Financial Officer (CFO), where the CFO asks: ‘What if we invest in training our employees and they leave?’ and the CEO responds: ‘What if we don’t and they stay?’
It’s a classic conundrum which I draw strong parallels to when I hear the many colleagues I encounter say ‘we can’t invest in research and development (R&D) because the outcomes are too unknown.’ Simply put, yes they are – but we also know it’s entirely impossible to know what tomorrow will bring, which is precisely why we should invest… because we don’t know what tomorrow will bring.
Time to become the CEO
It’s been official for some time now – when it comes to business growth, we as a nation take the CFO approach and don’t invest much in business R&D. According to the latest data on 34 Organisation for Economic Cooperation and Development countries, New Zealand ranks 28th for its R&D spending as a percentage of Gross Domestic Product. It’s well behind the leaders South Korea, Israel, Japan, Finland, and Sweden, with our business sector R&D spend comparatively low compared to other small advanced economies.
But why? Do we not see the value like the CEO? Are we too content with our share of the pie (however small that may be), or too busy in day to day operations? Is growth too risky with the current market climate, or have we simply got other priorities? They’re all valid reasons and likely conversation stoppers right there, but if investment and return cycles are anything to go by, the age old adage ‘what goes around comes around’ holds true – be it for our children, mortgage, or even our own selves.
We need to acknowledge that R&D is a long term vision goal, and if we’re to invest it should be in what we hold dear to us or in something that is truly transformational – and if that isn’t reason enough, as a source of bread and butter for us through potential business growth opportunities!
R&D is important for growth and even survival
A recent panel data analysis on economic growth in the European Union confirmed that in order to ensure sustainable economic growth performance, it’s necessary to allocate more resources to R&D activities. Many of our member companies are small to medium enterprises, where a recent report by the NZ Ministry of Business, Innovation and Employment outlined they make up about 97% of our nations businesses, with almost 70% being single-worker run.
With enterprises of fewer than 20 employees having recorded lower “survival rates” than larger firms, with roughly a quarter of them failing within three years from 2010, it’s become clear that at some point, business owners will have to critically evaluate the future of their business R&D activities. This message came through clearly in our recent Executive Board meeting where strong member engagement is now required to progress R&D projects, with HERA stepping back to let businesses lead this work and adjusting our role to be the catalyst and support system to assist them in their growth phase versus the driver of it.
We’ve recently implemented this step in our proposed offshore fish farm project which looks to create business opportunities in structure and technology development for an autonomous fish farm to help the NZ Aquaculture industry expand their exports to meet their target of $1 billion by 2025. Various consultation workshops to connect key players and flesh out a loose work program have been executed and our industry members are now in the process of assessing their commitment level to progress forward. To assist, we’ve developed a valuable assessment tool package which explains as transparently as possible the project targets, expectations, potential ownership structures, and predicted return on investment so they can make as an informed ‘risk’ decision as possible.
The size of your vision can impact your business growth or even its survival for that matter.
At HERA we believe early investment will pay off big dividends in the long run, and this year our Industry Development team are committed to launching a survey campaign inviting our members to participate in a self-assessment exercise to help us better identify your business drivers and potential for growth for future industry sustainability in a global market.
Let’s think big. Let’s take charge. Let’s own our future.
So let’s rephrase the earlier CFO-CEO conversation with you in the CEO seat this time – how would you respond if asked, ‘What if you were to invest in your business growth and it didn’t work out?’ We hope you might first consider how important your business is to you and how you’ll take care of it in the long run and confidently answer with: ‘What is the size of my vision?’
Inspired to know more or have something to say? Contact our Manager Industry Development Dr Boaz Habib.