I’m amazed that Fisher&Paykel Appliances has waited so long to shift its NZ laundry appliance factory to Thailand. But although it’s sad to see NZ jobs lost, remember that this is in the context of F&PA having become a real global company. It is NZ-owned and its design and development capability, finance, strategy, supply chain and distribution channels are still managed out of NZ. We need more F&PA’s building global businesses headquartered here.

Here’s an OpEd piece I wrote on the subject several years ago for the DominionPost’s Infotech:

Exports are not enough
13 August 2001

“Export or die!” We have heard that message so often - and for many companies, it is the right message. Getting the world to buy a New Zealand product or service is an important milestone for a developing business. Lots of successful exporters are needed for a healthy economy - but they are not enough. The world’s most successful companies do not just export globally - they operate globally. That means having sales, service, logistics, production and development operating around the world. Look at the world’s greatest companies. How many do things only at home to ship out to the rest of the world? I can only think of one - Boeing. The others made the leap from exporting to international operations. Our own Dairy Board/GlobalCo (Ed. that’s Fonterra) has substantial and growing offshore development, procurement, manufacturing and logistics. More Kiwi companies need to recognise when to make that change.

Why? To minimise the cost of distance - freight, duties, foreign exchange risk and in-transit inventory; to reduce production costs, through greater volumes, lower material costs and lower manufacturing wages (an unpleasant reality); to get closer to customers for more efficient service and faster reaction to changing needs; to build critical mass for future investment; and to build credibility with large global customers.

I speak from personal experience. Deltec developed an advanced antenna technology for mobile phone networks - Teletilt - that enables network operators to adjust their cell coverage remotely and with improved signal quality. We began in New Zealand and Australia, explored SE Asia, and then expanded sales rapidly in China. Our products were key components of large infrastructure projects. We were the world leader in our niche. But as we grew and started to explore Europe and the Americas, our larger customers demanded the cost and service benefits of in-market operations. By mid-2000, we were getting a consistent message from global customers like Motorola and Nokia: “Set up full-scale sales, service, manufacturing and logistics in North America, Europe, China and Brazil. Do it now. Or don’t expect to get our business in future.”

The time had come to switch from a Kiwi exporter to a global business.

The capital requirements and the risks were large. Then the tech sector went into meltdown, and technology investors took fright. So we decided to sell. Andrew Corporation, a global competitor with complementary products and a similar vision for the future, recognised the value of Teletilt and our expertise. Our Wellington development facility will become their worldwide centre for developing advanced antenna systems. New Zealand will continue to play a key role in the technology. It won’t save the mainstream manufacturing, which would have gone to China eventually anyway, but we can reinvest in new opportunities.

My point is that New Zealand should not wistfully expect its companies to export everything from home. Global companies like Nokia, Vodafone, and Nestlé operate in many countries. The interesting thing is that large numbers of their high-value jobs are still at home- in development, marketing, and corporate administration. They are surrounded at home by a plethora of supporting organisations- in banking, IT, law, accounting, advertising, travel, short-run early-stage manufacturing, research, education, etc. Together, they bring home huge revenue and profit streams.

If New Zealand wants a high-value economy, it needs more than just exporters. It needs global businesses that operate offshore in all facets of their business. New Zealand should encourage its businesses to invest offshore, not deride them for it. Without global operations, we won’t get a Kiwi Nokia or Vodafone. With global operations, we look like getting a Kiwi Nestlé. We could sure do with some more.

PS. At the HiTech2000 Awards, Deltec won the High Growth Company of the Year Award, the Investing in People Award and the Supreme Award. When the tech-wreck got even worse, in late 2002, Andrew’s NZ R&D centre went too, but that could happen under any owner, and only validates my argument that we need our own global players based here. The home R&D is usually the last to go.

You’ll all be aware of the strange phenomenon in recent times of “the national skills shortage”. While immigration might be part of the solution, it’s a problem across the developed world, driven partly by demographics and partly by high economic activity. Industries across the spectrum are finding it difficult to attract staff, and frequently the call is for ‘the government‘ to restrict entry into popular or so-called ’soft’ courses, and to increase the number of engineering or ICT graduates, plumbing apprenticeships or whatever.

While governments can and have restricted funding to basic community and lifestyle educational programmes, it would take a very brave government to start directing who should do what courses, at what level. Who’s going to force your son or daughter to do a course that they don’t want to enter? Last time I checked, we don’t live in a dictatorship. And in any case, government workforce planning never works, except in very small and specific short term situations.

Demographics and population aside, the real problem is that we employers haven’t done enough at an early stage in the education process to get kids excited about working in our industries. ICT and engineering have done little to attract our brightest and best. (The Telecom Xtra-ordinaries haven’t helped either). Parental and academic snobbery made learning a trade something to be seen as second-best. So we ended up with few young tradespeople, while frustrated teenagers made teachers’ lives hell, instead of leaving school at 16 to learn a trade, drive a truck or even sweep the roads.

Our tertiary education system is generally very responsive to market demand. If the kids start turning up demanding more places in a trade or technical programme, we’ll figure out a way to satisfy that demand. Right now, that demand isn’t there, and it’s up to the employers and industries of this country to stimulate it. Singapore didn’t tell its kids to do engineering - government and industry together got them excited about the opportunities and provided the places for them to learn.

Kids aren’t stupid - they just need information. It’s simple - tell people (parents , students and teachers) about your industry. Do it early (at the start of secondary school, not the end) so they don’t give up on maths and science, if you want those skills. Tell them how much a plumber makes by the time they’re 30. Tell them about the opportunities for truckies (who need a clean licence, so keep out of trouble). Tell them about the vast array of jobs you can do, places you can go and money you can earn in the IT industry. Tell them that the easiest way to get rich (boat/bach/Beamer) is to build your own business and to do that you need to learn about making/growing/designing/delivering/managing stuff, and the easiest way to do that is to start by working for a successful business. Tell them about Peter Maire, Rod Drury, Sam Morgan. Get them excited - tell them.

Here’s a recent Infotech article I wrote in a similar vein, published on 9th April 2007.

Disclosure: I’m a non-executive member of the NZ Tertiary Education Commission.

I’m often asked to talk to groups and lead workshops for new entrepreneurs on strategic thinking. (I even get paid for it occasionally). In a nutshell, here’s what I say:

Clearly define your offer and how to fulfil it

• For the customer, investor, supplier and employee
• What, why, when, how, where, who?
• What not, why not, when not, how not, where not, who not?

Keep it simple

• Consistent, understandable, doable, communicable
• Simpler is easier, less risky, concentrates resources for maximum impact

Do it!

• Do the stuff you decided to do
• Cut out the stuff you decided not to do
• Fix problems before clearing backlogs
• Build the processes, organisation and style
• Put in place the people, resources and priorities
• Dedicate people to make change happen
• Measure, report and communicate progress on the strategy (up and down)

Think & act for greatness!

Simple, really. Any questions?

Unlimited’s March 2007 issue included an  interview with me by Fiona Rotherham at the time of the Fronde name change.  (Also the source of Matt Grace’s photo of me, which appears on my blog banner).  Regarding the name change, I’ve been interviewed and blogged several times and I think I’ve explained it enough now, but in case you missed it:

• We changed our name because we needed something that worked internationally.  Synergy did not - there are hundreds of them out there.
• We did it carefully knowing what we were giving up with the old name.
• One of our staff suggested Fronde (rhymes with blonde), one of several hundred names we considered.  We liked the historical and modern meanings, we liked the possible allusion to the fern frond, we got the .com and the trademark, and it doesn’t sound like a cure for haemorrhoids.
• Yes, we know - the revolutionary connotation of fronde is from the 17th century, not the 18th. 

So discussion on our name change is now officially over.  If you don’t like it, that’s your problem a shame, but it’s time to move on. (ED: Modified after an hour’s reflection)

What isn’t in the web version of the interview is a side bar in the printed version on ‘Strategic Thinking’- a highly encapsulated summary of a talk/workshop I am often asked to give.  See my next post for more on that. 

Blame Rod Drury and Tapio Sorsa for this. I started reading blogs to see how our name change at Fronde had gone, and I found myself joining in all sorts of discussions. Rod was too polite to call me a blog-hog to my face, but I know what he was saying when I wasn’t there. Tapio thought it was great profile. Anyway, the consensus was that I should start a blog of my own, so blame them.

I intend this to be a business-oriented site, touching on topics like:

• General business thinking (strategy, marketing, leadership, operations, etc);
• Industry, trade and the economy;
• Technology business (rather than technology itself);
• Comments on my companies (that are relevant in a personal blog);
• People, places and practices I think worth noting (for better or worse);
• Articles, speeches, etc. that I want to share.
• Reviews and events in which I think you might be interested;
• Isambard Kingdom Brunel (you’ll have to read my posts for that one);
• Education (a particular interest of mine);
• Thoughts and ravings on concepts and issues that catch my fancy;
• Other stuff that might be relevant to a business blog.

This blogsite is titled after Isambard Kingdom Brunel’s personal motto ‘En Avant’ - which means “Get Going’. Anyone who knows my leadership style knows that I want to get things going, get started, start delivering value.

Thanks to Tapio, Mike and Andrew for getting this built for me. I don’t have a clue how it all works - but I don’t need to. Hey, I’m a ‘big picture’ guy! Isn’t technology great? Also, thanks to Unlimited magazine and Matt Grace for the flattering photo.

Again, welcome, and I hope you find it worth visiting and joining in the conversation.

Some background information on me

I’m the CEO of Fronde Systems Group Ltd, a leading NZ-based IT services business. We design, build and operate industrial-strength business transaction and payment systems which connect the world to your business and your business to the world. With around 200 professionals in Wellington, Auckland, London and Singapore, we plan to expand into Australia and North America.

Other current activities include:

• Owner and director of Isambard Ltd and Isambard Investments Ltd, my private companies. Venture investments include Surveylab and Compudigm.
• Non-executive member of the NZ Tertiary Education Commission, which is the principal funding agency for post-school education, training and related research.
• Talking on business strategy and related matters - which led me to starting this blog.

Previous activities include:

• CEO and co-owner of telecommunications equipment maker Deltec Communications Group (HiTech Company of the Year 2000, sold to Andrew Corporation in 2001).
• CEO of mid-size electricity company Electra.
• Strategy consulting partner at Ernst & Young.
• Several boards associated with the above companies plus economic development agencies and government taskforces.

Later on, I’ll post my CV and other background information.