You only have to look at the performance of the current PM to realise that CEOs of big NZ companies are not really very talented - maybe if ALL of their remuneration came from creating additional value, they might be better - give someone a 5 million dollar salary for just keeping a ship steady really is a waste of money
It would be interesting to know who scripted the AI clone in the so-called "Richard D. Wolff (Youtube): New Zealand’s Economy Is Crashing — Here’s Why" as it is clearly not Richard D. Wolff. Prof Wolff, in his 'real' videos, warns that there is now an industry producing AI clone videos, and suggests ways of detecting them. This video ticks all the AI boxes. Listen by all means, but don't for a moment think it is Prof Wolff.
Thanks Peter. I was suspicious of this, but figured that this video was still based on Wolff's real work, such as an article on NZ. I'll try to work this out.
Your article Bryce along with other thinking commentators is finally pointing out the malaise that has become epidemic across the country and its economy. Businesses are failing solely because of poor performance at both boardroom and senior management level. Unfortunately, the nation's boardrooms have been captured by the Institute of Directors who have pushed hard for a number of years that one cannot be a director on a board unless you have completed one of their courses. Those courses do not a director maketh. Good quality directors are those with real world experience that have a good industry knowledge of those businesses they are responsible for directing. There are too many businesses being directed in the boardrooms by people who are only there because they have completed an I of D course and are of the right ethnic and gender grouping regardless of whether or not they have any knowledge of the business they are directing. Until those issues are addressed businesses will continue to fail or at the very least just remain afloat. There will be no growth under the current model used for selecting company directors.
I completely agree about the IOD. I joined for one year and having died of boredom (I acknowledge a short attention span) I let my membership lapse. I well remember telling a friend who was on a stock listed company board that if I got any more than 50% in any of my studies, I felt I had wasted some of my social life. He said "I employ people like you. People who can see through the system with fresh minds". I bet that isn't taught at the IOD.
Thanks Bryce, your commentary resonates very much with my own observations. There is as you indicate an unhealthy obsession with property investment instead of investing in industry sectors that create genuine value that we can sell as a trading nation.
Certainly a look at the biographies of chairs and directors of top NZ companies reveals a very high prevalence of qualifications like CA (Chartered Accountant) and legal backgrounds, often with prior roles as CFOs, partners in law firms, or investment bankers.
Amounting to a highly incestuous, self-reinforcing, limited gene pool of risk averse leadership, hardly conducive to building innovative, high value and often technically complex industries. Instead the country desparately needs directors (and indeed politicians) with strategic vision, industry connections and operational expertise, strongly motivated to make new things of significance happen rather than just minding the shop.
Lobbying for Government (and indeed government) to get out of the way, or even assisting with those kinds of purposes is ok by me, as long as it doesn't result in a lopsided NZ playing field, which it is a Government's role to prevent from happening.
The comments about investing in bricks and mortar (ie houses and buildings) are similar to those that Gareth Morgan was making in the early 2000's. Nothing has really changed since then. NZ lives in a house of cards. Rymans is a very good example of this; their business model is built on selling and buying buildings, not caring for people, (that's a sideline).
Hopefully, some leaders in the country will grasp the needle and make the difficult decisions needed to change direction.
Don't see Fletchers mentioned in the worst run businesses? Can't be many more incompetent!
When the press wants a comment on the economy they go to the trading bank economists who give them the narrative that most suites their bank and stimulates their most profitable sector - mortgages.
Bryce you need to do better than this. Here is the problem in a nutshell “Bagrie’s central diagnosis is that New Zealand’s form of capitalism has become fundamentally unproductive, addicted to an asset class that creates the illusion of wealth without generating real economic value. As he bluntly puts it, “You do not get wealthy selling more expensive houses to each other”. The national economy, he argues, is not building its future on innovation or productive enterprise, but is instead “banking’ on houses”.
Basically this is the direct result of settings by successive governments. Neither Labour nor National for decades have lead governments that address these issues. That’s why we struggle. It’s the settings (largely tax frameworks), the business leaders just operate within those settings.
The policy settings certainly don’t help Geoff, but the NZ boardrooms are pretty light weight and NZ businesses have massively under invested. Driving around the Gold Coast today is a powerful reminder of just how far behind New Zealand has fallen. Every manufacturing business I visited here today had their order books full for the next one to two years. Oh, and fuel was a whopping $1.60 per litre. And so on. The brain drain could very easily turn into a mass exodus. I think losing only 200 people per day has been extraordinarily lucky.
So very interesting. Personally I have been advocating for years with the chant ‘management needs to be improved, to leave their ivory towers, to be proactive in undertaking regular ‘side-by-side’ assessment of the work undertaken on the ‘factory floor’, communicate with the staff particularly asking for ideas, and do check-ups on all systems and procedures personally.’ E.g. Pike River - CEO personally check the evacuation hatches, complaints by staff etc. The boardroom often does not reflect the core business being conducted e.g. someone from the ‘floor’ and as you say the entrepreneurial spirit.’ Further, it seems, boards exist as a means for the elite to be rewarded politically or obtain a high source of revenue with little ‘cost to benefit’ analysis….
The many apparently separate issues currently affecting New Zealand ( the poor quality of business management, the constitutional impasse, de-industrialization, the high and rising cost of living, stagnating wages, increased inequality, foreign policy conflicts, immigration policy, infrastructure deficit, drug abuse and crime) are all closely connected and among these constitutional change is the key to overcoming all the other problems.
Many New Zealanders tend to be pragmatic, which means they like to look at single issues in isolation, and avoid "ideological" approaches which view all phenomena as connected, with systemic causes and a systemic solution.
Yet despite that tendency to pragmatism, we have suffered through four decades during which a particular ideology ("neo-liberalism") has dominated political and economic decision making, to our great cost.
The temptation now is to reject ideology and revert to the classic pragmatic ad hoc approach. That would be a fatal mistake. Pragmatic ad hoc methods work when society is on a basically sound course and needs only minor and occasional adjustments in specific areas. New Zealand has not been in such a happy place since the third quarter of the last century. Then since 1984 the political class as a whole has followed an imported ideology which is deeply flawed, has never been subjected to critical scrutiny and which has little relevance to our actual historical and social circumstances. That means that the governing class of New Zealand has been guided by a hopelessly inappropriate ideology.
In both diagnosis and prescription, tangata motu need to take a systemic approach. Our problem is colonialism, and that must be addressed before any of the other issues can be resolved.
That's the sort of rubbish which neo-libs have imposed on the public sector since the 1980's. The two sectors are completely different, requiring different disciplines. Part of the nonsense coming out of the public sector often these days are public sector employees trying to behave like they are in the private sector and feeding unintelligible gobble-de-gook which they think their board, i.e. cabinet, wants them to say.
Interesting comment. It seems to accept that the public sector isn't perfect and then blames this lack of perfection on an ideology. Many would argue that the public sector's failures are driven by a different ideology - that of belief in bureaucracy, social control and risk aversion. Of course the private sector stuffs up from time to time - it also succeeds. There will be food on your table tonih=ght - provided by private sector organisations.
I would never defend the public sector blindly. However, I spent time as a public servant, and then in local government. I greatly admired long term public servants, at all levels, who were there because they were proud to serve the public. What they did, and how it was delivered was according to policy set by government. However, post the 1980's managerialism crept in and being a "manager" seemed more important than performing the particular role of the department they were working in. The same applies in local government. The old "Town Clerk" class were often admirable people, as was the Director of Parks or the Roading manager etc. I well remember our Director of Parks had completed an apprenticeship in the Parks dept then a degree at Lincoln. His wife told me once that when they went overseas, she went shopping and he checked out ideas in that city's parks! I feel universities have much to blame. As a tech person I believe that often the best sort of training starts within an apprenticeship. That earths your thinking. Too many directors have not spent enough time near the workshops of our society, where many of our best undiscovered ideas exist.
Agree with Cameron. NZ is not broken but we have too few corporates who really deliver for their shareholders and the country. Spark, in which I have some shares, is a classic non performer which had such a good head start when Telecom was split.
We have a director class which overall is not getting the runs on the board. Contrary to many I think Fonterra is now getting things right under its indigenous (Kiwi) CEO.
With an over paid CE being paid $6m per annum selling our heritage which was built on the Milk coops being non taxed. I think he and his executive are dreadful.
It would be a mistake to take the listed stock market as being representative of the performance of the NZ business sector. The incentives for being listed (ability to raise capital, liquidity of investment) are massively outweighed by the cons - negative and pessimistic public scrutiny from a financially illiterate and depleted media sector, governance requirements unrelated to performance from the NZX, and the tall poppy syndrome associated with a culture that fails to celebrate success or understand that failure is part of a good risk mindset - if there is no failure then it means not enough risk was taken.
The proportion of listed market capitalisation to GDP is one of the lowest in the OECD from memory. Its a sign that the real money (and success) is to be had by NOT listing your company...
Most of the well run businesses I have seen up close are owner operated. I have never seen the press or government recognize them as a category. Lots of experience and competence there to be learned from.
You only have to look at the performance of the current PM to realise that CEOs of big NZ companies are not really very talented - maybe if ALL of their remuneration came from creating additional value, they might be better - give someone a 5 million dollar salary for just keeping a ship steady really is a waste of money
Luxon is so useless you do have to wonder just how mediocre his peers were at Unilever and the be appointed CEO of Air NZ beggars belief....
And assess his estimated nett worth against his Air NZ remuneration. He is wealthy-and-sorted thanks almost entirely to the New Zealand tax payer.
And boom, the hammer hits the nail on the head.
interesting isn't it - Capitalisim to the fore , but when things get tough taxpayers money is requested to keep them going ....
Capitalism 101 Peter. Privatise the profits, socialise the losses.
It would be interesting to know who scripted the AI clone in the so-called "Richard D. Wolff (Youtube): New Zealand’s Economy Is Crashing — Here’s Why" as it is clearly not Richard D. Wolff. Prof Wolff, in his 'real' videos, warns that there is now an industry producing AI clone videos, and suggests ways of detecting them. This video ticks all the AI boxes. Listen by all means, but don't for a moment think it is Prof Wolff.
Thanks Peter. I was suspicious of this, but figured that this video was still based on Wolff's real work, such as an article on NZ. I'll try to work this out.
I think the script is sound indeed, but not Wolff in my view, for I found it seems to lack any of his trademark Marxian overtones.
Your article Bryce along with other thinking commentators is finally pointing out the malaise that has become epidemic across the country and its economy. Businesses are failing solely because of poor performance at both boardroom and senior management level. Unfortunately, the nation's boardrooms have been captured by the Institute of Directors who have pushed hard for a number of years that one cannot be a director on a board unless you have completed one of their courses. Those courses do not a director maketh. Good quality directors are those with real world experience that have a good industry knowledge of those businesses they are responsible for directing. There are too many businesses being directed in the boardrooms by people who are only there because they have completed an I of D course and are of the right ethnic and gender grouping regardless of whether or not they have any knowledge of the business they are directing. Until those issues are addressed businesses will continue to fail or at the very least just remain afloat. There will be no growth under the current model used for selecting company directors.
I completely agree about the IOD. I joined for one year and having died of boredom (I acknowledge a short attention span) I let my membership lapse. I well remember telling a friend who was on a stock listed company board that if I got any more than 50% in any of my studies, I felt I had wasted some of my social life. He said "I employ people like you. People who can see through the system with fresh minds". I bet that isn't taught at the IOD.
Thanks Bryce, your commentary resonates very much with my own observations. There is as you indicate an unhealthy obsession with property investment instead of investing in industry sectors that create genuine value that we can sell as a trading nation.
Certainly a look at the biographies of chairs and directors of top NZ companies reveals a very high prevalence of qualifications like CA (Chartered Accountant) and legal backgrounds, often with prior roles as CFOs, partners in law firms, or investment bankers.
Amounting to a highly incestuous, self-reinforcing, limited gene pool of risk averse leadership, hardly conducive to building innovative, high value and often technically complex industries. Instead the country desparately needs directors (and indeed politicians) with strategic vision, industry connections and operational expertise, strongly motivated to make new things of significance happen rather than just minding the shop.
Lobbying for Government (and indeed government) to get out of the way, or even assisting with those kinds of purposes is ok by me, as long as it doesn't result in a lopsided NZ playing field, which it is a Government's role to prevent from happening.
The comments about investing in bricks and mortar (ie houses and buildings) are similar to those that Gareth Morgan was making in the early 2000's. Nothing has really changed since then. NZ lives in a house of cards. Rymans is a very good example of this; their business model is built on selling and buying buildings, not caring for people, (that's a sideline).
Hopefully, some leaders in the country will grasp the needle and make the difficult decisions needed to change direction.
Don't see Fletchers mentioned in the worst run businesses? Can't be many more incompetent!
When the press wants a comment on the economy they go to the trading bank economists who give them the narrative that most suites their bank and stimulates their most profitable sector - mortgages.
Bryce you need to do better than this. Here is the problem in a nutshell “Bagrie’s central diagnosis is that New Zealand’s form of capitalism has become fundamentally unproductive, addicted to an asset class that creates the illusion of wealth without generating real economic value. As he bluntly puts it, “You do not get wealthy selling more expensive houses to each other”. The national economy, he argues, is not building its future on innovation or productive enterprise, but is instead “banking’ on houses”.
Basically this is the direct result of settings by successive governments. Neither Labour nor National for decades have lead governments that address these issues. That’s why we struggle. It’s the settings (largely tax frameworks), the business leaders just operate within those settings.
The policy settings certainly don’t help Geoff, but the NZ boardrooms are pretty light weight and NZ businesses have massively under invested. Driving around the Gold Coast today is a powerful reminder of just how far behind New Zealand has fallen. Every manufacturing business I visited here today had their order books full for the next one to two years. Oh, and fuel was a whopping $1.60 per litre. And so on. The brain drain could very easily turn into a mass exodus. I think losing only 200 people per day has been extraordinarily lucky.
So very interesting. Personally I have been advocating for years with the chant ‘management needs to be improved, to leave their ivory towers, to be proactive in undertaking regular ‘side-by-side’ assessment of the work undertaken on the ‘factory floor’, communicate with the staff particularly asking for ideas, and do check-ups on all systems and procedures personally.’ E.g. Pike River - CEO personally check the evacuation hatches, complaints by staff etc. The boardroom often does not reflect the core business being conducted e.g. someone from the ‘floor’ and as you say the entrepreneurial spirit.’ Further, it seems, boards exist as a means for the elite to be rewarded politically or obtain a high source of revenue with little ‘cost to benefit’ analysis….
The many apparently separate issues currently affecting New Zealand ( the poor quality of business management, the constitutional impasse, de-industrialization, the high and rising cost of living, stagnating wages, increased inequality, foreign policy conflicts, immigration policy, infrastructure deficit, drug abuse and crime) are all closely connected and among these constitutional change is the key to overcoming all the other problems.
Many New Zealanders tend to be pragmatic, which means they like to look at single issues in isolation, and avoid "ideological" approaches which view all phenomena as connected, with systemic causes and a systemic solution.
Yet despite that tendency to pragmatism, we have suffered through four decades during which a particular ideology ("neo-liberalism") has dominated political and economic decision making, to our great cost.
The temptation now is to reject ideology and revert to the classic pragmatic ad hoc approach. That would be a fatal mistake. Pragmatic ad hoc methods work when society is on a basically sound course and needs only minor and occasional adjustments in specific areas. New Zealand has not been in such a happy place since the third quarter of the last century. Then since 1984 the political class as a whole has followed an imported ideology which is deeply flawed, has never been subjected to critical scrutiny and which has little relevance to our actual historical and social circumstances. That means that the governing class of New Zealand has been guided by a hopelessly inappropriate ideology.
In both diagnosis and prescription, tangata motu need to take a systemic approach. Our problem is colonialism, and that must be addressed before any of the other issues can be resolved.
Please identify the government departments that are better managed than these 'corporate titans'.
It is inaccurate to describe Air NZ and Rymans as monopolies - however their lack of management skill is accepted.
That's the sort of rubbish which neo-libs have imposed on the public sector since the 1980's. The two sectors are completely different, requiring different disciplines. Part of the nonsense coming out of the public sector often these days are public sector employees trying to behave like they are in the private sector and feeding unintelligible gobble-de-gook which they think their board, i.e. cabinet, wants them to say.
Interesting comment. It seems to accept that the public sector isn't perfect and then blames this lack of perfection on an ideology. Many would argue that the public sector's failures are driven by a different ideology - that of belief in bureaucracy, social control and risk aversion. Of course the private sector stuffs up from time to time - it also succeeds. There will be food on your table tonih=ght - provided by private sector organisations.
I would never defend the public sector blindly. However, I spent time as a public servant, and then in local government. I greatly admired long term public servants, at all levels, who were there because they were proud to serve the public. What they did, and how it was delivered was according to policy set by government. However, post the 1980's managerialism crept in and being a "manager" seemed more important than performing the particular role of the department they were working in. The same applies in local government. The old "Town Clerk" class were often admirable people, as was the Director of Parks or the Roading manager etc. I well remember our Director of Parks had completed an apprenticeship in the Parks dept then a degree at Lincoln. His wife told me once that when they went overseas, she went shopping and he checked out ideas in that city's parks! I feel universities have much to blame. As a tech person I believe that often the best sort of training starts within an apprenticeship. That earths your thinking. Too many directors have not spent enough time near the workshops of our society, where many of our best undiscovered ideas exist.
Agree with Cameron. NZ is not broken but we have too few corporates who really deliver for their shareholders and the country. Spark, in which I have some shares, is a classic non performer which had such a good head start when Telecom was split.
We have a director class which overall is not getting the runs on the board. Contrary to many I think Fonterra is now getting things right under its indigenous (Kiwi) CEO.
Fonterra is an accident waiting to happen.
With an over paid CE being paid $6m per annum selling our heritage which was built on the Milk coops being non taxed. I think he and his executive are dreadful.
It would be a mistake to take the listed stock market as being representative of the performance of the NZ business sector. The incentives for being listed (ability to raise capital, liquidity of investment) are massively outweighed by the cons - negative and pessimistic public scrutiny from a financially illiterate and depleted media sector, governance requirements unrelated to performance from the NZX, and the tall poppy syndrome associated with a culture that fails to celebrate success or understand that failure is part of a good risk mindset - if there is no failure then it means not enough risk was taken.
The proportion of listed market capitalisation to GDP is one of the lowest in the OECD from memory. Its a sign that the real money (and success) is to be had by NOT listing your company...
Most of the well run businesses I have seen up close are owner operated. I have never seen the press or government recognize them as a category. Lots of experience and competence there to be learned from.