It took Navman ten years to reach a turnover of $4m, a further three years to achieve $40m, and an additional five years to break the $400m barrier. The company did not survive well under its first foreign owner but eventually each of the four business units found new owners and all of them continue to operate successfully today. They all maintain an R&D focus in New Zealand. The fleet tracking business, Navman Wireless, also continues to maintain the number one market position in NZ and Australia.
Of the $450m of sales achieved in 2005, $300m was attributed to portable car navigation devices, truly the “odd man out” business unit from a New Zealand point of view. The remaining three business units, marine navigation, fleet tracking and GPS receiver modules could be considered a closer match to the more typical “narrow vertical” Kiwi business model but still punching well above the Kiwi average in terms of global market share.
There are several key ingredients to the success of any business. New Zealand has many well managed companies who grow steadily in the good years and manage to hold their own in the bad, but very few ever shift into “hyperdrive” and achieve international success. Why is this?
I have read many different papers written over the past ten years on the “key elements of success”, there are many different views but top of my list is the culture of the management team. To replicate a Navman success in a similar time frame the core team must manage the business with a sense of desperation and urgency. The management team’s view on what success looks like MUST be documented in a business plan and preached to the whole company. It is NOT enough to simply say we are $50m this year and will be $70m in two years. The plan MUST provide absolute detail as to how the goal will be achieved. Our plans could be termed as “anal” in nature but it worked. This level of detail must be visible to everyone in the entire company and everyone MUST believe the plan is achievable for it to work.
Once the company can tick this box on the plan, the rest is simply down to good old common sense, knowledge and EXPERIENCE. The reason it took Navman ten years to get to $4m in sales was our lack of relevant experience in the market we planned to operate in. We could do the development and manufacturing bit but we didn’t understand how distribution worked within our market.
New Zealand is building a successful track record in several international markets with its wine exports. We can clearly see that the successful companies are the ones who understand the power of brand and channel. Unfortunately the old “colonial, sell it at the gate” culture still exists and if left to run rampant, this can destroy the good work of the few stars who lead the pack.
New Zealand has a lot of great small businesses. Their greatest weakness is lack of ability to commercialise on a global scale. The brand and channel issue is one of the biggest stumbling blocks but lack of general business experience is our greatest weakness. Unfortunately you cannot learn this stuff at University and even if you could the typical Kiwi business owner would not be able or willing to take the time to learn it in the lecture room. The ONLY way to gain this knowledge is to hire in people who have “been there and done that”.
I truly believe that Kea is in a position to provide the means to connect Kiwi’s around the globe together. That is not to say that the guy you want to hire in Brazil will be a Kiwi but there is a good chance that there is a Kiwi in Brazil who will be able to connect you to a “head hunter” who specialises in finding the people you need.
The other key factor to Navman’s success came from building new business units that levered off, and added leverage to the business we already had. When we were making one million GPS receivers a year our cost for GPS chip sets, LCD displays and all the other components that made these products were about as low as they could be on a global scale. This allowed our marine electronics business to become VERY competitive. It provided our Navman Wireless division with the lowest possible cost solution in the world allowing the company to become the largest fleet tracking operation in the UK within three years of its market launch.
This “leverage” strategy is something the Japanese are masters of and something Kiwi companies need to learn. We are not naturally good at working together but when we travel and work overseas we begin to understand the power of the collective mentality. If we can translate what we do on the rugby field to business we will have a better chance of creating more Navman’s in the future.