Growth for growth’s sake is not something I admire.
In business, for example, sustained high returns on capital are a better measure of performance. However, the New Zealand business culture is far too “think small”. Make a couple of million – relax, buy a holiday home and a boat.
Exporting or growth is too much effort – who needs it when you are comfortable? What Kiwi can fairly quibble? Such approaches arguably show a more balanced commitment to family, friends and sometimes the community than spending time growing a company and competing internationally.
Unfortunately, this culture falls down in creating the skills and job opportunities for New Zealanders which only larger businesses provide.
We are not all able or want to be entrepreneurs or chief executives, but a Nation of small local businesses or branch offices will not create deep middle management; it will tend to limit research and product development; and, it will be relatively unattractive for ambitious quality management who do not want to start a business.
It also means less employment of the people who naturally congregate around head offices – consultants, lawyers, accountants, designers, cleaners, caterers etc and even once-removed groups such as those in tertiary teaching institutions.
While larger companies may not have the growth rates of start-ups, their scale and business practices can have a substantial and positive impact on employees, contractors, universities and so on. The New Zealand’s capital markets benefit more from the top ten listed companies than the bottom 50 or even 100. Were Fonterra to list it would attract international interest and some of those investors would get excited about other opportunities in New Zealand, potentially enabling smaller businesses to succeed and grow.
A few years ago, I was regularly approached by parties wishing to acquire Morrison & Co (www.hrlmorrison.com) – it made sense, the markets were ‘hot’ and there were many parties able to pay serious numbers because the business could be easily subsumed into an international model, with considerable overhead savings.
However, we took the decision to continue to build the business knowing full well that it was likely there would be financial ups and downs ahead – after all, in my case, I really enjoy my job and a pile of cash was not a real measure of success nor a route to fulfilment; I don’t need a new car or house; and, I believe New Zealand needs bigger businesses.
As a result of that decision, Morrison & Co employed Marko Bogoievski (over a year before I became aware I was ill) to become CEO of both Morrison & Co and Infratil (www.infratil.com), the listed company Morrison & Co formed and manages. Had that decision not been taken Marko, unquestionably one of the Country’s finest executives (incidentally with experience in both start-ups and large companies), would have been lost from New Zealand to offshore.
As a result of Marko’s appointment Morrison & Co and Infratil have been able to weather the GFC at the same time as investing heavily in the employment of many new top class executives and to expand offshore. As the world stumbles through the remainder of the GFC and then recovers to grow again both Morrison & Co and Infratil are better structured, resourced and positioned for the next 20 years of growth and performance – and, importantly, both will become increasingly material contributors to New Zealand’s success.
How can KEA members support the formation and development of larger businesses in New Zealand? A hard question to answer, but some suggestions : communicate with Directors and Management of New Zealand companies offering them ideas for expansion in international markets; actively participate as investors in NZX listed companies and as shareholders write to Boards and Management pressuring them to grow their businesses for long term gain rather than taking short term opportunities to sell or milk profits; join the NZ Institute of Directors or engage with New Zealand head-hunting firms offering your skills as Directors of New Zealand companies – in my experience, internationally based Directors who are New Zealanders can provide very beneficial input to local companies : they have different and higher skilled experience based on operating internationally; they often see the world differently; they are interested in New Zealand’s success and that leads them to consider a New Zealand directorship; and, while not available to attend every Board meeting, can be happy to travel to New Zealand regularly enough together with contributing by phone or email as required on other occasions.
In my view, New Zealand is better placed to succeed than in any time in my lifetime. But to do so, we’ll need a step change an aspiration/ambition and commitment. We need to understand the benefits of economic success and the necessity of such gains to enable us to create the society we long for. Successful kiwis living offshore have a real contribution to make is shaping these aspirations and achieving these outcomes.