Grad Show presentation 25 November
Below you could find the grad show presentation given by Jon Clausen:
I do work for Fisher & Paykel Healthcare. We do not make fridges and dishwashers, although after working there for 15 years I am still unable to convince my Mum of that fact.
I’ve been asked to talk today on the future of business in NZ. The future of business in NZ is looking fantastic. The present may not be too good, but the future is fantastic. It’s fantastic for a few reasons; the rest of the world loves NZ. Bill Gates has a house here. The Dell family ski the South Island regularly and Google’s management team love to holiday here. We are fantastic innovators. Foreign firms want to invest in our businesses. And we have great NZ companies that have done it before! They have created jobs and wealth for NZ in the export arena.
I am lucky enough to work for one of these companies. Fisher & Paykel Healthcare is a company that is all about humidity. Humidity is necessary for life. The business started around 40 years ago with Dr Matt Spence at Auckland Hospital. He was struggling to clear secretions that were clogging the breathing tubes going into his unconscious patients in the Department of Critical Care. He took his wife’s Agee preserving jar, added a small heater element and some water and created the worlds first heated humidifier for ventilated patients. Not knowing how to commercialise the invention he went to the then DSIR who got Fisher & Paykel involved. F&P knew the market in NZ was too small, so two of their best salesmen were despatched around the world to sell humidity. Over time, the technology has changed and we have added more and more products to the portfolio. We have moved from a distributor based sales model to a direct sales model. 80% of our New Zealand 500 Million Dollar business comes from the 30 countries in which we have direct offices. 19% comes from the 90 countries where we sell our products through distributors. 1% is the size of our domestic business.
From that description of Fisher & Paykel Healthcare we can see a few of the secrets to success:
– a need was identified, in this case it is a highly technical niche
– an innovative product was created
– government support was given early
– the right partner was introduced, with capital
– we went global as soon as possible through distributors
– and then went direct as soon as possible afterwards
This makes it all sound easy, unfortunately as you know, its not.
The future of Business in New Zealand is outside New Zealand. The lifeblood of this country is built on Exports. Our main exports are still in agriculture, but this is changing with examples from food to film and even medical products. Underpinning this change is the Intellectual Property held by NZ firms. It is this IP that keeps us the global leaders in agriculture that we are. Other countries have grass and rain. They are unable to do what we can with it.
There are huge challenges we face in this global environment, but a lot of good NZ companies are doing well despite a slow recovery to the global recession.
The Pratt & Whitney/Air New Zealand partnership employs 350 people in New Zealand and have turnover of 300M New Zealand Dollars. They overhaul 10% of the Worlds A320 engines in Christchurch. Altitude, are a subsidiary of Air NZ and have a great business with turnover close to 40M New Zealand Dollars, refitting planes.
Innovation drives our economy. We are fortunate to be in the Asia Pacific region. Depending on who you talk to the recession hasn’t affected us too badly due to the drive of the China market, and Australia technically never had a recession. As we know China has millions of affluent people wanting better goods and more protein. Asians want healthy foods provided sustainably. Sustainability is increasingly important to consumers.
New Zealand has a good record in innovation, but we have a lot more work to do. The government has innovation on its agenda, but they will need to put their money where their mouth is. Not everyone “gets lucky” like Fisher & Paykel Healthcare. New Zealand doesn’t have a great record of turning these innovations into commercial opportunities.
Building this commercialisation link will happen with increasing capability thru our Universities, Polytechs, CRIs and then Business. The Applied learning environment provided at Unitec and the direct access for students to real life situations such as the businesses in Rosebank Road is key to our students understanding of how to commercialise opportunities. Our managers now and in the future need to build skills around Leadership and Innovation.
“Driving NZ up the Value Chain” is a key phrase used by Wayne Mapp the new Minister for Science and Innovation. The governments catch cry of “closing the gap with Australia” is a way to focus on the issues that will get us up the OECD rankings. If we boost exports we will boost the wealth of NZ and boost the NZ lifestyle.
I heard Brett Hewlett from Comvita talk recently and he had an interesting twist on the Export debate. Comvita with their Manuka Honey based offering export 82% of their products. Comvita’s goal is to move from Exporter to an Internationalised NZ business. With the basics in place like a Premium Brand, Great Research and Innovation, a Strong Route to Market and it all done Sustainably, Brett then explained what he meant by Internationalised NZ business…..or what we call IB:
An exporter will invest in product, while an IB will invest in the market.
An exporter will use distributors while and IB will have direct sales
An exporter is distant from the market, an IB is close to the market
An exporter will forge relationships while an IB will leverage them
An exporter will have breadth in the market, an IB, depth
An exporter will make minimal investment an IB significant market investment
Comvita, to get closer to their UK and Hong Kong Markets purchased their distributors. They chose to go deep into local markets and invest in them. Brett says, “You only get significant returns when you make significant investments.” Comvita can now leverage relationships it has built up overseas – “You don’t want to reinvent the wheel,” he said.
Brett’s four export tips were:
- Niche and valuable products and services always out do ‘cheap and volume’.
- Start Kiwi but recruit locally: send a Kiwi out to recruit locally in the market, and bring the Kiwi home before he thinks he’s a local, because he can’t think locally.
- One model of operation is not enough; be prepared to change what you do.
- What is unique in New Zealand is not necessarily unique overseas – really do your homework and have your unique selling point nailed.
Another example of a great exporter is Sir Ken Stevens the CEO of Glidepath. Who make baggage handling systems for airports. Glidepath is primarily focussed on the North America Market. Sir Ken talks about turning cutting edge ideas into commercial realities. It is necessary for Glidepath to innovate so they can:
– make things better
– keep ahead of the competition
– create an environment that challenges staff
– develop career paths
– discover paths to growth and prosperity
In relation to innovation Sir Ken says, most companies never find it, if they do, they struggle to commercialise it. I guess, the reality is that the market has moved on when it comes time to commercialise. Most companies are not connected enough. Most companies are too busy working in the business, not on the business.
Some tips from Sir Ken may seem obvious but he suggests:
– bouncing incremental improvements off your customers
– share smart ideas with your staff and get their buy in
– measure the effect on end customers in the market and almost every time, customers want something “better for less” and “simple is better”
A huge challenge for the future of business in NZ is getting small enterprises global. Students from Unitec are positioned uniquely to help these companies.
The future of business in NZ is fantastic. We are a small country that continues to punch well above its weight. Companies like Fisher & Paykel Healthcare are excited about the students produced by Unitec. And as you can see from the slides behind me, so are a lot of other NZ companies.
These students are the future of business in NZ and I think our future is in safe hands.