New Zealand desperately needs more entrepreneurs to drive economic growth, but will the government's new tertiary education strategy actually reward the risk-takers we need, or unintentionally stifle their potential?
By Rod McNaughton, University of Auckland Professor of Entrepreneurship
(Photo: Unsplash/ Chivalry Creative)
The recently unveiled Tertiary Education Strategy 2025-2030 is the government's ambitious plan to leverage the power of universities and polytechnics to finally tackle New Zealand's persistent productivity challenges. The core idea? To transform our tertiary institutions into engines of innovation, accelerating the commercialization of research and cultivating a new generation of entrepreneurs. But here's where it gets controversial... are the strategy's goals truly aligned with its proposed methods?
The strategy clearly identifies "particular gaps in market-driven entrepreneurial skills" and tasks universities with boosting entrepreneurial education, particularly for graduate researchers. It also acknowledges the growing trend of individuals building careers through self-employment, freelancing, or a portfolio of different roles – a nod to the evolving nature of work.
Adding fuel to the fire, a new national intellectual property policy grants academic staff the initial right to commercialize government-funded research. This signals a clear expectation that universities will actively generate new ventures and groundbreaking technologies. The message is loud and clear: the country craves more innovators, founders, and individuals willing to take calculated risks.
However, several elements within the strategy, particularly the proposed performance assessment methods, could inadvertently discourage the very entrepreneurial spirit it aims to foster. And this is the part most people miss...
The Peril of the Wrong Metrics
One prime example is the emphasis on graduate earnings. Early-career income is a widely used benchmark for assessing labour-market relevance, and the strategy treats it as a key success indicator. But entrepreneurship rarely starts with a high or stable income. In fact, founders often endure years of fluctuating or minimal earnings as they navigate the challenging path to building a viable business.
The fear is that if earnings become a primary metric, universities might shift their focus towards producing graduates for established, high-paying sectors, potentially neglecting entrepreneurial endeavors. Imagine a university deciding to prioritize churning out accountants instead of supporting a student trying to develop a groundbreaking AI-powered medical device simply because the former offers a more immediate and predictable salary.
But earnings are just one piece of a complex puzzle.
The strategy's strong emphasis on aligning with the labor market, co-designing programs with employers, and responding to current skill shortages could inadvertently steer institutions towards preparing graduates for today's jobs, rather than the industries of tomorrow.
Think about it: many entrepreneurial opportunities emerge in sectors too nascent to even appear in occupational forecasts, from synthetic biology and cutting-edge climate technologies to the ever-evolving fields of AI and autonomous systems. Innovation thrives on experimentation and exploration, not simply fulfilling existing demands. Students need exposure to groundbreaking knowledge to become true innovators, not just a mastery of legacy skills.
Establishment Versus Experimentation
The strategy also highlights efficiency, tighter accountability, and improved retention and completion rates. While laudable in themselves, these metrics inherently reward predictable, linear progress.
But entrepreneurial careers are often anything but linear. Students might take breaks to build prototypes, pursue unexpected opportunities, or even pivot their entire focus based on new discoveries. Researchers might divide their time between academic pursuits and nurturing emerging ventures.
Under an overly rigid framework, such behavior could be perceived as inefficiency rather than a testament to ambition and resourcefulness.
Even the strategy's approach to vocational and foundation learning reinforces traditional employment pathways. It emphasizes work-based training and immediate workforce attachment.
Yet, for many communities, including Māori, Pacific, and regional communities, micro-enterprise, social entrepreneurship, and locally-driven innovation are vital tools for economic resilience. A narrow employment lens risks overlooking these alternative forms of entrepreneurial value creation. For example, a small, community-owned eco-tourism venture might not generate high individual salaries but could provide significant economic and social benefits to a rural region.
Stronger industry involvement presents another potential hurdle. While collaboration with employers is undoubtedly essential, the employers typically invited to shape curricula are often large, established firms.
Their priorities might differ significantly from those of emerging industries and new ventures. If incumbent voices dominate program design, the system might become less receptive to disruption, experimentation, and the specific needs of smaller firms and emerging industries. Imagine a curriculum designed solely by established automotive companies, potentially stifling innovation in the electric vehicle or autonomous driving sectors.
Lessons from Abroad
Several countries, including the United Kingdom, have already grappled with these tensions. The Knowledge Exchange Framework, for example, assesses universities not only on employment outcomes but also on commercialization, licensing, community enterprise, and research partnerships.
The UK-based Institute for Fiscal Studies suggests assessing medium-term trajectories rather than early-career earnings by considering the highest earnings of graduates three to five years after graduation, while accounting for prior academic achievement, demographic characteristics, and field of study. This highlights the inherent complexity of accurately measuring entrepreneurial success.
The New Zealand strategy outlines the metrics but lacks detailed definitions. These details will be crucial if we genuinely want to encourage more innovation and entrepreneurship, not just more students graduating on time and seeking conventional employment.
The Path Forward: Aligning Actions with Ambitions
The strategy sends a strong and welcome signal that innovation and entrepreneurial capability are essential to New Zealand's future. Its emphasis on commercialization, creativity, and adaptability aligns with international research on the drivers of productivity in modern economies.
However, the next critical step is to ensure that the strategy's performance measures are perfectly aligned with its ambitious goals.
Entrepreneurship rarely manifests as a high salary, a pristine CV, or even timely degree completion. It is characterized by risk-taking, continuous refinement, and the creation of long-term value.
It's often messy and time-consuming. If tertiary institutions are judged primarily on short-term, conventional indicators of success, they might be incentivized to prioritize safer pathways at the expense of genuine innovation.
If that happens, the system risks promoting entrepreneurship in theory while inadvertently constraining it in practice.
What do you think? Will this strategy truly unleash New Zealand's entrepreneurial potential, or are we setting ourselves up for unintended consequences? Are the proposed metrics the right way to measure success, or should we be looking at different indicators? Share your thoughts and concerns in the comments below!
