Opinion: Make government a customer, not an investor

NZCS president Ray Delany suggests entrepreneurs market new products to the public sector first

At a forum hosted recently by the New Zealand Computer Society in Auckland some participants talked about the role of government in fostering innovation. I was struck by the contrast between this and a lecture by visiting University of Texas professor Rob Adams the following week giving very clear and direct advice to aspiring entrepreneurs where he never mentioned government even once.

Sarah Putt’s recent editorial on this subject was right in one respect when she said we should ignore the government.

The fundamental role of government, at least in a free society like ours, is to provide adequate infrastructure (UFB for instance), maintain security via police, customs, defence etcetera and ensure a social safety net is available for those unfortunate enough to be unable to look after themselves. That’s it.

Everything else is up to the private sector, and if the private sector doesn’t generate wealth and jobs then there will be no tax revenue for the government to do anything.

Where we get confused is between the government’s role as I have described it above, and its role as a provider of services. In many sectors the government has an extended role in that it delivers the majority of services.

This is particularly true of health, one of the single largest areas of government expenditure.

In health, probably 80 percent or more of services are delivered either directly by Crown corporations such as District Health Boards or supported indirectly through government subsidies and contracts.

This makes the government a very important customer. This just happens to be the way we do things in this country, it’s not a universal model, and other countries do it differently – a fact we should be aware of when attempting to export our ideas.

If we forget the idea that it’s the government’s role to provide corporate welfare and/or fix everything, then we can start to think about the government as a customer. When we do, we might find that clever local entrepreneurs have figured out how to meet the needs of their government customers at a profit while at the same time building products and services which can be successfully taken to the world.

Orion Health is a good example of this. In the 1990s and 2000s Orion worked very closely with South Auckland Health (now Counties Manukau DHB) to develop clinical management systems for use in the delivery of hospital services.

The result was SAH acquired high quality information systems at a very competitive price, and to this day remains a leader in the use of IT to improve health services delivery.

This provided an excellent showcase for Orion to demonstrate that its products were suitable for use in a first world health system (yes really) which they successfully translated into an export business employing hundreds of talented kiwis along the way.

Better results for the government customer, creating jobs and growth in the economy; there is no downside in this approach. At the least I would suggest it is better than expecting a bureaucracy to get good at picking winners and betting your money on them. It’s also better than importing a whole bunch of over-engineered solutions built for large economy organisations that may or may not be able to effectively scale down to our size.

Rob Adams advises us to not allow the engineering mentality to dominate.

Instead of spending your life and your savings building your brilliant product, make 100 calls to people you think might want to buy it and ask them what they think.

This will cost a fraction of what it will take to build your idea, if it’s a good idea you’ll get plenty of encouragement and if it’s a bad idea you’ll at least know that before your life savings are gone. By the way, if you really feel you want government assistance this approach will probably help you to get that too.

Nat Torkington summarised this brilliantly in a recent tweet when he said “Pure engineering has never won in business without customers buying”.

So forget about the government, and get on and build a world-class business.

As Margaret Mead said: “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has”.

Ray Delany is the president of the New Zealand Computer Society.

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