The agency responsible for foreign direct investment onto this island, IDA Ireland, has recently launched a new marketing campaign in North America. This campaign is pitching Ireland as an innovation island. The New York Times discussed the campaign in detail so head over there for more information if you are interested. My question here is whether Ireland can stand up to the mark on the claims that it is an island full of innovators.
What is innovation? It is a process that involves lateral or creative thinking to come up with new solutions to problems. It occurs most in response to a real need. Successful innovations have been those that people find really useful in addressing a particular situation or issue.
Can Ireland, with a population less than half of that of New York City, really be good at innovation on a global scale?
Ireland already does have some notable innovations that it can be proud of.
Ryanair is an example of process innovation that turned a miniscule struggling Irish airline into one of the largest airlines in the world in just over a decade. Sure, we looked at what was best elsewhere (SouthWest Airlines) but made it our own and added our own dynamics to it.
Guinness emerged in the 1770’s from a small ale brewery in Dublin that needed to compete against the big London breweries that were exporting a new form of drink, popular with Covent Garden’s market porters, into Ireland. Arthur Guinness took this new “porter” and brewed a version of it that within the first 100 years saw the biggest brewery in the world based in Dublin. And no, we weren’t drinking it all ourselves.
Riverdance revolutionised how the world reacted to traditional Irish music. By innovatively taking pre-recorded music and raising a traditional village pub performance to the level of rock concert, Riverdance has transformed a dance genre from being at death’s door to a worldwide phenomenon. Spin-offs aside, such as Lord of the Dance, Riverdance itself has grossed in excess of $1 billion since 1994.
Havok is an Irish software company that started as a campus company in Trinity College computer science department. (One of the founders taught a course I took as a post-grad.) The Havok founders identified a need to improve the quality of graphics rendering in computer games and came up with a revolutionary application that renders the graphics in run-time, thus speeding up and improving the quality of the rendering. Havok software is being used in PC, Xbox 360, Playstation and many other games formats. Havok-powered games generated sales revenue totaling over $1.5 billion in North America alone during 2008.
The IFSC, or the International Financial Services Centre, based in Dublin’s previously depressed docklands was set up under government legislation in 1987 to address Ireland’s real need to lift itself out of the economic troubles of the 1980’s. A low corporate tax rate of 10% was introduced to attract international financial firms into the IFSC. Half of the world’s top banks and insurance companies soon located operation in Ireland, bringing employment, urban regeneration and billions in additional tax revenues.
The model employed in the IFSC has been expanded with much success in other sectors. Nine of the top ten pharmaceutical companies in the world have located R&D and manufacturing plants here. For years Ireland has been the biggest exporter worldwide of computer software, mostly as a result of Microsoft locating its European headquarters here. We now host worldwide technology giants such as Intel, Dell, Google, eBay, Facebook, HP, SAP, Siemens, EMC, Cisco and Paypal. The clustering of such industries on this small island has resulted in the development in Ireland of a skilled workforce that is disproportionately clever.
Investment in R&D, the official word for innovation, is important to us in Ireland and in 2008 1.66% of GDP (€2.8 billion) was spent on it. Our target is to grow this to 3% of GDP. IDA Ireland has shifted its focus over the past number of years to R&D type activities rather than pure manufacturing. Last year 40% of IDA investments were in companies doing R&D here, a figure that has doubled over the past five years.
There are a few things that Ireland lacks, but innovation and ambition is not one of them. I’ve written here previously that we need to do more. We already have the smarts but they need to be fostered and supported so that we can continue to punch above our weight on the global stage.