The New World wine industry (i.e. particularly the USA, Australia and New Zealand) owes much of its success to its smarter production methods, not least being the innovative use of stainless steel plants derived from the dairy industry (now widespread).  That gave them the platform to produce very clean wine, with fine control during the fermentation process providing greater taste consistency.  Smarter consumer marketing has also been a major factor, which the Old World winemakers are only just starting to emulate.  Innovation is happening in wine styles, as well.

Pinot Noir is the Rolls Royce of red wine grape varieties, requiring intensive, hands-on care and labour in all stages of growing, harvesting and winemaking. Yields are lower too, and long cellaring is also normal. When you look at Pinot Noir from a business model perspective, you see complexity, high input costs and long working capital cycles.  Many winemakers avoid it for those reasons. (Fortunately for us, not all).

However, those very issues have been exercising the mind of one winemaker.  For the past seven years, he’s been quietly working away on an idea.  You’ve no doubt heard of Beaujolais Nouveau (based on the Gamay grape), especially if you’ve worked in London when the wine merchants race (literally,  using chartered helicopters) to get the first bottles on sale on the official release date.  Well, Chris Archer, winemaker at Alana Estate Wines in Martinborough, has achieved a similar style with Pinot Noir (Martinborough is home to several world-renowned Pinot Noir makers).  I won’t attempt to describe all the difficulties in production and processing that Chris had to overcome, but the story struck me as a powerful example of seeing an opportunity where everyone else sees a problem.

All the hard work has resulted in a very exciting new product - Alana Estate’s Lumiere 2008. Last night, I had the pleasure of enjoying several glasses with Chris at the new wine’s first public outing. Not only is it a great summer red wine, but it’s also very affordable, selling for NZ$40 in the restaurant last night, and was a big hit with nearly all of the several dozen who tried it, with many bottles ordered and drunk. Let’s hope that’s a sign of future commercial success.

Over the last few days, I’ve been asked a few times where I get my information, eg. on the financial system’s current problems. Essentially it’s just listening to smart people whenever I get the chance (eg. university, industry body and professional body presentations), talking with people I respect (of various backgrounds and political hues) and, especially, reading physical and online articles and books. And every now and again, I come up with my own thoughts too.

The internet gives me access to many more publications than I’d buy from Carries (the newsagent over the road from my apartment).  The Economist is always worthwhile (the print edition works far better than online), I subscribe (for free) to several financial, economics, business, and technical weblogs, and I get news feeds from leading newspapers and broadcasters around the world (quite a few more than I’ve listed in my blogroll links on the lower right of this webpage).  I include some sources which tend to take a different line to my usual prejudices, to hear alternative opinions and evidence (which I do occasionally take on board).  I subscribe to one or two political blogs but not many - they are generally too partisan and prejudiced for my rationalist taste.

All this is delivered to my “reader” - a Google service which aggregates all this stuff for me. Of course, one has to be disciplined about setting aside and limiting time slots for reading - it can absorb every waking minute if you let it.

Here’s a sample of recent stuff worth reading:

• “These are nervous times, but our banks are much safer than US and UK banks“, from Bernard Hickey’s Show me the money blog on Stuff, the Fairfax NZ news site.
• “Lessons to be learned from American financial meltdown”, by Roger Kerr in the NZ Herald.
• Three articles by Gareth Morgan in the Dominion Post:
  Gluttons table set by central banks; Great party, now for the hangover; Investors lose zest as loans become lemons.
• “A user’s guide to credit ratings” (.pdf file), from the Reserve Bank of New Zealand (alerted to me by Glenn Wilson at First NZ Capital).

For those trying to understand the current financial schemozzle and looking for historical references, Business Pundit has handily listed ten of the world’s most dramatic financial crises, with a short  summary of what happened, why, and the ensuing action.

• Swedish Financial Crisis (1990-1994)
• United States Savings and Loan Crisis (1980s-90s)
• Northern Rock Bailout (Great Britain, 2007)
• Tulip Mania (The Netherlands, 1637)
• Wall Street Crash of 1929
• The Japanese asset price bubble (1986-1990)
• The .com bubble (1995-2000)
• 1997 Asian Financial Crisis (1997-1999)
• Russian financial crisis (1998)
• Argentine economic crisis (1999–2002)

BP offers a “moral of the story” on each crisis which I found less useful, and it seems to have applied some form of ranking to these crises which I can’t figure out. Despite these gripes, the article is is a timely memory jogger.

President Bush’s bail-out bill has brought the almost-inevitable response from lawmakers - they are using it to tack on extra controls in areas which have dubious links to the original problem.  It seems to be a given, that once lawmakers and regulators start intervening in markets, they go too far.  And the result is usually not what they intend.  For example, Sarbanes-Oxley turned into a bureaucratic burden of huge cost and dubious merit. Clearly it doesn’t prevent much, and only encourages greater care by miscreants covering their tracks. It and similar regulatory burdens have cost New York a large share of legitimate corporate activity, to London’s benefit.  I predict that unintended consequences of similar or greater magnitude will come out of the add-ons to the bail-out bill.

The US isn’t the only country subject to this problem.  I’ve seen it in both the UK and NZ, too. For example, overly-prescriptive and restrictive employment regulation intended to protect workers has been one of the factors in the widespread move to contract labour in a number of industries.  The outcome for the shop floor is less employment certainty than before, not more, and not at all what the regulators envisaged.  Ask any employer about who employment law most protects and the answer will be under-performing managers and senior professional staff, who take ages to fire because of the bureaucratic process required. Yet their incompetence is far more likely to cause job losses among shop floor workers. Unintended consequences again. So incompetents get rewarded to go away, by bogus redundancies and settlements. When the law encourages deceit and the counter-measures are worse than the original problem, you know the law is flawed.

There are numerous other examples of this naive belief by lawmakers and bureaucrats that prescribing processes will assure outcomes.  Any good business owner or school principal knows it ain’t necessarily so.  Culture, ethics, leadership behaviour, peer pressure, and “the way we do things around here” are far more powerful tools.

Don’t understand what’s caused the credit crisis?  Thanks to the BBC and Russell Taylor, one of the writers behind Alex, the cartoon anti-hero of the City of London, here is Alex’s explanation, in the style of James Stewart in the movie “It’s a wonderful life” (which features Stewart’s character dealing with a bank run).

“So, you want to withdraw the money you deposited with us? Yes, well, I’m afraid we can’t give you back your money because we don’t have it.

You see, what happened is that we lent the money you gave us to Joe and the Kennedys and Mrs Maklin to buy houses with, and then we lent them some more money to buy a second property on a buy-to-let basis and a third rental property too and then we lent them some more money against the value of all the various properties that we’d lent them the money to buy, so they could go on a nice holiday.

In fact the money you’d deposited with us wasn’t enough for all the money we’d encouraged them to borrow, so we packaged up their mortgages and sold them on to some other people so that we’d have more money to lend more people to buy more houses.

Are you with me?

The problem is that the property market has crashed so that Joe and the Kennedys and Mrs Maklin can’t repay the mortgages on their houses, which means that everyone who bought those bonds is stuffed.

Which unfortunately includes us, as we also bought mortgage-backed bonds off other banks thinking we could sell them on to someone else for more money.

So we no longer have any money and we’re now perceived as a bad risk in the wholesale money markets, so none of the other banks will lend us any money, which they haven’t got in any case, because no one will lend them any money because everyone’s too paranoid about everyone else being a bad risk.

So I’m afraid we’re going into liquidation, but that nice Mr Potter in town will give you 12 cents in the dollar for your money which I think you’ll agree is a pretty good return on a triple-A rated bond these days.

But there is some good news.

We won’t be cluttering up your hallway with all that junk mail offering cheap mortgages and low-interest credit cards like we used to, so at least we’ll be doing our bit for the environment, which I’m sure you’ll agree is the most important thing.” 

The truth is out there.  Google’s Chrome web browser was invented by a beekeeper from New Zealand in 1959.  Jack Wyndham, now 88, took out a worldwide patent in 1971 for a “Type Goggling Appliance” that looks similar to the Google Chrome but could store only 50 words per minute. He dubbed his prototype (a modified chrome typewriter) the “Goggle Type”.  Unfortunately, he ran out of funds and his patent lapsed, enabling Google to pick up the idea when technology made his idea feasible.

Wyndham has now generously made his original “type goggling appliance” available for sale on auction site TradeMe, complete with records and photographs, with all proceeds going to Save the Children in Vietnam. Tech enthusiasts will be keen to acquire this historically significant artifact, which is expected to attract keen bidding from around the world. Bill Gates is rumoured to be be particularly interested.

Here’s your chance to buy an original art work and donate to charity at the same time.  The team at Click Suite, the interactive media design studio of which I’m non-executive chairman, spent Friday creating a variety of artworks which are now available to be purchased on TradeMe, the auction website.  All proceeds go to Save the Children in Vietnam.  Ignoring my own pathetic effort, this stuff is very good, so check it out.

Other Click Suite projects for Save the Children include a sponsored bike journey in Vietnam, and, next Monday, a fundraising Vietnamese dinner and charity auction with some excellent  and affordable items donated by Click Suite’s friends and clients.  Feel free to sign up for either.

TV3 covered the story last night as well, which gives you another chance to look at the art.

It’s taken far too long, but Microsoft has finally come up with an ad to take the sting out of Apple’s brilliant PC & Mac campaign.  Apple managed to turn PC into a euphemism for uncool.  I may be seeing something too subtle here, but if this ad works, it makes it un-PC to attack PC, because PC is now all these socially admirable (i.e. PC) people.

This is a vast slight improvement on those dreadful Seinfeld & Gates ads, which most people fortunately did not see, and actually reinforced Apple’s message that PC was uncool.

Update 1: After seeing this for the third time, I think viewers will soon get bored.  Response ads don’t persuade people to buy, they just counter the attack ads.

Update 2: I forgot to mention that I own Apple shares.

The Vista Group reconvened yesterday for the first time in several months and, over vegetable risotto and chorizo pasta, addressed the topic of local government and advertising, prompted by the launch of a new logo for Auckland, New Zealand’s largest city. Being a Wellington-based group, we couldn’t resist the opportunity to put the boot into Auckland’s new logo (and we’re going to take the Ranfurly Shield off them tomorrow as well):

• Frayed around the edges, just like Auckland.
• Like a chair losing its stuffing after years of being scratched by the cat, just like Auckland.
• Like a building under demolition, just like Auckland.

Magazine publisher and font designer Jack Yan went anal over the letters U and N.  We ordered him extra chorizo to calm him down. We then put on our white hats to find something positive to say:

• Like a building under construction, a work in progress, just like Auckland.
• We liked the Asian Pacific feel of the colours.
• We liked the printed jandals.

City self promotion is regarded sceptically at best by many.  I was on a board some years ago which initiated a revamp of the successful Absolutely Positively Wellington campaign, only to fall foul of petty parochialism among Wellington’s assorted mayoralties. (We only need one, but for some reason we have 4 plus a regional council). The dumbest response was that we should rename Wellington so that their glorified suburb could promote itself separately. I hope Auckland doesn’t suffer from the same problem, but it doesn’t look likely.

Last week in this series on selling a mid-size privately-held business, we asked what should you do to improve your business attractiveness. This week we’re asking what should you do to be ready for sale. That might look like the same question, but it isn’t.  This is about housekeeping:

• Tidy the books 1: Clean up those overdue debtors and creditors. Get rid of that old stock you know is never going to sell. The buyers will pick up that it’s junk, and may even give it negative value because they’ll have to get rid of it.
• Tidy the books 2: Get your personal business out of the business.  The Aston Martin, the boat, that club membership, the home entertainment system that you euphemistically call your home computer. Sell them to yourself if you still want them (ask your accountant for advice).  If your mistress or toyboy is on the payroll,  it’s time to make other arrangements for her or him. (I’m not joking, I’ve seen it).  It will make your numbers look better too.
• Tidy the books 3: Show you’re a credible and substantial business. Consider getting your last 2 years financial results audited (by a Tier 1 or 2 CA firm, not J. Bloggs from across the street).
• Tidy the paperwork:  Get all the contracts, leases, staff records, financial records, trademarks, patents, design records into shape and tidily assembled in one place. Then get a complete set of all key information copied and put into binders, and onto computer disk, in readiness for due diligence.
• Tidy the problems: Do something about those ticking bombs in the business. You know what I mean.  That product design issue which hasn’t blown up yet; those warranty claims which have yet to be processed; those customer and supplier disputes resolved; that argument with the taxman; the compensation claim from that employee you fired last quarter; the broken lathe.  Need I go on? The buyers will find out about them, one way or another, and you don’t want to be sued afterwards.
• Tidy the place:  If your business looks like a biker gang HQ, it will be priced accordingly. Make sure the site looks good. Pay your kid’s sport team to clean the outside area. Give the office a lick of paint.  Get the warehouse tidy. Dump the broken furniture.

There may be some costs getting your business tidy, but with your now tidy and audited accounts, you’ll be able to legitimately present those costs as non-recurring items the buyer can discount. Doing all this before you go to market means you aren’t rushed, and the buyers will see a well run business.  It will make due diligence very easy and lifts buyer confidence, which all helps when you’re negotiating the price and terms of sale.

New Zealanders have been beating themselves up for decades about their low productivity relative to the rest of the world. I’m not referring to how hard Kiwis work - they are famous for their high work ethic. No, this is about how much economic value is created for each hour worked, where NZ ranks low.

One common response is that NZ industry does not invest enough in capital goods to enhance its productivity, but that’s just not true.  NZ has consistently been one of the highest investors in plant and machinery relative to GDP.

So investment isn’t the issue. Indeed, NZ’s dairy products manufacturing industry is amongst the most efficient in the world. The answer comes clear when we look at the complexity of NZ’s exports.  Put simply, NZ doesn’t sell enough  complex (and by implication, high value) stuff.

It’s not just exports. Take housing.  There are lots of sawmills and small scale framing plants around New Zealand, but nothing like the high volume housing factories of northern Europe and North America, which both, like NZ, have traditions of wooden housing.  So NZ investment is high relative to value created, and volume is low, so the investment is sub-optimal.

New Zealand isn’t short of businesses creating innovative and complex products, it’s short of businesses making enough volume to make the R&D and capital investments really work.  NZ doesn’t need more innovation, or even more start-ups. It needs more of those it already has to become mid-size companies, and more mid-size companies to build into larger companies.  Get growing, guys!

PS. Thanks to economist Arthur Grimes for pointing me to this information at his lecture on the economics of infrastructure on Tuesday evening. More on that another time.

Most of us would kill for a line like this in a review of our product in a major US technology magazine:

… they are certainly the best … devices  I have ever seen or used, and the degree with which they can be upgraded and customized seems to be endless.

That’s from last week’s GPS World. The whole article is one long ringing endorsement of the Surveylab ike305.  Surveylab designs and markets the ike  range of professional data capture devices, combining a GPS receiver, laser distance meter, digital compass and inclinometer, and a high definition digital camera, all integrated with the latest HP IPAQ computer. Basically it captures the position and image of what you are looking at, rather than just where you are.  Primary markets are military, infrastructure and utilities.

So why am I telling you this? I was an early investor in Surveylab, and Leon Toorenburg, its founder and now CEO, sent me this as a warm-up to our upcoming AGM.  Great job, guys!

First we had the  firesale of Bear Stearns to JP Morgan. Then Indy Mac. Then the Fed’s rescue of Fannie Fannie Mae and Freddie Mac.  Now we hear about the collapse of Lehman Brothers and the firesale of Merrill Lynch to Bank of America. While not directly related, the UK’s Northern Rock near-collapse (only averted by nationalisation) and NZ’s widespread collapse of minor finance houses also share some common features - a reliance on debt to fuel property market speculation, over-lending to unsound borrowers, exposed by an increasing inability to raise new funds and repay old ones as they fell due.  Other major banks worldwide have had major writeoffs, and there may be more grief still to come (eg. AIG).

I’m no economist, nor am I a banker. I can’t say if or how these problems could have or should have been prevented.  The primary blame must lie with the leadership of the individual institutions. However, I  also believe markets generally work if you let them, and I suggest that, contrary to what some people might believe, some markets have not been allowed to operate.  By keeping interest rates artificially low whenever there was a blip in the markets, by avoiding hard decisions, by papering over the cracks, by refusing to take decisive action on issues, by avoiding some pain, all that seems to have been done is to make the collapse worse than the pain avoided in earlier years. So, I do wonder if a major factor in the scale of the US problems was the actions of its government and central bankers to avoid some market and voter pain over the years. There are a lot of retirees who probably now wish they’d suffered a little pain occasionally rather than lose their life savings all at once.

If you put off tough decisions, the problems don’t go away, the solutions only get tougher, and you risk losing everything. This is a lesson that national leaders, business leaders and the general public would do well to ponder in a broader context.

Because I’ve run several established technology-based businesses, people assume I’m a keen early stage investor. I’m not.  Early-stage investing  means taking a passive punt on a product/service idea, a business model, a management team, and a market that have yet to prove they all work separately and in combination, let alone be made profitable. Any early-stage investment is at best an informed punt, and one not to be undertaken by those who can’t afford to smile about the losses.

I invested in one early stage business in 2002, three in 2003,  and one in 2007. Five sounds like a lot but it means only one in nearly five years (and that was Xero). The amounts invested were relatively modest. Two have ceased trading (although I still think one of them could work with the right leader), I’ve cashed out one (which made up for the 2 duds) and the remaining two, although very promising, have a long way to go before seeing any rewards.  On balance, I’m ahead, with upside to come.

I made a small investment in another early-stage business today. I’ve got high hopes for the team, the idea and the potential. But, as Aristotle wrote, “One swallow does not a summer make.”  It’s unlikely I’ll be investing in another early stage investment any time soon, if ever.

OK, this a straight steal from Mr Lovemark’s blog.  Yes, I know - I’m being lazy - but it was too good not to share.  My comments are in italics.

Who amongst us has never unleashed some trivia at unsuspecting friends or family members? Tom Nuttles (I have no idea who he is and neither does Google) is publishing a book on September 4 and it is packed with such trivia highlights (or low lights) as:

• Humans share 35% of their DNA with daffodils (I know one or two who make the flowers look smart).
• Britons eat 97% of the world’s baked beans (Kiwis must make up the rest).
• The average British woman spends 2 years of her life gazing in the mirror (guys, use this at your own risk).
• Women are estimated to buy 80% of everything sold (according to Mr L, the other 20% comes from a list given to men by women).
• Hitler was on the shortlist for the 1938 Nobel Peace Prize.
• Two-thirds of Britons live within 5 miles of where they were born and raised.
• 70% of Land Rovers, first built in 1948, are still on the road.
• 62 of the world’s 100 richest men are married to brunettes (given SWMBO is brunette, I was tempted to make a remark here; but, as Falstaff says in Shakespeare’s Henry IV part I, “The better part of valour is discretion”*).
• No English manager has ever won the Premier League.
• No words in the English language rhyme with orange, silver, purple and month.
• The most expensive age of your life is 34 (gee, try paying for 2 kids away at university).
• The average age of a first time grandparent in the UK is 49.

* Just snobbily demonstrating the benefits of a good education here.  Most people give the quote the wrong way round.

IT magazine Datamation has published its list of the top 200 technology blogs (think of blogs as opinion and commentary websites) which it claims is a more considered list than the usually automatically generated lists based on counts of site visits, links and other indicators. Many will appeal only to the tech-heads, rather than a more general business audience, but it’s worth checking for sites that might be useful for your purposes.

By the way, ignore the numbers alongside the names.  They aren’t rankings.  The list is organised by subject areas, except for the first (big hitters) and last (highly recommended) sections. I tend to rely more on newsfeeds from several business papers and IT magazines for keeping up with what’s new, but I subscribe to several of the sites in the list (they’re all free):

• Read/write/web. I get the weekly summary, not the whole avalanche. Congratulations to Richard MacManus who drives it all from Kiwiland.
• Seth Godin. Really marketing thoughts rather than tech.
• Phil Wainwright. For software-as-a-service commentary. (SaaS and its allied technologies are going to change the way many small, mid-size and even large organisations get their IT).
• Saas Blogs. From the leaders of SaaS platform service Apprenda, but it’s not really self-promotion, just good airings of SaaS business issues and ideas. Congratulations to CEO Sinclair Schuller, who I’ve met and is a very nice guy.

I have tried quite a few others on the list, but unsubscribed after they proved irrelevant or boring or merely repetitive of others.  I also subscribe to some not on the list, so it’s not definitive.

Remember when providing company cars was a big part of staff remuneration? Many firms have stopped doing that, and simply pay staff more, with (subject to the whims of the taxman) generous mileage allowances. Why? Basically simplicity and flexibility.  The company car programmes cost far more to provide and administer than the payroll and expense claim method; and the internal angst and envy that went with them were not worth the hassle. Give them the cash and get rid of the problems.

CIO Magazine reports on a growing school of thought that suggests you should take the same approach to people’s business technology, ie. their mobile phones and laptops.  These are increasingly subject to personal preferences and, like  cars, companies face specification creep as everyone aspires to the latest status symbol.  Not only that, if you look around many businesses (especially in IT), you’ll see people who’ve brought their own computer to work, because they prefer them to the standard issue platforms that the company makes available.

If you could negotiate bulk buying deals, set some standards, and put all your sensitive and shared applications and information behind appropriate safeguards, what’s not to like?  The phone idea can fly - many companies already expect their staff to have their own mobile phones, and the network operators are coming up with group plans to cut down call charges and paperwork.  If you’ve a tech-savvy workforce, then maybe the personal laptop idea will fly too.  But I suspect it will be some time before the general workplace user will be ready for such a move. And, as CIO points out, many companies would resist it, for sound reasons.

But I still expect to see this trend grow.  Companies will impose standards and security through their web-based resources and applications, not through the desktop hardware. As the desktop reduces to a big touch screen with a fast comms link, and the phone effectively becomes the mobile personal computing and ID device which connects to that desktop at work and at home, why bother to replicate the technology?

In this series on selling a mid-size privately-held business, we’ve asked a lot of questions so far:

1. Why are you selling?
2. What exactly does your business offer the world?
3. What are your goals and dreams - inside the business, outside the business and after the business?
4. How attractive is your business, and what’s wrong with it?
5. Who are your key people, customers, suppliers and partners, and are you vulnerable to their departure?
6. How do you make yourself unnecessary to the business?
7. Which buyer types should you target?
8. Who would want to buy it and why; who should, but doesn’t, and why not?
9. Should you sell gradually or all at once?
10. Should you sell to family and/or staff?

Hopefully, the discussion has thrown up lots of ideas.  Probably far more than you can  hope to take action,  probably some that are mutually exclusive. So just what should you do to improve your business attractiveness?

I’m reminded of Sir Peter Blake’s famous mantra, “Will it make the boat go faster?”  If an idea didn’t result in the NZ America’s Cup challenger’s boat going faster, he wasn’t going to waste time on it.   Likewise you need to assess all these ideas you’ve generated against some criteria to determine if they are worth pursuing.  In any planning context, I find the following helpful:

• How much increased value will this add to our net worth?
• How well does it fit into our business?
• How much will it cost?
• How hard is it for us to to do?
• How long will it take?
• How much of my team’s and my time will it take?
• How likely is the projected outcome (e.g. market uptake, lack of competition, projected savings, etc)?
• What impact will this have on normal business performance, while we are busy doing this instead?

Or, in a nutshell, “Will it make our business easier to sell, and is it worth the effort?” Rank all the ideas and pick the few things, if any, that will really make a difference. Then get them done quickly.

Also don’t forget the old real estate agent’s advice: leave something for the buyer to do (especially if it’s long, complex, small value, or risky).

While New Zealand’s dairy products giant Fonterra is globally successful in an industry where science and technology are key ingredients, there are probably only about 200 or so serious international businesses across all sectors in .the whole country. As Stuart Corson points out in the September issue of Boardroom (from the NZ Institute of Directors, and not online), selling services based on labour time (however smart) is not going to be a driver of high national economic productivity. Corson argues that New Zealand can learn a lot from Finland, a like-sized sparsely populated country with a strong rural base, and some strong cultural similarities. He’s a former forestry sector researcher who’s worked extensively with the Finns for over 30 years.

Normally, whenever someone suggests Finland as a model for New Zealand, they get a response along the lines of:

• Finland is different – it’s got Europe on its doorstep; we’re thousands of kilometres from markets of comparable size and wealth.
• Finland struck lucky with Nokia; without it Finland is just another rural economy.

Corson doesn’t buy that. As he points out, there are plenty of countries within and adjacent to Europe which don’t have the Finns’ success, and physical location clearly isn’t a factor in their companies’ global prowess, for example in paper-making equipment. And there are over 3000 companies in the Finns’ ICT sector alone – which can hardly be all down to Nokia.

Corson puts the Finns’ success down to their bent for technology (they produce proportionately twice as many scientists and engineers as most countries in Europe), the preponderance of technologists in company leadership positions, and their appetite for risk and innovation in business investment. Aside from farming and its downstream industries, many NZ businesses could best be described as low entry cost (i.e. easy to get into). There are some very good technology and design-led businesses, but far too few at anything like international scale.

I’ve long held similar views: that the trick is to produce the engineers, technologists, designers and scientists, which means getting kids to want to do science and mathematics at school, and encouraging them to pursue technological tertiary education. You can’t order your teenager to do anything much, and expecting the government to do likewise won’t work either. So NZ needs to create a virtuous cycle:

• Rewarding our successful engineers, designers, scientists and technologists - and their teachers - where success means market success, not just academic esteem.
• Investing in their continuing development to build and deepen their technical expertise, business skills and leadership ability.
• Lauding the success (and earning power) of engineers, scientists, technologists and designers (and the companies that employ them), and getting that message to kids and parents.
•  Ensuring that the funding mechanisms which support our engineering, technology and design schools (secondary and tertiary) enable rather than hinder their relevance, quality and accessibility.

Encourage people to become engineers, technologists or scientists and they’ll gradually occupy a greater proportion of leadership positions, they’ll be more comfortable with technology-based investment for greater value and productivity, and they’ll create new businesses. Yes, some people and companies will be lost offshore, but will we be worse off? I don’t think so. And for those who worry that I advocate a purely utilitarian view, let me point out that a richer economy can afford more in social and cultural programmes, in infrastructure, healthcare and welfare, if it so chooses.

Disclosure: I am a non-executive member of the board of the Tertiary Education Commission in New Zealand, which administers government funding of universities, polytechnics, etc. and industry training. These views are mine, and not necessarily those of the Commission or the Government, which determines funding mechanisms and priorities.

My old colleagues at Fronde are having a dream run at the moment, with all this announced in recent days:

• Winning the national teachers’ payroll contract with Talent2 - implementation and hosting.
• Being selected as Google’s SaaS partner in NZ.
• Getting a buyer for a major component of its mobile banking and security subsidiary.

Great to see the plan working.