Thought Leaders : Convert the dream

Irrespective of what size our firms are, we have goals that are measured against specific targets and timeframes and we vary actions to ensure that the goals are achieved. In all cases failure to achieve over period of time means change in personnel or process.
When you look at New Zealand businesses’ poor export and growth records over recent years, it is obvious that the economic targets we have set as country are wrong. The targets are not seen as believable or achievable, and the interventions by associated government departments are wasted.
What is urgently needed are realistic goals that New Zealanders believe in, that will deliver us success on world stage and that are seen to be achievable within timeframes capable of holding nation’s attention span.
The previous Labour-led government adopted the target of reaching the top half of OECD rankings in per capita GDP. Today’s Government has the goal of closing the gap with Australia in per capita GDP.
Per capita GDP is recognised indicator as it is good proxy for income per person. Measuring the target as ranking, though, is problematic because New Zealand could get richer, but if other countries also got richer faster than us, New Zealand would drop in the rankings.
The more important issue is that most New Zealanders have no idea of the meaning of economic expressions like “GDP per capita”, how it is calculated or how they can influence it: so having it as measure of change becomes irrelevant.
Nevertheless, based on 2009 OECD data, for New Zealand to reach the top half of OECD countries, it would have to increase its ranking from 21st to 17th. This would mean overtaking France, whose per capita GDP was US$33,679 compared to New Zealand’s US$29,176. This means we would need to grow 16 percent more than France to achieve this target.
It’s similar story with Australia. Its per capita GDP is US$39,351. To eliminate the gap, New Zealand would need to grow 35 percent faster than Australia. When have we ever looked like doing that? It is worth noting that the gap has widened since 2008 because even though we have been growing quite respectably, Australia has been growing faster.
Both these targets have been misused over the years, with politicians and business not really applying what it takes to achieve the goals or varying the goals to what would make them achievable.
Let me suggest that what is needed from Government is encouragement to business to set identifiable growth goals and targets, and provide support to help them be achieved.
At the end of the day, the living standards of all New Zealanders depend on what the country earns from business, especially those that export. If we are to improve our living standards and catch up to the living standards of countries such as Australia, more businesses need to convert the dream of becoming successful player on the world stage into success.
The goals we set as nation need to be realistic and achievable by larger tier of businesses across wider front. It has become clear in recent years that our current group of export heavyweights in agriculture and tourism lack the growth capacity to alone significantly lift living standards and New Zealand’s overall economic performance.
We need to find ways to grow export volumes and values in new areas such as ICT, film-making, clean technology and energy, high-value food and beverage products, and the many other innovative and creative services and products made locally.
Every New Zealand business has the potential to improve its performance. They should be given the motivation to do so. It might be about training, management skills, research, exporting or attracting investment, but the consequences of attention to any of the elements in dedicated way will over time impact on New Zealand’s growth and our nation’s confidence.