BACKUP Act Small, Think Big

Does size matter? Alice in her Wonderland adventures found that it did, but in different ways in different situations. Why and how does it matter in an economic sense? The question kept surfacing last month, in part because the University of Auckland’s Business School line up of international speakers invited to contribute to its New Hemisphere Speakers Series kept making the point: New Zealand enterprise must think and act globally to survive.
And, then of course, Management started researching for cover story on the impact the global talent war is having on nation states, particularly tiny nation states like ours. It was, at times, hard to shake that shrinking feeling.
Take Japan’s only significant management guru Kenichi Ohmae for instance. The unashamed self promoter reminded everyone at his New Hemisphere presentation that in 1990 there were just 20 cities in China with populations of more than one million citizens. Today there are almost 170. And almost every city of any significance is charged with growing its economy by seven percent year. Fail to reach the target two years in row and the mayor, charged with achieving the goal, gets “a red card” and departs the field.
This approach to growth and exploitation of size has turned China into “United States of Chunghua”, said Ohmae. China’s GDP is currently seventh in the world. At its current growth rate it will catch the United Kingdom at number four by 2007 and probably surpass both Germany and Japan to lie second only to the United States by 2009. “Don’t think of China as China,” he warned. “Think of it as series of markets all driven by entrepreneurs who have growth targets to meet.” Can New Zealand compete?
Ohmae wasn’t too sure about that. But he didn’t seem to think size had much to do with it. Instead he felt we had every reason to succeed in world that is typified by what he calls and has named his latest book the ‘Invisible Continent’. Many of the platforms for success already exist here – such as relatively deregulated marketplace. On the other hand, he noted changing political attitudes toward re-introducing some levels of regulation. We also have an active internet economy and relatively advanced IT infrastructure. Given the right attitude, we should succeed in Ohmae’s new economy, size should not be an issue. Tax cuts for the nation’s citizenry, by the way, he dismissed as largely irrelevant to the exercise.
What New Zealand needed was vision of the future to excite young people and encourage them to succeed and achieve. And on that score he had concerns. Our education system for example. Educators had to teach kids that it is “survival of the fittest” world. His reading of New Zealand’s current approach to education was, for the want of better word, negative. “Kids have to know that if they don’t succeed they will starve.”
New Zealand’s smallness could, in situations and rather like Alice, deliver distinct advantages. Being small could mean being nimble, flexible and able to sneak through small doors into new worlds. With internet technologies, distance is irrelevant. The strategies for Ohmae’s “invisible continent” focus on the evolution of what he calls the cyber economy. It’s about receiving information, adding value, then re-emitting that information in another form. The difference is the wealth generated when it creates customer satisfaction.
Coping with rapid structural change will be important in tomorrow’s global marketplace. There will, according to Ohmae, be clear winners and losers in the next few years, and New Zealand did not have too many old world industries. Excellent companies built in “the old world” will face more difficulties and either transform themselves or disappear. Size, in terms of bigness, will not protect them from extinction. Kodak and Fuji and their core product, film, face most “uncertain future”, he said.
A week after Ohmae’s presentation, London Business School’s international marketing strategist George Yip delivered similar messages to the New Hemisphere Series attendees. We had to understand our quite distinct competitive advantages and take them to the world, he said. The global company “does not have to be everywhere, but rather have the capability to go anywhere, deploy any assets, access any resources, and maximise profits on global basis. The old conventional wisdom was to behave locally unless you can prove otherwise. I now say, behave globally unless you can prove otherwise,” he said.