Could NZ ever grow a Cisco?

By Rod Oram

How well does New Zealand grow companies?

It is a topical question. We go to the polls on Saturday to vote for the party we believe will best develop our economy; and the world just got a new benchmark by which to measure prodigious young companies.

Cisco, a United States maker of internet network and telecommunications equipment, reached on Tuesday a market capitalisation of $US300 billion ($590 billion). It is now the third most valuable US stock market company. It is worth 11.5 times the entire New Zealand stock market. If you bought $US2000 of its stock on the first day of trading in 1990, your stake would be worth $US1.33 million today.

Yet it is a mere adolescent, turning only 15 years old on December 10. The two companies more valuable than it, Microsoft and General Electric, took longer to reach the $US300 billion mark - respectively 23 years and 106 years. If its share price continues to rise twice as fast as Microsoft's, Cisco will become the world's most valuable stock market company in 2001.

The list of reasons we have not grown a Cisco are obvious and long. For starters, we're not a technology hot bed; our market is tiny and distant; we don't have nurturing venture capital and financial markets; and we don't have a high-tech, entrepreneurial culture.

We could never match the US on those factors but we could change many of them for the better with appropriate policies, focus and commitment from the business, academic and government communities.

But let's consider the starting point. One way to measure it is to examine the best New Zealand corporate growth story of the past 15 years. That's a handy timeframe, matching Cisco's age and the start of our market economy.

It is rather misleading to pick the best-performing stock market company. Too many of our successful young companies are private or were sold as babes to foreign investors.

So this is an interactive column. Which company, established since 1984, would you nominate? What is its growth rate? What is its line of business? What are the key ingredients of its success? What contribution is it making to the country's economy? What is its outlook over the next three years? Will it stay a New Zealand company?

Taking a short view of the future is critical. The world is changing too fast for any company to have an extended right-to-life. It needs to constantly adapt to justify its role. Three years happens, of course, also to be the maximum life of the next Government before it must justify its re-election on economic and other grounds.

Please send your nominations by fax to 09 373 6423 or by e-mail to rod_oram@herald.co.nz. Further columns will examine the companies and themes you offer.