Global competitiveness

1
Global competitiveness

• Global Competitiveness Report, WEF
• NZ Growth index - 14th 2003-04 (up one place)
  Business index - 18th (up four places)
• But gain from government.business slipped
  back over last 2 years
• Technology index gt from 11th to
  21st
• Information comms tech gt from 17th to 19th
• Innovation gt from
  10th to 16th
• Spending on RD gt from 28th to 33rd
• Presence in value chain gt from 31st to
  40th
• World Competitiveness Yearbook same verdict

2
NZIM Capability Index
3
Bad strategy

• New Zealand companies
• Optimisation is the prevailing business model
• More revenue, lower costs, fewer people
• But hugely vulnerable to new competition,
  shifting dynamics, external threats
• Fatally flawed
• Attempts at long-term, strategic approach
• Dogged by short-termism, ineptitude

4
Agenda

• Jump! How high?
• Our second chance
• Unfit, unready
• Shaping up
• China the phenomenon
• China the opportunity
• Our challenge, our genius

5
Good strategy

• Strategic resilience
• The Quest for Resilience Gary Hamel
• Harvard Business Review, Sept 2003
• www.hbr.org, search on Hamel, US6
• A strategy that is forever morphing, forever
  conforming itself to emerging opportunities and
  incipient trends
• An organisation that is constantly making its
  future rather than defending its past
• A company where revolutionary change happens in
  lightning-quick, evolutionary steps

6
Standing in the future

• Hindsight is easywhat about foresight?
• Stand in the future
• When we have achieved a big ambition
• (based on a lot of research)
• we can backcast
• to understanding how we got there
• the steps, skills, resources we needed
• NZ exponents
• Nick Marsh, Ian Ivey and colleagues abroad

7
Carter Holt

• Survival strategy Has to be world class
• Efficient, innovative, international
• 5 years into 10-year transformation
• Capex 1998-2002 452m
• ( ½ NZ forest industrys)
• Ruthless efficiency
• Kinleiths pulp costs cut by 23
• Internationalisation
• Aust. sales 30 gt 45 Asia 10 gt 20
• Innovation
• 30 of sales from products less than 3 years old
  (1/2 way there)
• Role model for its US parent
• Faraci Liddell run the global show

8
Start with the basics

• Rotaform20-year old, family company
• Was a workshopnot a manufacturer
• Even simple things were hard, went wrong
• Root cause illiteracy, innumeracy, denial
• Began in-house training 3 years ago
• Reject rates fallen 55
• Last year sales 34, profits 31
• Complex products eg spa pools, online
• Profit margin risen by one-third

9
Ambitionlearning

• Working on the business
• not in the business
• ICE House, Univ. of Auckland
• Owner-Operator Course
• 15 days over 5 months
• Sales growth 24 pa
• vs. 11 NZ sample
• Top quartile on course
• Sales 34
• Net profits 40

10
Benchmarking

• Centre for Operational Excellence Research
• Director Robin Mann, Massey, Palmerston Nth
• Benchmarking Club www.bpir.com
• Benchmark world class, scale of 0 lt 1000 points
• Baldrige and other criteria, processes
• 700 is world class threshold
• Only 2 NZ companies have ever achieved 700
• Average NZ company 150 points
• Average club entrant 260 points
• Goal improve 50 pts a yr, world class in 10
  years
• 40-42 of NZ companies benchmark performance
• But only 2 benchmark processes

11
World best practiceonline
www.bpir.com
12
Corporate scorecard

• GDP value added to goods and services produced
• GST value added tax
• (output revenue input costs) x 12.5
• Corporate value add per employee
• (GST x 8) / no. of employees GDP per capita
• Furniture industry 2001/2 42,300 pa
• Goal Double value-add per employee in 10 years
• using technology, design, branding, value chains
• You already add 250,000 of value per employee
• How will you double that in 10 years?
• Dells value add NZ1.3m per employee per year

13
Alliances Airways

• From Government departmentvia
• 1 Commercialisation (late-1980s)
• 2Technology leap (mid-1990s)
• 3 Reinvention (late-1990s)
• 4. Globalisation (from 1999)
• Partnership with Lockheed Martin
• Airways valued for technology management
• Poised for greatness
• to become

Model of a NZ, globalised, intellectual
property-driven company
14
Americas Cup

• Sport?
• No!
• Science technology
• High tech manufacturing
• Ultimate edge testing
• International alliances
• International marketing
• Team building
• These should be NZscore competence
• But Team NZ in 2001-03failed in allit was not
• World scale, class, speed

15
Success Swiss style

• Swiss Federal TechnologyInstitute, Lausanne
• Alinghi science
• Multi-disciplinary
• World-class
• Showcase for radicalrestructure of institute