The Idealog Guide to Weightless Exports

NOVEMBER-DECEMBER 2011/ IDEALOG / 87

Idealog Guide to

WeightlessExportingHOW TO TAKE YOUR IDEAS TO THE WORLD WITHOUT HAVING TO PACK THEM UP AND SHIP THEM OFF

TelstraClear. Now’s good. 0508 555 500www.telstraclear.co.nz

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GUIDE TO WEIGHTLESS EXPORTING

Weightless ExportingThe term ‘weightless exporting’ has been floating around for a while, flitting in and out of other discussions about innovation and commercialisation. So we figured it was time to nail that sucker to the wall, because it’s vital to the future of New Zealand – and to anyone who lives here and wants to earn more than a farm worker’s wage.

Contents

WeightlessWhat is

Exporting?

Why are you banging on about this?

Creative licensing beginnersFOR

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Banking Weightless Exportingon

US and themForeigners –

younger, cheaper and better than you

It’s a big

after allworldOur man

Chinain

Making it in Malaysia

Making it sing inSingapore

New ideas in old Europe

Apple and the Apps revolution

Does weightless mean treading lightly?

How do I get on ‘the Google’?

Keeping it Kiwi, but not just Kiwi, or too Kiwi

Everywhere you go, always take the profits with you

In association with Export New Zealand and proudly brought to you by:

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Put simply, weightless exporting is the business of selling ideas raw, usually by licensing or some sort of contractual agreement, instead of making and shipping products from here in New Zealand, or hiring service staff and consultants to work with clients

WeightlessWhat is

Exporting?

Icebreaker’s clothing is built on a primary production platform – it makes snazzy outdoorwear out of wool. It started out as a purely weighted product, with wool raised in New Zealand, clothes made here, and then shipped all over the world. But like some big ol’ balloon, as it’s been blown up larger and larger, it’s become more and more weightless. The manufacturing has been moved to Shanghai, and the emphasis placed on design from the outset has become a major tool for adding value to a business that now employs more than 1,000 people and buys about a fifth of New Zealand’s merino wool.

Increasingly, what it’s really exporting is an idea, as chief executive Jeremy Moon puts it: “It’s about our relationship to nature, and to each other. And it’s about new ideas and doing things differently, being an authentic natural choice in an age of synthetics, and seeing how far we can develop this simple idea.”

But most importantly Icebreaker has maintained its core connection with New Zealand and the wool industry its whole story is based on. Most recently, this has been expressed in its Baacode system, which customers can use to trace their garment back to the farm it was grown on.

ICEBREAKER’S WEIGHTLESS WOOLLIES

FORMWAY’S LIFE CHAIR WAS DESIGNED AND DEVELOPED IN NEW ZEALAND, BUT SHIFTED

TO PRODUCTION IN THE NORTHERN HEMISPHERE ON ITS WAY TO SELLING MORE THAN ONE MILLION UNITS.

Weightless success

Grenville Main



THE DAIRY COLLECTIVE – HOW TO MAKE

YOGHURT TRAVELFresh yoghurt is not known for keeping for long periods

of time. When Ofer Shenhav and Angus Allan of

Auckland-based The Dairy Collective wanted to go

offshore, they could have frozen up batches and

shipped them, but they may have ended up being some of

the most expensive dairy produce in history and not as

fresh as they once were. Instead they shipped the

recipe out to the UK, got the yoghurt made there, and started stocking the shelves of big players like Sainsbury’s, Waitrose and Ocado. Crucially, they not

only sold the system, process and the component parts of the intellectual property –

their special way of making yoghurt – but they also took the brand over there as well.

The jaw-dropping appeal of Mark Zuckerberg’s meteoric rise to billionaire status is partly about the weightless way in which Facebook was originally created using just a laptop and an internet connection – in other words, how weightless its global spread has been. Facebook now gets more traffic than Google in the US. If Facebook were a country, it would be the third largest in the world.

MARK ZUCKERBERG – THE WEIGHTLESS BILLIONAIRE

▲

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LES MILLS SET UP HIS FIRST GYM IN 1968. IT COULD HAVE

SO EASILY HAVE BECOME JUST A SINECURE FOR A RETIRING ATHLETE. INSTEAD, UNDER THE GUIDANCE OF HIS SON PHILLIP, IT HAS SPAWNED

A WORLD-FAMOUS RANGE OF GROUP FITNESS CLASSES THAT

IS NOW LICENSED TO 14,000 GYMS WORLDWIDE

Weightless successCRUSHING THE COMPETITIONEverEdge IP’s experiences in licensing the Crushpak crushable plastic food pottle demonstrates how the need for scale can all add up.

Adams says, “We prepared the commercialisation strategy and got ready to take it to market. It became apparent very quickly that a single factory in the US could produce about a million of these units a day and that’s one of dozens of these factories around the US.

“In New Zealand the annual consumption of this product is about six million units, so a week’s worth of US production from one factory could supply New Zealand for a year.

“So even assuming we had been able to secure the capital to build a factory to supply at the rate required to supply the US, and assuming we could ship those units to LA and land them there, and assuming we do that every single day, day in day out, we still wouldn’t have had the distribution to move a million a day. So there was no way that technology was going to be commercialised in a weighted way.”

EverEdge IP licensed Crushpak and Adams says it’s since been “phenomenally successful”.

“It’s generating millions of dollars of royalties annual and those revenues are 90 percent margin.

“So you can stuff things into containers and compete toe to toe with much better resourced competitors in their home markets, or you can use a licensing business model and achieve extremely high-margin revenue. To me the choice is both stark and obvious.”

THENEXTPLAYS.COM – SUCCESS ON THE CARDS

When I first encountered NextPlays, it was a bunch of

ideas on cards being touted by social entrepreneur Peter

Salmon from his Wellington-based outfit Fische Consulting

like he was the world’s first designer conjurer. Described

by the company as “part research, part collaborative workshops, part prototyping labs” the NextPlay system

brings together 70 case studies or ‘plays’ from around the world, each showing one

process the company concerned has used to grab

a little more sustainable market share. Users can analyse these ‘plays’ in

several different ways. One approach takes examples from the point of view of a list of key sustainable

innovation criteria. These include Authenticate,

Engage, Go Long, Loops, Mixed, Needs Based, and

Simplify. Another allows you to choose from the same

case studies in light of Doblin’s Ten Types of

Innovation to see where the innovation occurred, in

Finance, Process, Offering or Delivery. Then the result of each play is catergorised as Refined, New and Shifted.

The system has been used for Air New Zealand, Kraft, Coca Cola, Shell as well as a social

project called ‘Sociedades Del Futuro’ in Mexico. So it looks like it might be a good way to

pick a winner. The only ‘weight’ involved is the trainer and the training

materials: thenextplays.com.

Peter Salmon

EverEdge IP CEO Paul Adams and senior VP, operations, Edward Scott.

IN BRIEFBooktrack was

launched by Mark and Paul Cameron in

August, with the help of AJ Park

It represents the ultimate in the

weightless exporting model – highly

effi cient, and with global reach

CONTACTTo fi nd out more, contact Hadleigh

Brown,

09 353 8216,

[email protected],

www.ajpark.com

Want to hear a story?Once upon a time, not so long ago, two Kiwi guys had a crazy idea. ‘Let’s reinvent reading,’ they said. And so they did

It’s exciting, as an advisor, to see your client launching successfully and progressing from having an initial prototype and an idea to turning it into something that can be downloaded from the app store

Researcher Kelly Sheerin's work could

potentially be used to assist the

NZRU, Super 14 and the ACC.

(L-R) Paul Cameron, Brooke Geahan, Derek Handley and Mark Cameron launched Booktrack in August. IP firm AJ Park was instrumental in ensuring the technology was protected and appropriately commercialised, using its well-established relationships with overseas associates to help file patent applications around the world.

Facebook director of global creative solutions (and Kiwi expat) Mark D’Arcy is one of a collection of big names backing the venture.

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SCALE IT UPIn the world of tangible as opposed to digital products, one of the immediate challenges facing us is that even if our manufacturing were competitively priced on the global market, which it’s not, we wouldn’t have enough capacity to make enough stuff for the biggest markets in the world. It’s one thing to make a product in New Zealand, it’s another to set up the infrastructure that a market, like the US, demands.

Adams says, “Often you get very successful products but they then get an order from overseas and it’s 10, 100 or 1,000 times the company’s ability to fulfil that order.” And you can’t wait until you get the big order before tackling the problem.

“The market abhors a vacuum. If there’s a great new product out there but the original creator can’t supply it, someone else will. We’ve seen many examples where New Zealand products were very successful here, the firm tried to supply the market from New Zealand, simply wasn’t able to and other, better resourced players from overseas jumped in and took the market.”

One way to get around this is to create things that can be scaled up much more easily. You can’t build a new factory overnight, but you might be able to find one somewhere on the planet that can get you what you need pretty quickly. Having a digital product also helps.

AJ Park’s Mark Hargreaves says, “If you build your model around weightless exporting, your ability to scale is greater. Software as a service is hugely scalable; you can grow quite rapidly.”

Why are you banging on about this?

Closing the knowledge gap in New Zealand’s economy

YOU TAKE THE SUPPLY ROAD, AND I’LL TAKE

THE KNOW ROAD

You can commercialise anything through

three models:

Sell the intellectual property

License the intellectual property

Incorporate the technology into

a product, make it and ship it

Adams says: “Our de facto commercialisation has been

the third [manufacturing] and it has been not especially

successful. The net commercial output is

remarkably low. Maybe we need to rethink the model

we’re using?”

DON’T PAY THE POSTAGE As New Zealand is the last bus stop on the planet, shipping is costly and comes with an inherent, if relatively small, risk of it not getting there. Sending a 20-foot container to the UK can set you back a couple of thousand dollars, and that’s without factoring in the handling costs. Then it can take about a month to get to its destination. This can play havoc with your forward planning and cash flow, especially in situations when somebody wants small amounts of products fast, an even more costly business per unit than sending whole container loads. With rising fuel costs and the threat of the imposition of carbon taxing, shipping isn’t going to get cheaper anytime soon.

VALUE OF THE WEIGHTLESS ECONOMY PER CAPITA:

NEW ZEALAND $33

SINGAPORE $263

US $279

FINLAND $322

SWEDEN $499



ONCE MORE INTO BREACH, DEAR FRIENDS

It’s madness to do all that negotiating to license a

product if you don’t bother to follow up to make sure they’re

paying you what they owe. Hargreaves says, “You always have audit provisions in your

license, but they are more honoured in the breach than

anything else. Often the audit is not carried out, and when they are carried out, more often than not the licensee has been under-reporting

the royalties. So you do need to keep an eye on them.” As

anyone who runs a small business will tell you, don’t count on the big corporates to be the best payers. The license for a product that may be your life and soul might end up stuffed in a

bottom draw somewhere in MegaCorp HQ and seldom

seen again. Stay in touch with your licensees or risk losing

touch with your product.

It’s easy to think that the licensing exists in a parallel universe only inhabited by legal eagles, but it’s crucial to maximise your returns Spend time understanding the market

you are trying to plug into

Match your intellectual property protection to your commercialisation

strategy – you can’t earn royalties effectively from places where your

IP is not protected

Spend a lot of time working on how the product gets to the market offshore and

to the end user – is there government procurement going on?

Understand what each party wants out of the license, not just how much money you

want and whether they can pay it

Understand that it takes a long time – it is not uncommon for licensing

negotiations to take a year or more. The more complex the technology and the more important to the licensee, the

longer it will take to get a result

Don’t underestimate the work. Don’t think that’s it’s always necessarily

going to be easy

If the license you are offering is going to be part of a large portfolio for the licensee,

how will it fit in their existing lines? Do they have the same expectations for it, or is it just one of many products they are licensing and they are not going to push

it that hard?

THE PROCESS

Mark Hargreaves

Creative licensing beginnersFOR

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Banking Weightless Exportingon

Banks can be gun-shy when you start talking about intangible investments. But banks here are increasingly willing to take a look at propositions that don’t necessarily fit into a shipping container

P R O D U C T I S A F A I L U R E

P R O D U C T I S A S U C C E S S

S T R O N G I P P O S I T I O N

W E A K I P P O S I T I O N

STRONG IP VS

WEAK IP

NO-ONE COPIES YOU

NO-ONE COPIES YOU

EVERYONE COPIES YOU

SUSTAINABLE MARGINS

SMEs, investors, CRIs, universities, research institutes, private R&D

Corporates, governments

SUPPLY OF IDEAS

COMMERCIALISATION

‘PINCH POINT’

DEMAND FOR INNOVATION PRODUCTS

I N A B I L I T Y T O M O V E T O W A R D S C O M M E R C I A L I S AT I O N

I D E A P R O D U C T R E A L I T Y

R I S K AV E R S I O N D I S C O U R A G E S

M O V I N G T O W A R D S C O M M E R C I A L I S AT I O N

COMMERCIALISATION IS WHAT COUNTSThere is no shortage of incredible ideas out there. And there’s huge demand for innovative products. So how do you make them meet?

Source: EverEdge IP

IS THERE A CLEAR REVENUE

STREAM FOR THE FUTURE?

THE NUMBERSIn the fi nancial year to

March 2011, Smartfoods’ exports

accounted for 12 percent of total

turnover. In the next fi nancial year, they will account for 24 percent. That’s 143

percent growth across its total

export business.

Exports for Asia are growing ahead of that at an average of more than 670 percent over

the same year.

CONTACTNew Zealand Trade

and Enterprise,www.nzte.govt.nz

Bringing breakfast to the worldWith its unique formulations, ongoing product development and speed to market, Kiwi cereal maker Smartfoods is in a bowl of its own

Smartfoods founders Justin Hall and Vicky Taylor credit New Zealand Trade and Enterprise for helping their business grow, expand, and connect with other Kiwi exporters.

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Duncan Catanach

US and them

There are two types of companies in the US – the quick and the dead

You can make very good money in the US, but you have to be well prepared. You have to be on your game – because everybody else is



ORION HEALTH – YOURSELF OR SOMEONE LIKE YOUIn the 16 years since Orion Health was founded, the firm has gone from a five-person startup to New Zealand’s largest software company. Its specialist healthcare programs might one day save your life, or the life of a loved one. They may already have done so. Your doctor almost certainly uses Orion products, as does your local hospital every time a new patient arrives.

Orion’s Concerto Portal has helped sweep away centuries of staggering down hospital corridors clutching dog-eared paper files. It allows medical staff access to a single view of their patients’ computerised admissions records, blood test, x-ray results and more.

The firm now has turnover of around $60 million and 500 staff, with offices in the US, UK, Spain and Australia, and has just announced it is recruiting another 100.

B2P – TESTING THE WATERS B2P’s range of products sniff out serious bacterial infection in water in less than two hours, and can confirm water is drinkable in about 14. Current testing takes between 22 and 72 hours.

Influential US magazine Popular Science said: “The Thermos-size MicroMagic device lets inspectors check for E. coli on site and at every stage of food production and preparation and it produces results in 45 minutes to 10 hours.”

This is valuable: waterborne disease is estimated to cost the US healthcare system about US$100 billion. The company has set up a US company to penetrate the market.

EMENDO – CAPACITY PLANNING SOFTWAREAny fan of TV hospital dramas knows how hard it is to get the right people and equipment into the right places in hospitals at the right time. This is what Emendo CapPlan does, and apparently it does it pretty well. According to the firm Bedford NHS Trust in the United Kingdom saved US$500,000 in the first four months of using the software. Since 2007 their saving in inpatient areas alone has averaged approximately US$1.2 million a year.

MATAKINA INTERNATIONAL – SIMPLY THE BREAST Matakina’s Volpara breast screening software has proved itself as a more accurate and lower cost alternative to existing systems in the US. The company now has deals with two major breast screening hardware suppliers to use the software – a potentially US$4.3 billion market overall.

NEW ZEALAND COMPANIES DOING HEALTHY BUSINESS IN THE US

It used to be the case that having your product made somewhere else was driven by the potential for saving money. That maxim doesn’t necessarily apply anymore

Foreigners – younger, cheaper and better than you

NEW ZEALANDUS$2,740

CHINAUS$580

INDIAUS$119

A MANUFACTURING

WORKER’S AVERAGE MONTHLY WAGE

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Nearly half a billion people speak English around the world, depending on who you ask (and how slowly and loudly you ask them). That leaves a few billion adults who don’t, and some of them have cash in their pockets you might like to have in yours

ASIA IS A RICH WEB OF

CULTURAL COMPLEXITIES

AND ADVERTISERS

NEED TO HAVE A DEEP

UNDERSTANDING OF THE CULTURE

OF EACH COUNTRY THEY

MARKET TO

It’s a big after allworld

Hans Frauenlob

Knowledge is powerThanks to its global banking network, BNZ is helping Power System Consultants take its specialist knowledge to the world

IN BRIEFBNZ offers PSC a full range of day-to-day

banking services such as term loans,

overdrafts, company credit cards, internet

banking and FX online for making payments

overseas.

BNZ also assisted PSC with strategic planning, advice on board structure, and

transactional reviews. As part of the NAB

group, BNZ has banking links worldwide.

CONTACTTo fi nd out more

about BNZ Partners, please contact 0800 273 916www.bnz.co.nz

For a company like Power Systems Consultants, which is truly global, it all has to work. PSC needs to be able to do business anywhere in the world at any time, and link back into what's happening in New Zealand

(L-R) BNZ managing partner Phil Bennett and Power Systems Consultants co-founder Tony Armstrong. The partnership has been vital to PSC's global growth.

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‘Made in China’ has built up a whole load of assumptions, most of which are wrong. We spoke to Patrick English, consul general, trade commissioner, Guangzhou, to get the real deal on making ideas into reality in the most populous country in the world. He’s been visiting China for 22 years and living there for 11, so he should know

Our man Chinain

CHINA, THE BIG COUNTRY

IF YOU WERE ONE IN A MILLION IN CHINA, THERE

WOULD BE 1,300 PEOPLE JUST

LIKE YOU. CHINA WILL SOON BE THE NUMBER ONE ENGLISH-

SPEAKING COUNTRY IN THE WORLD



bout a quarter of the country’s GDP comes from manufacturing, spurred on as companies look beyond China as an entry point to Asia. Meanwhile, Malaysia is trying to increase the value of its

manufacturing, and move into the service sector. The Malaysia-New Zealand Free Trade Agreement, which came into force last year, suggests they are keen for Kiwis to get involved.

Meanwhile, the middle class is busy burgeoning in Malaysia, just as it is all over Asia, and increasing their consumption of protein and their interest in brand-driven sophisticated shopping experiences. So there’s a market there for the right products too. IP protection is in a relatively advanced state, and there’s a growing uptake of social media, with businesses using Facebook to build brands and even business-to-business networks.

All this means Fiona Acheson, trade commissioner, Malaysia, Indonesia and Brunei, reckons there are good opportunities out there for the right propositions.

“Like doing business in New Zealand, the most successful businesses tend to be those that view business as an ongoing relationship in which you invest time, money and support,” she says. “New Zealand products and services aren’t necessarily top of mind for Malaysian businesses or investors looking for opportunities.

“Assumptions that things will be similar to New Zealand or other developed markets tend to be a stumbling block.”

Victoria University’s Kim Fam says, “Malaysia and Turkey are both Islamic countries, but Malaysia is more lenient when it comes to advertising alcohol. This is because Malaysia is a multicultural country that needs to maintain social and cultural harmony with its various ethnic groups, including Malay, Chinese and Indian.”

NOT CHEAP IN CHINA

GETTING THE RIGHT ADVICE ON CHINA IS IMPORTANT,

AND NOT CHEAP. ACCORDING TO RECENT REPORTS,

LANZATECH SPENT $509,000

ON AN EMPLOYEE OF ITS INVESTOR,

QIMING VENTURE

PARTNERS, TO HELP WITH

ALL MATTERS RELATING TO THE CHINESE

MARKETNZTE has 11 staff in three offices in China. For more NZTE advice on trading in China, visit bit.ly/ojKshf.

Making it in MalaysiaIn case you have any images of Malaysia as all palm trees snorkelling, check this out: the latest World Economic Forum Global Competitiveness Report placed Malaysia 21st, four slots ahead of New Zealand at number 25 Patrick English

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Lanzatech’s team of biologists and process design engineers spend their days in a state-of-the-art lab facility in Auckland cooking up patented processes and microbes. Among other things, they convert carbon monoxide-containing gases from coal, steel manufacturing, oil refining, chemical production, as well as recycled waste, into valuable fuel and chemical products.

Over the past couple of years, the firm has entered partnerships with industrial corporations across Asia, including Chinese steelmaker Baosteel, with which it is working to commercialise its technology, IndianOil, China’s Henan Coal and Chemical Industrial Corporation and Mitsui & Co, part of Japan’s Mitsui conglomerate.

Revenues on licensing deals are just starting to trickle in, but the company reported a net loss of $14.6 million in the 12 months ended March 31, almost twice the loss of $8.4 million a year earlier, according to financial statements lodged with the Companies Office. Chief executive Jennifer Holmgren has said the firm won’t break even until the end of 2013.

Tucked away at the bottom of Malaysia, the Singapore powerhouse is becoming a key staging post for New Zealand companies looking to promote their ideas and innovation out to Asia and beyond

WHAT TO KEEP IN MIND When looking at selling a

technology product, ensure that it is one of the first

few countries to have seen the product or service. If it is a medical device,

obtaining FDA approval or EU certification or having been tested and piloted in Australia could potentially speed up its market entry.

Consumers in Singapore are used to the flash imagery from markets such as the

US and Europe, so New Zealand products

should have the same level of sophistication if not

more. Singapore is a very brand-conscious society.

Brands sell – and they sell very well.

THE ASIA OPPORTUNITY Some of the key trends

across Asia that say, yep, we will pay innovative countries to do cool

stuff for us:

Increasing disposable incomes

Growing focus on health and wellness

Growing appetite for Western/imported

products

An emphasis on convenience

Brand consciousness

Ageing population (in some markets such

as Singapore)

Increasing focus on halal certification in Malaysia,

Indonesia and Brunei (and Singapore, to some extent)

Interest in knowing the origins of a product

Growing focus on food safety

Making it sing inSingapore

LANZATECH – NOBODY SAID IT WAS EASYLINKEDINDONESIA

Indonesia has just become the world’s

second largest user of Facebook with 35

million usersThe United

States Embassy in Jakarta has about

143,000 friendsAbout 12 percent of

the world’s tweets stem from Indonesia

Ziena Jalil

KnowlEdge here.TM

EverEdge IP is a world leader in technology and intellectual property commercialisation. We understand the power of knowledge. We know how to harness that power to drive growth and create wealth. This is commercialisation. This is our edge. EVEREDGE IP

The Commercialisation Specialists.

®

Millions of tons of water. Harnessed by concrete and steel. And knowledge.

Talk to us today about how we can help you convert innovation into international [email protected] | (09) 489 2331 | www.everedgeip.com

IN BRIEFIf you’re exporting,

you’ll need to be well connected to the

globe. TelstraClear is a subsidiary of Telstra,

the world’s fi fth largest telecommunications company. Its network extends worldwide,

which means TelstraClear can offer

great leverage, particularly to

companies that operate at a trans-

Tasman level.

CONTACTTo speak to a

TelstraClear business advisor, call 0508

BUSINESS (287 463) www.telstraclear.co.

nz/business

On displayNapier-based Future Products Group – the power behind the McCafé cabinetry – has experienced untold business growth. TelstraClear has been there all the way

The company’s jump in Skyping to facilitate its export activity led to an increase in data usage – so TelstraClear recommended an upgrade

FPG expanded into Australia in the 1990s with custom-made retail and food display units, and McDonald’s contracted them to supply cabinetry for its McCafé concept stores.

TelstraClear advisor Nigel Hulena with FPG founder Jared Vaughan, who says the telco’s assistance has been invaluable.

McCafé has since gone global after being trialled in Australasia, and FPG has reaped the benefits. There are at least 1,300 McCafés in operation now – this one’s in Germany.

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New ideas in old EuropeEurope has hit the business headlines recently for all of the wrong reasons, but the credit crisis doesn’t mean that every European is skint just yet – and there are a lot of them

TOP TIPS FOR SELLING TO THE EUROPEANS

Scoliège says that before deciding to enter a new

market and on the strategy for that market any New

Zealand company should:

Have a good understanding of the market. Have one

senior New Zealander from your team in country for several months or link up

with the right* local partner, agent, reseller or distributor.

Ideally, do both.

Sell a solution, not a technology, especially

when communicating to the end user of the product directly. Engineers will like talking technology, while

the purchasing, marketing or finance directors want

solutions that relate to their objectives and problems.

Be persistence and patient. A good commercial

relationship is not built in one or in two meetings. Both

commercial partners and customers want to see that you are committed to the

market and that they can trust you to still be there in three

years’ time. Appearing quickly without good preparation to

then withdraw again can hurt your image more than taking your time and entering when

you are ready.

Know that cultures differ. The main points of a German

customer might be very different from those of, say,

the Australian customer, and therefore the benefit to

them and the positioning might vary a lot.

*The wrong one will cost you money and time, and cause you severe frustration

and embarrassment

Marcus Scoliège



Time to get New Zealand out from under the cloudInnovation in New Zealand is sometimes treated like a capital offense. Here’s why

TO BE THE BEST, WORK

WITH THE BEST. HOW

CAN YOU SOAR LIKE AN EAGLE

IF YOU’RE SURROUNDED BY TURKEYS?

You don’t need to set up a factory, you don’t need to invest in plant and equipment, you don’t need to get expensive finance or establish extensive distribution channels

Mark Hargreaves

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Keeping it Kiwi, but not just Kiwi, or too KiwiDNA’s Grenville Main is a man who knows how to sell Kiwi stuff abroad. He warns weightless exporters that leveraging off of our strong New Zealand identity is one thing, but leaning on it is another thing altogether

THE CHALLENGES OF BRANDING WHILE WEIGHTLESSYour brand captures and communicates the uniqueness of the idea you’re selling. But there are some challenges: there can be less physical product to stick things to, both literally and metaphorically; it can be more challenging to centrally control your brand if you are not in direct control of production; conversely, it can be easier to control all branding elements in a digital environment, and your customers will expect you to do so.

Grenville Main says while the Kiwi attitude factor and ‘Kiwi on the edge hoo-ha’ holds a degree of allure, New Zealand needs to aim at something else entirely: to get recognised as a design engine.

Designing customer experience

AT WE IDENTIFY AND EXAMINE CUSTOMER EXPERIENCE ISSUES. AT WE DELIVER ON THAT THINKING.

WE HELP TAKE KIWI BUSINESS TO THE WORLD.

IN BRIEFEverEdge IP helps innovators make

money from ideas. It guides clients through the commercialisation process, from start to

fi nish. It’s also independent of the

patent attorney industry and provides objective, insightful and robust advice

around if and how to commercialise

technology. The EverEdge IP team has been there, done that

– two thirds of company revenue still

comes from commercialising its

own technologies, so its advice is pragmatic

and deal orientated.

CONTACTPaul Adams, EverEdge

IP, 09 489 2331,

[email protected],

www.everedgeip.com

In vino veritasTwo homegrown vineyard managers are on the verge of transforming viticulture around the world, thanks to a little help from our friends

Researcher Kelly Sheerin's work could

potentially be used to assist the

NZRU, Super 14 and the ACC.

Wickham says EverEdge IP guided Klima through the whole commercialisation process – and that if they’d done what they thought was the right thing, they’d be in ‘all sorts of strife right now’. EverEdge IP CEO Paul Adams says failure often happens because the commercialisation process is mismanaged, not because an idea is terrible.

Klima founders Marcus Wickham and Nigel George were astounded when they first saw their highly successful pruning mechanism in action. It’s taken off since then, with German licence partner ERO Weinbau on board and licence agreements being negotiated around the world. EverEdge IP played a huge part in the company’s successful commercialisation.

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Businesses don’t come more weightless than digital businesses, but they do have to be treated every bit as seriously as any other business – and they come with their own special set of challenges

Business speed of lightAT THE

The weightless

nature of digital business

means if you can get it

going with just a laptop and a smart idea, so can

a lot of other people



Rod Drury, Sam Morgan and Sir Stephen Tindall are doing the groundwork for a new era in New Zealand connectivity.

DNA’S RULES FOR EXPORTING

SUCCESSA concept or model that’s worked in one

market won’t necessarily work

perfectly somewhere else. You may have

to fi ne-tune it.

Focus on anything you can build IP around, deliver better value

with, deliver ‘in market’ because it’s

light, and you can prove customers in that market will pay

for.

Consider adding a pinch of Kiwi attitude,

create a brand that will have customer

relevance, and drive resonance – design a

service experience that’s all about user

needs and goals.

Stand out – you may beat the tyranny of distance, but you’ll

always have to work to beat the tyranny

of indifference.

Certain sectors are more ripe because

they are light: science and technology, IT,

education, fi lm, furniture and food.

CONTACTGrenville Main, 09 489 2331 or

09 375 1592,grenville.main

@dna.co.nz, or Donna Maxwell, donna.

[email protected],

www.dna.co.nz

Ready to fl y?When it comes to exporting our great ideas, location is irrelevant – and New Zealand companies could get airborne faster with a lighter strategy from the very start

DNA head Grenville Main says client Trilogy Skincare is a great example of a business with strong IP and an ability to capitalise on the weightless model.

DNA helped BNZ take its Out Of The Box (OOTB) concept from Kiwi shores to Australia, where it lived on – very successfully – in another incarnation for parent company NAB.

Epic Beer broke with convention in creating a beer with far more hops than your average beer, and as a result is reaping the rewards, with attention from US brewers.

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Social media for beginners – in other words, pretty much everybody

ONLINE SOCIAL NETWORKING, AS OPPOSED TO THE AGELESS VERSION

OF CHATTING TO PEOPLE OR GOING TO ROTARY,

HAS NOT BEEN AROUND FOR VERY LONG

2003MYSPACE

2004FACEBOOK

2005YOUTUBE

2006TWITTER

How do I get on ‘the Google’?

GEEKS, MAKING US ALL MORE SOCIABLE

SINCE...



XERO TO HERO: ROD DRURYOnline accounting software from Xero is a great example of weightless exporting. Founded in 2006 by Rod Drury to replace the old ‘software in a box approach’, it now claims 50,000 paying business customers and 200,000 active users and has reportedly processed more than $50 billion in customer transactions. Drury says acquiring customers so quickly reinforces his strategy of using capital to grow the business “so we can take advantage of the market opportunity and position Xero as the global leader in small business accounting.” In July it acquired Paycycle in a deal worth A$1.5 million. In its last set of financials, it reported revenue of $9.3 million for the year ending March 31, up from $3 million in 2010. Despite the topline growth, the company posted a net loss of $7.6 million.

HOW NOT TO DO ITThese are excerpts from the now famous exchange between would-be freeloading weightless exporter in digital projects Simon Edhouse and sharp-witted designer David Thorne. It highlights some of the pitfalls involved in coming up with that ‘game changing’ online idea.

From: David ThorneDate: Mon 16 Nov 2009 5.27pm

To: Simon EdhouseSubject: Re: Re: Re: Logo Design

Dear Simon,Your last project was actually both commercially viable and original. Unfortunately the part that was commercially viable was not original, and the part that was original was not commercially viable. I would no doubt find your ideas more ‘cutting edge’ and original if I had travelled forward in time from the 1950s but as it stands, your ideas for technology based projects that have already been put into application by other people several years before you thought of them fail to generate the enthusiasm they possibly deserve.

From: Simon EdhouseDate: Tue 17 Nov 2009 11.07am

To: David ThorneSubject: Re: Re: Re: Re: Logo Design

You just crossed the line. You have no idea about the potential this project has. The technology allows users to network peer to peer, add contacts, share information and is potentially worth many millions of dollars and your short-sightedness just cost you any chance of being involved.

From: David ThorneDate: Tue 17 Nov 2009 1.36pm

To: Simon EdhouseSubject: Re: Re: Re: Re: Re: Logo Design

Dear Simon,So you have invented Twitter. Congratulations. This is where that time machine would definitely have come in quite handy. Regards, David.

From: Simon EdhouseDate: Tue 17 Nov 2009 3.29pm

To: David ThorneSubject: Re: Re: Re: Re: Re: Re: Logo Design

You really are a f*#$%!g idiot and have no idea what you are talking about. The project I am working on will be more successful than Twitter within a year. When I sell the project for 40 million dollars I will ignore any emails from you begging to be a part of it and will send you a postcard from my yacht. Ciao.

From: David ThorneDate: Tue 17 Nov 2009 3.58pm

To: Simon EdhouseSubject: Re: Re: Re: Re: Re: Re: Re: Logo Design

NZTE’s Hans Frauenlob says the accepted protocols for social media change rapidly.

Probability of Simon selling his project for $40 million dollars and sending me a postcard from his yacht

NoneIf using a time machine

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APPLE DEFIES GRAVITY Apple makes computers, right? Wrong. Interestingly, if you check out their website, the closest you’ll get is “Apple designs…” followed by a list of all their marvellous machines.

EverEdge IP’s Paul Adams says, “Apple is a classic case. It creates really smart technologies and designs, sends those designs off to China where the low-value, high-volatility, high-CAPEX, low return on investment stuff gets done, and then gets its sent around the world for sale, which Apple manages through its retail channels.

“It’s offloaded the worst part of the value chain to others and kept the high-value parts for itself. Look at its returns, you can’t argue with them. They are extraordinarily high because they’ve embraced weightlessness.”

Jeremy Warner, business editor for the Independent says, “Apple doesn’t make anything. All its manufacturing is outsourced to the developing world. The company itself is just a hothouse of development, marketing and distribution.”

COMPULSORY IPADS IN

SCHOOLS – A MARKETING DREAM COME

TRUEIn July, Orewa College put

netbooks like the iPad 2 on its ‘compulsory stationery list’

for Year Nine students, and is asking parents to foot the bill

THERE ARE AN ESTIMATED 1.9 BILLION INTERNET USERS WORLDWIDE

Apple and the Apps revolutionIf you have any lingering doubts about the importance of weightless exporting, just check your phone

There are more than 200 million registered users on MySpace (if MySpace were a country, it would be the fifth largest in the world, between Brazil and Indonesia)

THE IPOD TOOK THREE YEARS TO REACH A MARKET OF 50 MILLION. FACEBOOK TOOK TWO

Another study reckoned 93 percent of adults in the US owned cellphones, but only two thirds of them feel comfortable making purchases on them, other than small items like pizza

DIGITAL SCALE



You don’t have to be a raving lentil muncher to care about sustainability these days. Not doing it, or doing it badly, can have a serious impact on your brand –and your bottom line

DIGITAL IMPACTMajor data centres account for almost two percent of the world’s carbon emissions, which is about the same as the aviation industry (although thankfully they’re not pumping it directly into the upper atmosphere). With more than 1.5 billion people around the world now online, studies estimate the internet’s energy footprint is growing by more than 10 percent annually.

FOOD MILES – A THREAT TO THE WEIGHTY The idea of food miles emerged from 1990s research, starting out as a tool to track the impact of global food distribution on carbon emissions and the environment. It was also adopted by companies in western Europe, particularly in the UK, as a fairly big stick to beat international exporters with, particularly food producers. New Zealand farmers have since argued that the measure is inappropriate, as our grass-fed agriculture has less impact than European and US intensive farming, even when the additional transport impact is taken into account. Grenville Main says, “It’s an argument that many European markets are placing in the way of good Kiwi brands, and it’s not going to go away. The ‘local’ movement is what we can leverage and I think it has huge potential.”

AIR NEW ZEALAND – SITTING PRETTY?Air New Zealand has

created the innovative new ‘cuddle class’ for economy,

including the Skycouch, where two adults can lie

down, and Spaceseat, which has individual space that means you don’t have to

worry about people nicking arm rest space.

Because the airline has moved to carefully protect

the IP in the designs, it’s managed to maintain

exclusivity and licensing options for them. Both the Skycouch and Spaceseat,

which were designed by Air New Zealand, have been

licensed to manufacturers Recaro and Contour

respectively and, as such, have the potential to

generate license fees for Air New Zealand in the future.But so far the company has

kept the new layouts all to itself and its customers.

Does weightless meantreading lightly?

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Everywhere you go, always take the profits with you

We need to make

weightless exporting a priority – we can’t just leave it to a few

enthusiasts and the odd lucky break.

By ‘we’, I mean you.

So go get started

The Idealog Guide to Weightless Exports

Business

Transcript of The Idealog Guide to Weightless Exports