Member log in

The uncomfortable truths of Kiwi business

When it comes to the global success of Kiwi businesses, are we really the renowned, worldly innovators we think we are?

While the rest of the world is inventing the next nano-gadget or changing the face of industries that fundamentally affect the way we live, New Zealand remains a country seemingly content to live off primary sector exports, one that shies away from risk and one that takes a largely parochial view of business.

Don’t get me wrong: with the right application of our talents we have a lot to offer the world – some of our biggest and brightest are genuine influencers on a global scale. But it should be noted that, while the average Kiwi believes we punch above our weight on the world stage, it tends to be those exceptional few we are referring to.  

The truth is, if we aspire to be more impactful and relevant in overseas markets, it is critical for the next tier of New Zealand businesses to be much more proactive in thinking and acting ‘globally’.

This doesn’t just mean farming out our operations or products offshore; anyone can do that.

It means addressing the pathological caution that leads to a lack of appetite for innovation in this country. It means developing the experience and expertise needed to engage with the rest of the world. And it means putting greater focus on investment rather than falling back on costcutting.

In short: we’re overcautious, we’re inexperienced and we’re just too mean, and that needs to change.

The future is not for the cautious. How many managers do you know who gladly take risks with their people? How many give their younger staff stretch assignments, really big challenges that create big learning opportunities? How many set the tone and create the environment for new and innovative thinking? And how many establish processes for ideas to be created, assessed and turned into something exciting?

Sure, this is nothing new; businesses have been talking about the benefits of creative processes for years. The issue is, in New Zealand that talk hasn’t led to action, and because of this Kiwi companies are slowly losing the confidence of one of their strongest links to world markets – engaged and high achieving expats working in increasingly senior roles offshore.

Our expats are seeing companies that are not tuned in to the way business is trending globally. They see the gulf between the innovative, new wave of thinking of their adopted market and the ‘same old, same old’ caution back home, and can’t help but be uninspired.

Convincing them that we are truly geared towards acting and thinking globally is key to unlocking these markets, and it starts with demonstrating a passion for innovation and new world thinking.

This is where our lack of experience becomes evident. Kiwis are some of the world’s best tourists – we have been everywhere and seen everything. Yet, strangely, we are among the worst traders. Either we fail to recognise business opportunities or we lack an understanding of how to leverage them.

And without practical, real world experience, those opportunities will continue to pass us by.

More experience means getting out in the world and learning what our customers want and how to sell to them.  It means getting back into the classroom and up-skilling where necessary. And above all, more experience means recognising our shortcomings against global competition and working to address them.

Lean Meats, a Hawke's Bay lamb company, know all about this. Its move into the US market saw the company’s chief executive relocate to California to develop knowledge of the local market. The company is experiencing phenomenal growth under the Atkins Ranch brand – a name which, in itself, shows a certain level of savvy resulting from local market learning. I can’t think of any Hawke's Bay farm with the word “ranch” on its sign.

This isn’t to say we need to abandon our ‘Kiwiness’ – it is an integral part of our selling potential in so many markets. Rather, more experience means learning how to leverage it at the right times to make connections in international markets.

That’s what Jeremy Moon, founder of Kiwi clothing label Icebreaker, is doing in Australia. His product screams ‘Aotearoa’ in a market which many believe to be a tough sell for our national brand. Not for Jeremy, with his Marino jumpers being snapped up by punters in Sydney and Melbourne by the thousands.

Jeremy’s point of difference is his understanding of how Aussies want to see and experience Brand New Zealand. His story is as much about a sensational Kiwi product as it is about sound market education and a passion to sell his vision to the world.

Our competition is no longer the shop down the street; it’s the fast moving startup in China and they’re not waiting for us. They’re studying for post graduates and doctorates, they’re up-skilling and they’re hustling for business.

This is why the “she’ll be right” attitude should no longer have any place in New Zealand business. Instead it must be replaced with innovation, learning and investment in our people, lest we risk being left behind.

Phil Veal is a founder and managing director of Matakite Capital, an alternative asset manager based in New Zealand. He is chair of DialedIn, a provider of cloud sales software. Phil has a Bachelor of Engineering with honours from the University of Canterbury and chairman of Kea, New Zealand’s global network. Phil is an active investor in early stage businesses.

Comments and questions
7

A good article Phil, but one that will probably not get much traction as most of us in NZ do not want to be told we are not "punching above our weight" we like living in our own little fantasy world.

NZ is a classic case of the boiled frog syndrome. Here are some examples:

1) Headline from the Government: NZ exports to China are booming since the FTA. this is fact.

Reality: Australia's exports to China are / were growing faster with no FTA.

Reality:

Sorry pushed the wrong button before finishing above.

Reality is that our exports to China are growing in the commodity areas (dairy and wood), the growth in value added products has been something like 20% since the FTA according to the NZTE CEO Peter Chrisp but in the same time the Chinese economy grew by 40% so we are going backwards. Hardly a success.

This is not being negative for the sake of being negative, this is a wake up call for the government (John Key, Bill English, Steven Joyce) to start asking some hard questions on why we are not achieving better results. Some of this is we are too conservative and a lot of it is that we do not ask hard questions.

This goes also for the NZVIF and their management. 10 years ago they got $200m to invest and grow a Venture Capital industry in NZ. Using their own KPIs they have failed totally. But instead of asking what went wrong and looking to change things they are allowed to effectively abandon the VC market and start investing the Private Equity end of the market - an area that is no broken.

Phil

The main reason NZ inc is held back is governments soft politics around monopolistic behaviour on some key infrastructure companies.

It effectively stifles competition locally, with much of our youth brain power recognising this, and leaving for overseas to use their brain elsewhere.

Sadly, a large part of NZ's economy is based on short term bonuses and yes people, who have little concept of the damage they are creating for future generations of NZ citizens.

What it amounts to is poor governance, and the current administration are no exception to this.

Strong consistent governance and regulation are NZ's key to success, rather than the trickle up effect of Chicago economics.

Absolutely endorse your comments about going to market and continuing to learn. Can you comment on the following, a question which keeps coming up:- 'how do we sell high quality NZ products in the Asian market, for a premium price, with no recognised brand"?.

Why do we have to sell at a premium price? Some reasons, apart from the fact our PM told us to, are, we can't manufacture at scale, our low quality packaging is expensive and then we ship to the market, slowly.

Phil, you should spend time in Australia. The same arguments apply here....having lived in NZ for 10 years (and writing on innovation for the NBR) Aussies have a big advantage based on scale and an guaranteed source of future income by digging, drilling, growing or shovelling a vast amount of natural resources. What they seem weak at is strategy to take advantage of this.
Nothing wrong with seeing the proverbial Kiwi glass as half empty, but some things are working.
Can you name a single new AU consumer brand that has been created over the past 15 years or so? There are a list of Kiwi companies like Ice Breaker (I have recently been to new Ice Breaker stores in Toronto and Melbourne). When I lived in Ottawa the outdoor adventure stores raved about Ice Breaker products. You are right in saying that buying Ice Breaker means you also buy a tiny piece of New Zealand....and this is a good thing.
I was just n Ottawa to see part of on going marketing of NZ wines and beef / spring lamb to the restaurant trade and consumer markets. I can buy a sophisticated selection of NZ Spring Lamb in most grocery stores across Canada. Very little Aussie lamb anywhere.... Also, I lived in Ottawa I did Les Mills classes, I could buy Fisher & Paykel, 42 Below, Anchor, Jason Designs (ironically its Canadian image souvenirs are made in NZ) and even olive oil made in Martinborough. There are very good technology companies also engaged internationally. I'd say that is pretty good for a very small country.
It is hard not to notice that NZ strategies such as design thinking are 10 years ahead of the thinking in AU. I have talked to forward thinking executives here who freely admit that Kiwi thinking is often ahead of what happens in AU.
And what about Fonterra? It is ridiculous not to see this as a world class way to grow the dairy market. It just bought another business in Tasmania.

I can guarantee that you will not find articles like this in AU publications. There is very little introspection that a fundamental problem is poor management of assets and people. We blame the high dollar, GFC (which clearly was not a global financial crisis as countries like AU never went into recession), high labour costs.....you never read that the problem poor strategy or poor management. Productivity levels are very poor for a country with such advantage. The bigger long term problems seems in the ability to solve the problem of how the country will create value in the future.
As I wrote in the NBR in the late 1990s and later in Bright and Unlimited, go easy with your bashing of everything NZ.

Nice article Phil. On point.
I think about the experience gained over here in US. Particularly the significance of actually asking for what you want...and not getting caught up in the incorrect concern that such a request may cause offence. Your advice years ago ... And now is valuable and true. We must learn to get past some of these kiwi hang ups... International experience helps. But a mindset change back home will move the needle.

Great article Phil. Innovation we can certainly benefit from more of, but what NZ lacks more entrepreneurship in global markets. The reality is that many successful businesses in NZ are successful because of the isolation of the country and the consequential monopoly or duopoly they are in. Taking their business off-shore to a market like China where their business could be grown by an order of magnitude is a bridge to far for most NZ business leaders. There are a few of us that have dared to take the risk. But not enough. I sector of the NZ business community that is punching above their weight is the NZ Chinese community. They are showing the way for the "overly conservative sit on their hands scared of China" business leaders. Lets celebrate the fact that Fonterra and the other dairy companies are making the most of it. But we need more innovation AND more entrepreneurship if NZ is going to make the most of it.