Dialogue: The heat is on - time for passion and vision

Carter Holt Harvey chief executive CHRIS LIDDELL says New Zealanders must make a commitment to build the world's best small country.

It's said that if you put a frog into a pot of boiling water, it will, not surprisingly, jump right out again. However, if you put the same frog into cold water and slowly turn up the heat, it will not notice the difference until it is too late.

It seems that in the past couple of months we have realised that the heat has been turned up. It's too easy to blame the problems on the Government when, as various commentators have observed for some time, the temperature has been changing for at least the past five to six years.

If we are to jump out of our pot before it is too late, New Zealand requires the same comprehensive approach as for any major jump or change programme - a call to action, a compelling vision, a set of supporting strategies, and people responsible for delivering the results of those strategies.

First, we need a call to action. Temperature signals have been coming thick and fast for the past two or three months. And yet there are still people who believe the string of negative indicators (poor economic growth, the exchange rate, the balance of payments deficit, the loss of talented people, low consumer and business confidence, even the Olympics) is just a temporary phenomenon. Luckily, these human frogs are slowly fading into the minority, as more and more people realise we are not on a winning path.

So the call to action is loud and getting louder, with the brightest development being that at least the debate is now in the public arena.

So let us start debating a compelling vision for our nation. This may be the toughest part of all, but if you don't know where you're going, any road will get you there. I believe we need to have a passion to transform New Zealand, to become the best small country in the world.

What does this mean and what are the strategies to get there?

Start with "best." Best means creating a unique and distinctive balance that only New Zealand can deliver - lifestyle and strong economic growth. If we get the balance between lifestyle and growth wrong, we will become a pleasant retirement home and tourist destination.

If we get it right, there will be no better country in the world in which to live.

We are lucky that the major components affecting our lifestyle (beautiful environment, climate, access to outdoors) are freely available, and with the right environmental safeguards, will continue to be so.

Strong economic growth is obviously more difficult, in either absolute or relative terms. We need strategies and targets for economic growth which are significantly more ambitious than the ones we currently talk of. This will mean, among other things, promotion of immigration and foreign direct investment in greenfield operations and new businesses. We need to get past the xenophobia these terms conjure up and accept that economic growth brings wealth and with it the ability to deliver on crucial social policies. Economic growth also implies aggressive growth in exports and more active pursuits of free trade zones.

Best also means a search for, and celebration of, excellence. Close enough is not good enough. Winning cultures attract winners, and we need a lot more of them. We should be promoting a culture that not only stops our brain drain, but attracts back the tens of thousands of talented New Zealanders who live overseas. We need to change our education structures to create the winners of tomorrow. It is not good enough, for example, to have only 2 per cent of our graduates in computer science, maths or engineering.

Look then at "small." This means not only geographic size and population, but also the flexibility that the concept of size can bring. Our culture prospers in small groupings. We need strategies that promote the strength of smallness.

For example, our larger companies and institutions need to find ways of acting like networks of small ones. They need to find non-traditional ways of promoting innovation and entrepreneurial behaviour, and speeding up everything, from decision-making to new-product development. Successful corporations overseas are already heading in this direction, creating a small corporate soul in a big corporate body. Company structures are changing, the nature of employment is changing and the skills needed to succeed are changing.

Clearly technology has a role here. It is sobering to note that the 10 largest corporations in the United States have five times the market capitalisation they did 10 years ago but collectively employ fewer people.

We also need to generate a continuous stream of new small businesses. We can afford to export our large businesses if we have a pipeline of small, fast-growing ones coming up in their place. To do this we need to establish innovator networks (for example, incubators, early stage venture capital). We also need to drive the commercialisation agenda for crown research institutes and universities to make them the source of new businesses.

Small also means small government. We need to find ways of decreasing the significant drag the government has on the economy. Government expenditure has increased dramatically over the past 25 years. Are we better off? We need to find a credible way of significantly shrinking the government. The government can also have a huge positive impact on the flexibility of an economy to respond to opportunities and change. We need to redefine government structures to make change and growth easier, especially for smaller businesses.

Who, then, would be responsible for delivering on these and other related strategies? All of us. My vision may not be yours, but enough of us need to agree on one for it to make a difference.

We also need to acknowledge that we all have played a part in getting ourselves into the mess we are in. I disagree with most of the Government's policy changes, but in the end they are reflecting the general mood of the nation.

Let's face it, business has done a poor job in recent years of taking advantage of a generally favourable policy environment and communicating a strong positive message about the importance of economic growth and wealth creation to the health of the country. The business sector needs to focus on strategies that deliver on growth, innovation and new-business creation.

Universities and research institutions need to become more oriented towards the commercial world and the promotion of excellence.

The Government needs to come up with a credible set of policies that will shrink itself and provide flexibility.

So it is time to jump. No major change is ever achieved without a groundswell of individual momentum.

Most important of all, we all need a commitment to personal leadership and personal aspirations that build towards the best small country in the world.

This is the first of 15 articles in which a cross-section of the community will provide views on how New Zealand can lift its economic performance and generate more jobs.

Tomorrow: Andrew Grant, of McKinsey & Co.

Herald Online feature: The jobs challenge

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