Archive for the ‘Kiwi growth’ Category
PR’s sometimes seen as being all about key messages, producing a sound bite that resonates and sticks.
That’s okay in politics, but in business key messages are only as good as the proof points that back up the claims in the messages. Unsubstantiated claims only produce blank stares, deaf ears and closed doors.
Compelling and effective key messages, and great proof points, are critical for Kiwi exporters – and particularly technology ones – as, chances are, a potential customer is going to do a double take, thinking “New Zealand technology? I know about your mountains and cows, but…”
To start with, nailing great Kiwi key messages is hard. Distinctive Kiwi innovation – we’re probably no more innovative than a heap of other nations and whether we have a unique (and meaningful) type of innovation is a tough one to prove; thinking outside the box – maybe, but you know, isn’t that risky?; “new thinking” – a nice word play on New Zealand, but ultimately meaningless; can do – for sure, but potentially another hollow business promise; clean and green – well…
A big problem with these key messages is their self-centredness. They are how we see ourselves, not how the world sees us.
Which is where proof points come in. The truly great ones change how the world sees us.
But really we’ve got bugger all of these. We’ve got a heap of that I reckon in the cold hard light of the international business day are weak: Lord Rutherford – so last century; Maurice Wilkins – who?; Richard Pearse –what did he do again?; we invented the disposable syringe etc etc.
It gets better when we drill down into specific industries and countries or localities for these sectors. For example, in IT and in Silicon Valley, there’s Xero and US venture capitalist and entrepreneur Peter Thiel.
But mega proof points? We really we have only got that are two bona fide, international stature, world stage: Weta Digital and the Americas Cup.
Weta Digital is not going anywhere and will remain a great Kiwi story.
Last week, Team New Zealand and the New Zealand marine industry grabbed the world’s attention with the most compelling international showcase of Kiwi technology, innovation, can-do attitude, thinking outside the box, since well…The Lord of the Rings.
The Americas Cup may have been lost, but we can’t afford to lose the story.
The NZ Herald has been running a series of articles under the banner “Where are the jobs?”
The answers – based on the articles in the series – are interesting, but not really on the money.
Featured articles on job generation include:
- the national cycleway
- video games
Great work if you can get it. However the future employment landscape is much more boring and less well paid.
Last year I posted on how most new jobs are likely to be low paid, with relatively high paying manufacturing jobs being lost and replaced by “low quality” ones.
The US Bureau of Labor Statistics calculates that the 10 jobs expected to provide most new employment in the US in the next decade will be:
• Registered nurses
• Home health aiders
• Customer service reps
• Food prep and serving staff
• Personal and home care aides
• Retail sales
• Office clerks
• Nursing aides, orderlies
• Post secondary teachers
New Zealand won’t be a hell of a lot different.
The worrying part of this list (no, not more accountants) is that six of the 10 are low paying. Three of the six are in health.
Unless there is change, this where the jobs are.
There’s a fair amount of back slapping that goes on about how entrepreneurial we are as a country. Basically it’s crap.
Too much of our entrepreneurship does little to increase our overall economic wealth, but all the same it can be pretty sh!t hot – speaking personally here.
Mostly Kiwi entrepreneurship is small time, unambitious, lifestyle focused etc which you know, at a personal level, is okay.
For the economy, not so much.
As Trade me founder Sam Morgan says: “Stop talking about entrepreneurship and just go build businesses.”
Morgan is the NZ patron of Global Entrepreneurship Week which runs from November 15-21.
“The Week will bring together millions of young people across the globe through online and local activities and encourage them to think innovatively and unleash their ideas. Through a coordinated effort with many different countries, during one week every year, the world will celebrate the entrepreneurial spirit in hopes of inspiring a new generation of young entrepreneurs.”
So not sure Morgan’s quote is on message, but from a NZ perspective it’s bang on.
I’ve posted before on the disjunction between our high levels of inventiveness and entrepreneurial drive and our relatively poor overall economic growth performance. Possible culprits include:
- Lifestyle coming ahead of building the business
- Our inability to distinguish between the way we think the world is and the way it really is
- Too much DIY
- Undervaluing intellectual assets
- Lack of sales culture.
Following up on my previous post – the perils of 100% Kiwi-owned – NZ amphibious boat-maker Sealegs has made a strong case for more overseas ownership on its share register.
This is in contrast to the 100% Kiwi route chosen by Hulme Supercars which BigCake predicts will have dire consequences.
Sealegs CEO David McKee Wright says a further $6.2 million investment in the company by Mauritius-based private equity company, Avenport Investment Corporation, would bring an international focus to Sealegs. (Avenport already owns around 20% of Sealegs).
The new capital would fund international marketing, sales initiatives and the development of new models.
The Avenport offer is to go to Sealegs shareholders for approval. One to watch.
McKee Wright’s statement is an interesting contrast to the attitude of Hulme Supercars which is restricting its $2m plus capital raising efforts to NZ.
If you are thinking of donating, read on.
Both Sealegs and Hulme have global market aspirations – which would you back?
As previously mentioned Hulme Supercars, thanks to its 100% Kiwi policy, is destined to be underfunded, undermarketed and underbuilt – it will go nowhere – the fate of hundreds of other 100% Kiwi-owed businesses with global potential.
BigCake has found evidence that it’s already shaping up this way.
A Drive South story compares the Hulme CanAm Supercar with the McLaren MP4-12C – seemingly “racers of equal quality”.
Both sport famous Kiwi motorsport names, cost more than $500,000 apiece and will come into production in 2011.
But there it ends.
Drive South says “realistically only the Surrey-based McLaren operation, that already has a healthy pedigree of handcrafted, ultra-high quality low-volume road car production, is a safe bet.
“This, after all, is still the story of a minnow and a mammoth.
“Ability, experience, infrastructure, money, and a surfeit of championship-dominating Formula 1 boffinery and competition engineering to draw on, give McLaren Automotive every little thing it needs to realise its latest road-car dream.”
To be fair, Hulme Supercars don’t see the McLaren supercar as a direct competitor – they want to be more exclusive than that, instead aiming at the Pagani Zonda-buyer (ie. Producing about 10 cars a year).
Here’s another interesting comparison (and problem). While Hulme Supercar is starting from near scratch, and casting around for a few thousand dollars here and there to get its car on the road, Pagani is an 18-year-old specialist carbon fibre company that has worked with Lamborghini and Daimler.
But over at Hulme Supercars, the CanAm “in current form is a more rudimentary car than [even] the McLaren,” says Drive South.
“Although also mainly built out of carbon fibre, the Hulme uses fewer exotic materials overall, eschews almost all modern driver aids and the intended production powerplant, the 7.0-litre GM-sourced LS7 V8, is definitely ‘old school’ compared with McLaren’s self-designed engine.”
There’s a whiff of another perennial Kiwi international market deal killer, DIY, about McLaren that also doesn’t bode well.
Don’t plan to fail guys – get your sh!t together and listen to what Sealegs is saying.
Why the hell would you want to do this?
Hulme Supercars is seeking investors in its supercar, but only ones from New Zealand need apply.
There maybe some legal or financial reasoning behind this (in particular Hulme wants nothing to do with US investors), but shutting out international investment, and associated engineering and marketing expertise will, judging by history, stop the supercar project in its tracks.
[26 June - It has been pointed out that there are strict rules governing capital raising in New Zealand and in most overseas jurisdictions, especially the US. For small NZ issuers, meeting these offshore rules is cost prohibitive. BigCake would add that his concern was that Hulme also appears to be ruling out other forms of international investment, such as direct investment.]
It is destined to be underfunded, undermarketed and underbuilt – it will go nowhere – the fate of hundreds of other 100% Kiwi-owed businesses with global potential.
This is not just an issue of the lack of spare capital lying around NZ to fund global growth, but a whole bunch of other stuff NZ is short of, such as:
• international financing skills
• international marketing expertise
• global connections and
• resources such as skills and technology.
All these things often come as part of an international investment package.
Do the Hulme Supercars guys want to, as they say, “fill a strategic gap in the competitive but potentially profitable international Supercar market” or not? [Actually that’s an underwhelming pitch for investors].
Anyway if they’re serious, they’d be open to international investment.
It’s not as if being 100% Kiwi will give them a serious marketing edge. Bugatti owners still think they’re buying an Italian a French car (founded in France by an Italian immigrant), even though the company is owned by the Germans.
Ownership matters a lot less than history, where the IP sits and how something is marketed. All that stuff can stay in NZ. Hell, we can even make things here.
To be fair, the Hulme people have set a pretty low initial production target of nine (that’s a small strategic gap), climbing to a projected 20, so maybe they realise their limitations.
But there’s a visible lack of ambition here.
BigCake wishes the Hulme team well – their business model based on (very) high value add manufacturing in NZ could work, but it is at risk for the above mentioned Kiwi deficiencies.
It’s possibly unfair to pick on them. Blame Hulme’s slick Kiwi marketing I guess for bringing them to my attention.
Are Kiwis scared of change, like more afraid than other countries?
Our ancestors, willing to head out to settle in an unknown land, for sure weren’t.
“The lust of a pioneer will acknowledge no frontier.”
But have we since evolved into weak-kneed shadows of our forefathers who see ever present danger in change, risk in opportunity? Realising we are a bunch of lucky sh!ts, have we spent most of the last 150 years wringing any further uncertainty out of our lives?
Certainty has a lot going for it, but it can weaken the lust of a pioneer.
BigCake found a survey of New Zealand business managers that showed they ranked in the top 25% in terms of “uncertainty avoidance” in an international survey.
Uncertainty avoidance was measured by stuff like how many laws or rules we have to cover most situations, the tendency to lead structured lives and an emphasis on orderliness and consistency.
If Kiwi managers in the survey were more uncomfortable with uncertainty than their international counterparts, it’s a reasonable guess that it’s a national trait.
You don’t have to look too hard to find evidence of this “nanny state”, say from 1890s labour laws through to ACC.
And on an individual level it is behind a lot of what BigCake calls “growth scepticism” – the sceptical reaction to claims that economic change this time will make a difference.
The uncertainty measure is in the Global Leadership and Organizational Behavior Effectiveness (GLOBE) project which I came across while researching the poor state of NZ management.
GLOBE interviewed 184 Kiwi middle managers in finance, food processing and telecommunications and found that by the standards of other countries, these managers were:
• Very focused on performance
• Collectivist and
• Uncomfortable with uncertainty.
The associated report on New Zealand was written in 2006 by Jeffrey Kennedy, now Director Open & Custom Programs at Nanyang Technological University in Singapore.
Kennedy says NZ’s society is “characterised by a reliance on social norms, rules, and procedures to reduce unpredictability and uncertainty”.
Kennedy comes up with a couple of pieces of hard evidence of this. In a 1990 Survey of Values Kiwis ranked life’s qualities as follows:
2. Accomplishing things
3. Comfort and prosperity third.
And in an international study of entrepreneurship, New Zealand ranked 15th out of 29 countries in tolerance for uncertainty.
And there are real consequences of this in the world of business. Off the top of my head:
• The whole export gig is shot through with uncertainty so we don’t export as much as we should or could
• When trading with the world we like to deal in hard contracts rather than engage in the soft (and unpredictable) world of relationship building.
The tyranny of distance is stopping the cavalier.
Most of us like to think we are now more grown up than the conformist, boring, predictable image of New Zealand from mid last century, but as author Malcolm Gladwell says cultural legacies have deep roots.
There’s no shortage of training programmes for NZ managers with a mind to improve their leadership skills to tuck into.
A MED report in 2009 identified 546 programmes run by 59 organisations.
On the demand side there is also quantity wise no problem. In a Massey University survey more than 80% of small business manager/owners said they saw managerial skills and leadership as key to company growth, performance and competitive advantage. (2% didn’t see any relationship)
But as a University of Technology Sydney (UTS) report points out many larger business owners (and most likely smaller ones as well) are delusional about their abilities – they think they are better than they are.
So judging by the fact that at best our managerial quality is marginally improving, though still mediocre by international standards, somehow supply and demand are not connecting.
And this disconnect has been known about for sometime.
But not all the issues behind NZ’s poor management performance can be fixed bv sending managers back to the classroom. A big factor is that NZ’s economy is dominated by small businesses and it’s hard for these business’s owners and managers to find the time and capacity (though too often also the inclination) to do some training.
Other issues not amenable to a training fix include:
• The best managers leaving.
• Difficulties in getting rid of bad managers.
• Lack of ambition.
The Government has a Skills Strategy, one stream of which is improving management and leadership capability. This includes trials of training partnerships between tertiary organisations and industry along with a commitment to streamline government training activities and improve links with the private sector.
Government agencies offering training include Trade and Enterprise, MED, FoRST, the Department of Labour, the Tertiary Education Commission, the Ministry for the Environment, the Ministry of Social Development, Te Puni Kokiri, the Ministry of Agriculture and Forestry and Treasury.
Hah, but this issue is primarily the responsibility of businesses and their representatives to fix, though there’s also an argument that there’s a market failure going on here.
Spanning the public and private sectors is the Business Capability Partnership which represents government, businesses and unions.
In the private sector trainers include Business NZ, Employers and Manufacturers Associations, Chambers of Commerce, the NZ Institute of Management, the NZ Council of Trade Unions, ITOs etc etc
The 546 programmes teach:
• Communication skills – 228
• Leadership skills – 196
• Employment relations – 122
• Influencing skills 110
• Team building 94
• Workplace culture 63…
Funnily enough given the above’s focus on soft skills, our managers do most poorly in people skills according to the UTS report.
And while we do relatively well in process skills in that report, on the ground there’s a dearth of training programmes that focus on this.
So …maybe the training market is sorting itself out, though no one seems to have a clue about the how effective many of these programmes are.
When BigCake started this series on the disastrous state of business management in NZ, he thought of the elephant as being a problem.
Which it is. A report out yesterday shows more of our firms are poorly managed than well.
But maybe a better way to view our beast in the office is to think of him as a solution. That’s what we have really been ignoring.
And in terms of kicking business growth up the arse, it’s bigger than tax cuts.
A report commissioned by the MED indicates that basic improvements to management leadership, capability and skills would be massively more beneficial to business productivity than big increases in staff numbers or capital.
And our managers are delusional about their management skills. The report found managers consistently overrate their firms’ management performance. Also their self assessments “do not align well” with an external tests.
The report, Management Matters in New Zealand – How does manufacturing measure up? Findings from the New Zealand Management Practices and Productivity global benchmarking project, shows that NZ business managers are a lot like our school kids – at the top as good as anybody, but with a long ‘tail’ of mediocrity.
It was written by University of Technology Sydney using methodology developed by the London School of Economics and McKinsey & Company that is in use in 16 other countries. It was paid for by NZ Trade and Enterprise, the Department of Labour and Treasury.
The authors point out businesses and managers themselves must take primary responsibility for upgrading their management skills and improving their practices.
Based on a survey of management practices in 152 medium and large sized manufacturing firms in NZ during mid 2009, the report shows the average New Zealand business, in terms of management performance, is below the top 59% of Australian, 64% of Japanese and 75% of the US manufacturing firms.
That’s three of our top four export markets. Our average business is also below the top 30% of Indian and Chinese firms taken together.
The report’s findings suggest that firms would need to increase labour by 41% or capital by 77% to increase their output to match a lift in their management score from the 25th to the 75th percentile of the other 16 countries.
Surprisingly what mostly lets us down is our managers’ people skills. They are not so bad at operations and performance management.
The key drivers behind this situation according to the report are:
o Firm size – larger New Zealand firms significantly outperform smaller firms. BTW – The New Zealand economy is dominated by small and medium sized firms.
o Ownership – multinational corporations adopt and spread better management practices compared to domestic firms. Publicly listed companies are also better than privately owned firms, family owned firms and cooperatives. Family run firms tend to under perform.
o Higher levels of education and skills among both managers and non-managers makes a difference.
The results show better managed firms are likely to be more productive, larger, and have greater sales.
Other survey results include:
o We rank 10th out of the 17 countries for operations management.
o In performance management, New Zealand comes 9th out of 17.
o In people management we’re on par with France, Ireland, Italy and developing counties such as Brazil, India and China
There’s interesting stuff on which sectors do better than others:
o Overall petroleum, coal, chemical and associated product manufacturing perform significantly better than other sectors.
o Machinery and equipment manufacturing is tops in operations management.
o Printing, publishing and recorded media and other manufacturing are the worst in people management practices. (Haven’t seen any mainstream media coverage of this report!)
Still to come – what’s being done to fix all this.
Probably the bowls club. The bad manager elephant we like to ignore at our cost is likely to be male, and an old one at that.
Woman and the young (well, under 55 – nice to be called young) are more inclined to improve their management skills than anyone else, according to a Massey University study into management capability in NZ’s small businesses.
Nearly everyone who took part in an associated survey said they didn’t do much formal management training (with woman doing slightly more), but when it came to the more popular “informal” and “incidental” training, woman were much more committed.
Same for age. The so-called young were into it, those over 55 markedly less so. The age thing is concerning because a large percentage of our managers and owners (62% for larger business) are “old”.
If our managers were as crap as everyone else in the world, it wouldn’t matter, but they are, despite apparent improvements of late, at the back of the field.
There are reports of international business deals falling through because of a lack of confidence in the New Zealand management end. New Zealand businesses are seen as having low business capability and acumen by their foreign counterparts according to New Zealand Trade and Enterprise research into perceptions of New Zealand businesses in leading international markets.
So why so bad? In no particular order or attempt at completeness (basically just what BigCake finds interesting):
• Do it yourself: The predilection for informal and incidental training – good old Kiwi DIY – must be part of it. According to the Massey survey, 61% of small business owner-managers learn by doing and being a bunch of tight wads spent an average $1000 a year on developing their managerial skills. The Massey report comments that this cold-shouldering of formal training in large numbers is of continuous concern for policy makers, but it adds the informal stuff also needs to be acknowledged.
• The best managers leave. Too many of the most competent, most ambitious, most forward thinking just scarper. This is mostly anecdotal, but BigCake’s seen it in many enterprises. The best leave and all too often, because the talent pool is so shallow, are replaced by lesser mortals. New Zealand is seriously haemorrhaging managers. Specialised managers topped a list of occupations of Kiwis heading for Australia by 30%.
• Businesses can’t get rid of bad ones. Even “reasonable” employers shy away from sacking incompetent managers because of the fear they’d lose any challenge to the dismissal. Most small businesses don’t have the resources to put up a fight, so they just suck it in.
• The 3Bs. I’ve got my boat, BMW and bach so ‘why the hell would I need to go to the trouble of doing any training?’
Soon I’ll look at what our managers are bad at.
Are our business owners and managers deserving of the faith – and dosh – the Government handed over in last week’s Budget?
Don’t think so. There’s stacks of evidence that too many are just not very good at running their businesses.
Of course there are some great managers out there who’ll repay the Government’s faith and others will have more reasons to get their act together. In many cases though, it’ll be trust,expectation and money down the tubes.
A screed of reports and surveys show many of our bosses can’t foot it internationally, though there is evidence that the situation is improving.
For some reason this issue largely gets ignored in debates about how to drag this country out of its economic rut.
Evidence of the problem includes:
• “Few firms have yet to match leading international benchmarks – no more than 2-3% of firms appear to be approaching international standards of performance on practices such as strategic planning and leadership, supplier relationships, employee performance management and benchmarking, or actively pursue strategies of innovation.” (MED)
• “New Zealand suffers a dearth of high quality managers and entrepreneurs. This lack of managerial talent could be affecting both a firm’s ability to internationalise and also the average firm’s ability to identify new opportunities and grow.” (Treasury)
• “[Despite some good news] the downside is that the Canadians have now joined a slowly growing list of countries whose managers outperform ours.” The New Zealand Institute of Management.
We also rate poorly in international surveys such as the World Economic Forum’s Global Competitiveness survey.
And then there’s the circumstantial stuff:
• “What is holding New Zealand back is a widespread lack of management and leadership skills among SME owners, which translates to disengaged workers and low productivity,” (Grant Hally, chairman, Independent Business Foundation)
• “The low productivity is mostly from significant mismanagement: The greatest differences identified here are in: GroupThink; “number 8 wire and not learning from others”; hostility to constructive criticism; discounting of formal qualifications; ignorance of both quantitative management and systems-approach management; “the old boy network”, and many more.” (2025 Taskforce)
• “Something I have noticed peculiar to New Zealand is a lack of commercial impetus due to dire motivation. I am frustrated by the isolatory and timorous attitude of NZ’s senior management who appear closeted within a fall-out shelter of “tried & tested” cladding, as if sticking their heads above an imagined parapet would render them terminally radioactive.” (UK immigrant to New Zealand commenting on the NZ Institute’s NZ Ahead website)
Over the next few days I’ll post on what may be behind this situation and what’s being done to fix it.