New Zealand needs compelling corporate success stories. Transend, New Zealand Post’s global business offshoot, looked like one of them. But now it’s attracting media flak, partly because its chairman is controversial Ross Armstrong. But does it really deserve so much criticism? Is it politics or the tall poppy syndrome at work? Are Transend and its parent New Zealand Post mortally wounded, or just going through rough political patch? In many countries NZ Post is considered world-class performer. Transend and its strategy looked like winner too.
We have not lost our South African contract. It is business as usual for us, despite the impression given by the media,” said an irritated Transend general manager marketing, Suzanne Stephenson, month or so back. She was responding to reports that the South African government planned to end its $54 million contract with New Zealand Post’s experiment in global diversification, Transend.
The company is the brainchild of controversial NZ Post chairman, Ross Armstrong, and Deloitte/Management magazine Top 200 chief executive award finalist, Elmar Toime. Transend’s public profile in New Zealand was virtually non-existent until this year. It didn’t even bother with listing in the Wellington phone book.
All that changed in April when first, disgruntled and anonymous NZ Post employees forced PricewaterhouseCoopers audit review of executive appointment procedures and expenditure approvals. In quick succession the South African contract story broke. “Transend operates worldwide to bring change to many political climates and business environments,” said Stephenson. “Change is not always welcome or popular.” Then Armstrong fell out with the board’s deputy chairman, Syd Bradley, and number of other board members as well. The NZ Post saga is an ongoing one.
But despite the bad publicity and Transend’s difficulties with its South African postal contract, the global contractor is notching up some impressive sales successes overseas, taking on some of the biggest postal companies and multinationals in its field and winning consulting and postal services contracts. Now it’s keen to consult on postal-linked banking operations. That decision might, of course, contribute to its ultimate undoing. The rigour of the thinking behind the Labour/Alliance sponsored People’s Bank is commercially dubious.
Armed with its questionably clever position statement – “longitude and attitude” – the company has, up till now, benchmarked itself against its international competition, just like its parent company did. Its strategy is to become the world’s smartest postal consulting, services and associated utilities business. It is building the business on the back of Transend’s New Zealand-based international mail operation.
Its CEO and driving force is the irrepressible, and sometimes flamboyant former Mobil Oil international marketing executive Drew Stein. His schizophrenic lifestyle has him bouncing from the bustle of exotic international destinations to the solitude of his Wairarapa cattle ranch, nestled in picturesque valley of the Tararua Ranges. The property, run during his frequent absence by his wife Laurel, son and handful of workers, is home to an astonishingly catholic assortment of birds and animals, everything from peacocks and parrots to prize-winning Simmental and Scottish Highland long-horned bulls.
Transend was launched three years ago. It now does business in 45 countries. Its latest “coup” is contract to install multimillion pound “transport optimisation system” for Britain’s Royal Mail. Now called Cosignia, the UK postal service is one of the largest and most respected postal companies in the world. It has its own international consulting company which, in Stein’s mind at least, puts its decision to buy Transend’s IT system for its core business into unique marketing perspective.
The world’s largest consulting and postal firms, some with 50 years’ experience, were sceptical when Transend entered the market. They didn’t believe that small and geographically isolated New Zealand could play successfully on the world stage. They were forced to take notice when Trinidad and Tobago awarded the company its first five-year management contract with five-year right of renewal.
Stein then moved his focus to Africa. Now Transend has work in South Africa, Botswana, Zimbabwe, Kenya and Nigeria. “Then we moved into Europe,” says Stein. Doing small jobs at first the company won major product sale in Sweden, deal that raised its profile considerably. “That was huge jump.” Now everyone that matters knows the company has arrived – particularly with the Royal Mail contract under its belt.
Stein credits NZ Post’s “historically good” international reputation for much of Transend’s success. The former government department was corporatised before most other postal organisations. The process in New Zealand was more robust and overtly successful than most international attempts to corporatise postal services. Consequently, foreign postal services beat path to Wellington’s postal headquarters in search of advice.
So Transend eased into existence as non-commercial advisory service. It focused on providing support for other postal organisations. Some money changed hands but generally “things operated on goodwill basis”. Then the real opportunity dawned on Armstrong and Toime. If they were in the business of dispensing advice, why not sell it professionally? Besides, NZ Post needed to diversify and find new future revenue streams.
The parent company was already benchmarking itself against the best postal services in the world and succeeding. In 1994 it was the Deloitte/Management magazine Top 200 Company of the Year. But becoming top performing company in New Zealand wouldn’t, of itself, grow the business. The list of opportunities for expansion of mail services in New Zealand could be jotted down on pretty small envelope. Here was window of opportunity. “They realised they could grow the business outside New Zealand’s finite market,” says Stein.
The company’s international operations, buried for decades within the NZ Post monolith, were brought out, dusted off and placed in new shop window called, originally, New Zealand Post International Ltd (NZPIL). It became subsidiary company and was re-branded. Stein was appointed chief executive.
Transend’s 2000 annual report published net profit of $23 million. Its global consultancy revenue accounted for 14 percent of its total $169 million turnover. Stein expects total revenue to grow 20 percent in 2001 and the consultancy revenue to grow by 50 percent. Transend is now an international cross border mail company as well as major consultancy. It is contracted to handle all New Zealand’s international mail, to and from the 189 countries recognised by the Universal Postal Union. The two streams of business “complement each other”.
Transend also handles international mail in Australia. It manages all Trinidad and Tobago’s domestic mail, and in Botswana it is involved in the management structure of the postal system and handles the country’s domestic and international mail.
In South Africa, where the controversy struck over the South African Post Office’s (SAPO) anticipated trading loss, Transend is involved in top level executive management of their domestic and international mail, and express parcels.
According to Stein, postal management and consultancy services are synergistic. “In some places we would not be in consultancy without the experience of mail management, and vice versa.” Being both consultant and hands-on manager gives the company an edge with many prospective clients. The value of the synergies will, according to Stein, become even more apparent in future.
If the original NZPIL was opportunistic with few defined goals, Transend is rigorously strategised. The company prepares one-year rolling plan, plus three- and five-year strategies. It also sells products and I