Over the past three years we have used the Deloitte/Management magazine Top 200 awards programme to encourage New Zealand business to take up the challenge of increasing our global aspirations. Successful societies are built on successful economies, and successful economies are built on successful businesses. New Zealand’s small domestic economy makes success on the global stage that much more important.
We do have our success stories. Fletcher Building has shown impressive growth through operational excellence and acquisitions; F&P Appliances and F&P Healthcare are role models of integrated design and manufacturing; Michael Hill and Pumpkin Patch are paving the way in building valuable global retail franchises; technology companies like Rakon and Tait Electronics are carving out valuable niches, whilst Mainfreight is building successful global logistics business. And the success of our clothing industry has been revelation.
So at time when tight labour market and strong kiwi dollar threaten to undermine their efforts, these companies are worth celebrating. Such examples aside, why do many New Zealanders still have little appreciation of what it takes to succeed globally?
I have commented in this magazine before on the need to have greater ambition. Our geographic isolation demands it. Either we step up and compete to nurture the intellectual property an advanced economy of the future will have, or be satisfied as tourist destination and retirement village for the world. The former is path to increased wealth, the latter to low-wage economy.
Capital is essential to compete globally and recent moves to address savings issues will encourage more personal responsibility for savings. But the Government’s dominant ownership position and unwillingness to involve the private sector in infrastructure development are major barriers to the further development of our capital markets.
Encouragingly our appetite for risk is improving. new R&D regime and corporate tax proposals may help and we now have many models of entrepreneurial success, from TradeMe to HRV (heat ventilation providers) to prove success comes from anticipating market trends with innovative products and strong market positioning.
But few will disagree that talent is the crucial ingredient for success globally. We need to both retain our most talented people and bring on board highly talented leaders and technical people with global experience. Businesses are facing war for talent on several fronts and need help from supportive government with policies targeted at improving the quality of our education outcomes, an immigration service focused on the needs of business, and personal tax regime that competes more effectively with Australia. We may also need to be more innovative in how we attract and retain top talent.
So how are we doing in the step up to succeed in the global economy? At the business unit level there are many individual success stories. But other countries continue to forge ahead. Today our exports as share of GDP are unchanged since 1983. The World Economic Forum recently determined New Zealand had slipped to 24th place in terms of global competitiveness, down from 10th in 2002.
Not only did we slip places but our absolute score deteriorated. Worryingly we scored worst in the areas that matter most for advanced nations – infrastructure (33rd), innovation (25th) and business sophistication (29th). We ranked an appalling 51st out of 131 for the burden of government regulation. Without re-think of government policy we will make no progress in infrastructure and regulation, but innovation and business sophistication largely remain issues for business to solve.
The challenge for business is to better integrate into global supply chains, control distribution, and get in behind cluster development. This will take investment in technology, processes and most of all people. The prize is more business success and greater wealth for New Zealanders.
A few years ago these would have seemed daunting challenges. Today, as result of the proven success of many New Zealand businesses, they are within our reach. M
Murray Jack, CEO, Deloitte
