Data-Driven Innovation: 2 of 3

This is the second in a series of three articles exploring data-driven innovation, what it means for New Zealand, and the design thinking behind the formation of the i4 Institute.

Others in the series 1 of 3 and 3 of 3

Data-Driven Innovation in New Zealand

Data-driven Innovation, Collaborative Networks, and online Platforms can support a wide range of innovations for New Zealand, including improving firm operational efficiency, developing new products and services, making better investment and strategic decisions, and more effective government interventions.

New Zealand Data-Driven Innovation Benefits

For New Zealand, Data-driven Innovation could easily deliver NZ$4.5 billion in benefits (COVEC, 2015) via new startups, value chain productivity lift, improved and customized goods and services, improved competitive advantage in key industry sectors, and greater well-being through better outcomes across the public sector.

New Zealand Data-Driven Innovation Barriers

However, research focusing on the New Zealand context (COVEC, 2015) has identified several significant barriers to the realization of these data-driven innovation benefits, including:

• Management Capability: New Zealand ranks poorly in terms of managerial competence compared to its OECD peers, a key barrier to digital technology adoption.
• Data-Driven Decision Making: New Zealand upper management/board level prefers to rely on gut feel and experience rather than data when making important decisions.
• Lack of Digital Skills: Less than ten percent of large organisations and Government agency training is spent on digital technology upskilling.

This commentary on the lack of digital skills training inside organisations is further highlighted by recent research (MBIE, 2021) that suggests:

“If New Zealand doesn’t improve the digital skills of its workforce, we will continue to have low levels of productivity and ultimately more expensive, less competitive products competing in global markets.”

Data Literacy

This low maturity in ‘Data Literacy’ across New Zealand organisations mirrors international experiences, with industry research proposing that poor data literacy is one of the top three barriers to building strong data and analytics teams (Gartner, 2020).

Not only that, but only 21 percent of employees in a variety of roles were confident in their data literacy skills (Accenture, 2020). While in the past, companies might have had a few skilled data professionals on staff, now almost everyone needs to have some level of awareness (MIT Sloan, 2021).

As proposed by Jain (2014), “Data is the new currency, it’s the language of the business, and we need to be able to speak that.” and stated by Gartner (2020), “Data and analytics is not a technology implementation — it is a change management initiative!”

Furthermore, the New Zealand Ministry of Business, Innovation and Employment (MBIE) also suggests (2020) that New Zealand’s geographic spread and lack of collaboration (weak agglomeration) has also hindered collaboration between parties, leading to some duplication of effort and a lack of innovation diffusion across and between industry value chains.

Strategy and Growth in the Fourth Industrial Age

Therefore, to truly gain the potential benefits of Data-driven innovation, businesses and government entities alike will need to change how they operate and collaborate. In light of the enormous increases in the volume and usefulness of data for decision-making in recent years and the ease with which this data can now be stored, analysed, and shared, that need extends to strategy design, operations management, human resources, marketing, and organisational structures.

- The Response: The i4 Program and Insitute

The i4 Program

In response to the need to increase Data-Driven Innovation capability in New Zealand, key stakeholders from industry, academia, and government, co-designed the i4 Program.

The i4 program objective was to help organisations unlock the value of their data and better collaborate with the digital technologies sector.

The i4 Program operated between July 2021 and June 2022 as a set of industry engagement and intervention activities across a national network of Regional Data Innovation Labs and Industrial Data Spaces.

These virtual labs and Data Spaces acted as focal points where both public and private organisations across New Zealand ‘join-up,’ to collaborate, share data, and help develop Data-driven Innovation (DDI) projects, where:

• DDI projects help New Zealand businesses see and harness the power of data as a strategic business asset and use data-driven technologies to improve operational efficiency, develop new products and services, and make better decisions around strategy and investment.
• For the New Zealand Digital Technology Sector, these DDI Projects helped identify innovation opportunities with Kiwi businesses, accelerating the adoption of Data & AI technologies and fostering a national data-driven innovation ecosystem.
• Across DDI Projects we also worked with the Education Sector to help equip Kiwi businesses with the skills and talent needed to make the most of their data and compete more effectively in their chosen markets.
• The i4 program partnered with Government Agencies and Research Institutes to craft Data Collaboratives between industry and the Digital Technology Sector, where public and private sectors exchange data across industry supply chains to create value.

i4 Deliverable — Improving Data Literacy

One i4 program deliverable was to address the low maturity in ‘Data Literacy’ where only 21 percent of employees in a variety of roles were confident in their data literacy skills, and a lack of collaboration between parties hinders learning and leads to duplication of effort, and a lack of innovation diffusion across and between industry value chains (MBIE, 2021).

Connecting Learning with Doing

One approach to increase data literacy and collaboration capacity in New Zealand businesses is Learning by Doing. Such an approach sees individuals couple the development of new data skills with real-world problems and opportunities, connecting people, skills, knowledge, and data resources inside their organization with multiple outside sources of Data-driven Innovation, ergo an Open Innovation Model, as opposed to a Closed Innovation Model (Chesbrough et al., 2013).

Figure 1: Closed Vs Open Innovation recreated from Chesbrough et al. 2013

For the i4 Program, this Open & Data-Driven Innovation approach created a ‘platform’ that helped connect the learning of new data skills with the doing of data skills…we now call it The i4 Institute.

The i4 Institute: An Open Collaboration for Data-Driven Innovation

The i4 Institute helps connect those people with data ideas and problems (seekers) with people who can help bring these ideas to market and help solve the issues at hand (solvers) using Data-Driven Innovation Challenges.

In acknowledging that New Zealand ranks poorly in terms of managerial competence (which is seen as a key barrier to digital technology adoption) the i4 Institute curates a national community of Data Stewards that help orchestrate the i4 Institute co-design process — in particular for those ‘wicked’ problems that require a collaborative approach by both private and public sectors.

In this regard, the i4 Institute can be viewed as a multi-sided platform comprising three user communities; Seekers, Solvers, and Stewards, coupled with a ‘learning’ engine and a ‘doing’ (transaction) engine.

i4 Institute Users and Engines

This notion of platform user communities and engines is consistent with emerging platform design thinkers such as Sangeet Choudary at Platform Thinking Labs and Simone Cicero at Platform Design Toolkit, where the nature of the work organized by a platform “is simplified as a mix between a learning advantage and workflow task execution” (Choudary, 2020).

Read more about the design ideas behind the i4 Institute in article 3 of 3.

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