The DNA of high-flying businesses
The DNA of high-flying businesses
The cry comes from everyone - politicians, civil servants, captains of industry, farmers, all the vital cogs in New Zealand's economic machine: for real prosperity, the country has to move from a traditional commodity base to high value developed export products which attract a premium.
The government's target of exports reaching 40 per cent of GDP by 2025 depends on this shift - moving away from commodities which can be swamped by world economic changes towards branded high value products which sit further up the value chain.
But KPMG's Simon Hunter says the reality is, even though many New Zealand companies understand the urgency, we need more companies to make the change.
Using agri-business, New Zealand's biggest export, as an example, he says the government's challenge of doubling the value of agri-business exports by 2025 requires a 6 per cent annual increase - but current trends suggest the gap will be $12 billion in 2025, widening to $40 billion by 2035.
So Hunter, KPMG's head of Performance Consulting, commenced a study to identify what he calls "Enterprise DNA" - isolating the detailed characteristics of businesses not only successfully facing the challenges of the world but profiting from them.
"We must have companies like this to fuel our prosperity, yes, and to pay for things in the future we take for granted now - like health and education," he says. "Without companies like this, we risk becoming a third world kind of country.
"This needs to be constructive - after years in the doldrums, this is New Zealand's time to unleash and regain our competitive advantage; we've never been better positioned. We need to be cautious that the 'she'll be right' attitude doesn't let the opportunity slip.
"The reality is that all too few of our businesses are taking the step of changing to become high value enterprises - most of that is being done by less than 10 per cent of our businesses."
Hunter's Enterprise DNA study centred on the qualities that have enabled companies like Air New Zealand, Vista, Greenlea Premium Meats, Tru-Test, Craggy Range and others to succeed in their sector.
"We need to understand what makes these companies tick; what DNA traits do they have in common? Our work has found they do have a common DNA structure or features critical to success which have been developed and aligned over time.
"Knowing what those features are is a key opportunity for any company wanting to increase the value it is creating. It's also a key opportunity to move more companies into a new performing space so we can hit those economic targets so vital to us."
Hunter says too many New Zealand companies are content to rest on their laurels; their principals often happy to do things the way they had always done them.
"Owning a business can be a very different thing from taking that business into a high-performance space," he says. "To my mind, many of those companies are a dead weight on our economy - the owners should sell or hand it on to their kids to run.
"Yet New Zealand is such a great place to do business. Look at all the positives - we have good rules and regulations, people want our products, we are closer to our markets than we have ever been and we are further away from the rest of the world when it comes to matters like terrorism and other massive disruptions."
Hunter says his Enterprise DNA study centred on a series of businesses performing in the way needed to hit our economic targets: "We looked at what they are doing differently. High value enterprises are not created by chance - they grow from a set of conscious decisions and do things in a particular way."
Those qualities broke down as follows:
- Pivotal leadership: Through consistent intensity, restlessness and relentless focus, they drive the business to greater achievements.
- Attitude: Clear and long-term ambitions to become the best. "The leaders and companies all had an attitude they wanted to be the best," says Hunter, "and sought knowledge to help them do it. They are confident but humble, never arrogant."
- Strategic anchor: A distinctive, strategic purpose which is never compromised though it can evolve. "They understand what they stand for and want to achieve."
- Investment and resource allocation: Investing in world-class growth while cutting that which is not delivering expected returns.
- Customer intimacy: Building an intimate relationship with the customer; understanding the emotional drivers key to maintaining it.
- Capable people: Great care selecting high-performing people to fit into the company culture.
- Connection & collaboration: High levels of investment in connecting and collaborating with world-class partners across the value chain and across industries to increase the pace and effectiveness of adding value.
- Deployment discipline: Relentless focus on delivering their core mission; innovating constantly in the core business and deploying a fast-fail model when things are not working.
Orginally published in the NZ Herald
© 2022 KPMG, a New Zealand Partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.