‘Pushing on a string’? Rethinking how New Zealand turns research into growth
Dr Peter Lee
Adjunct Professor, Management and International Business
Increasing supply with limited demand is like “pushing on a string.” The metaphor, originating from the Great Depression, describes the ineffectiveness of trying to move something forward by force alone. US Federal Reserve Chairman Marriner Eccles used the phrase to illustrate why expanding the money supply failed to stimulate demand. Today, a similar challenge arises in New Zealand’s innovation ecosystem—where research supply is increasing, but business demand remains weak.
New Zealand is undergoing major reforms in its science, innovation and technology sectors to extract more value from publicly funded research. These reforms emphasise strengthening the supply side of innovation, including:
- Establishing the Prime Minister’s Science, Innovation and Technology Advisory Council to provide strategic direction.
- Restructuring Crown Research Institutes into four future-focused Public Research Organisations.
- Developing a unified approach to intellectual property management to accelerate commercialisation.
While these initiatives aim to generate more valuable research, they risk overlooking a fundamental driver of success—business demand. Without strong industry leadership in innovation, increasing research output alone will have limited economic impact. Simply put, innovation doesn’t just need supply; it needs a market pull.
Dr Peter Lee
Why business leadership is the missing link
New Zealand’s R&D expenditure remains low compared to other developed nations. At 1.4% of GDP, it lags the OECD average of 2.4%. The primary reason? Business investment in R&D is weak, making up only 55% of total R&D spending—far below the OECD average of 74%.
Traditional explanations, such as geographic isolation and industry composition, no longer hold in today’s digitally connected global economy. The problem isn’t a lack of potential; it’s a lack of strategic prioritisation at the leadership level.
Some New Zealand companies have successfully broken this pattern. The TIN1000 report showcases firms that thrive in global markets through a combination of vision, leadership and execution. However, their success remains difficult to scale across industries.
A key insight from global research on product development suggests why:
Companies that rely primarily on financial metrics to assess new opportunities tend to underperform, while those that prioritise strategic fit achieve significantly better results.
For innovation to flourish, leadership must move beyond financial gatekeeping and actively integrate strategic innovation into decision-making.
Bridging the leadership gap
Although 65% of New Zealand CEOs express a willingness to take risks on new ideas, only 49% of boards share this mindset. This misalignment leads to slow decision-making, lost opportunities and a reluctance to back high-potential innovations.
For boards and executives to drive meaningful innovation, they must:
- Develop strategic innovation competencies
Effective innovation leaders demonstrate three critical board-level capabilities:
- Sensing: Proactively identifying emerging opportunities and threats.
- Pivoting: Redefining company strategy to create new value.
- Aligning: Making agile decisions that translate strategy into action.
- Adopt structured decision-making frameworks
Boards must balance risk oversight with agility, ensuring that governance structures enable rather than impede innovation.
- Strengthen board-executive collaboration
Open communication and shared accountability ensure that strategic innovation initiatives receive the support and traction they need.
- Leverage industry partnerships
Collaboration between businesses can amplify the impact of New Zealand’s research ecosystem, mitigating the challenges of operating in a small market.
Conclusion: Aligning push and pull for impact
For New Zealand to unlock the full value of its research investments, corporate leadership must take a more active role in driving innovation. While government efforts to enhance research supply are essential, they cannot succeed without strong business demand.
Boards and executive teams must embrace innovation as a strategic priority—not just a function of R&D but a core driver of long-term value creation.
By strengthening governance, fostering leadership alignment and prioritising strategic innovation, New Zealand can transform its research potential into tangible economic growth.
Instead of pushing on a string, we must create a system where research and industry pull together—building a future where innovation thrives, businesses scale and the economy prospers.
About the author
Dr Peter Lee is a champion of innovation and technology commercialisation. A director, chair and advisor to several ventures, Peter was CEO of UniServices, the commercialisation arm of the University of Auckland, during a period of rapid growth in research for industry. He is an Adjunct Professor and Registered Technology Transfer Professional, contributing to national science, defence and innovation strategy through multiple senior advisory roles.
