Ann Sherry
Group Executive, Human Resources, Westpac Banking Corporation

In Search of New Zealand Inc

On January 1 the year 2000, the world will be facing a new century. Judging by the varying tones of the end-of-century reviews, fears of cities being crippled by Y2K, warnings of Armageddon as giant hurricanes whip the US coast, we face the end of the century and millennium with a mixture of anticipation and apprehension.

What does the brave new world of the 21st century offer? What can we look forward to, for ourselves and our families, for our cities and our nations? What new journey are we embarking on?

It's no insignificant fact that New Zealand will be the first country to see the sun rise on the new year. I'm not sure what the people of Gisborne have planned, but certainly on Sydney Harbour the headaches are going to be of millenniumesque dimensions.

I was thinking of this and the future as I was pondering my outsider view of New Zealand.

Being the first to see the dawn might not matter. It doesn't have to.

But potentially you can use this event to turn the spotlight on New Zealand, and say, here we are in all our southern ocean splendour, a country so wonderful that the President of the world's most powerful nation wants to come and live here.

It depends on thinking creatively, seeing new ways of doing things, pushing out the boundaries and testing the possibilities of the new and different.

Today I've been asked to speak to you on the topic of Looking from the Outside In. I'm not proposing to bring a briefcase full of answers across the Tasman, because I don't have them.

What I want to do is launch a few ideas, to try and challenge you to see the future from a slightly different perspective. As public sector managers, it's the power of your imagination and skills for innovation that can chart a new way forward for New Zealand. You are charged with helping frame the policy and practice dimensions for your government.

Creating a millennium advantage is one idea.

To be honest, from my position in a large corporation based in Sydney, from the outside looking in, I see a nation with some incredible talent, some class intellectual capital, and leading-edge know-how in a range of fields.

But in a globalised world of capital, labor and ideas, you face a significant challenge. You're a small economy. That's the reality. New Zealand ranks 17th out of all the APEC nations that just recently met in Queenstown.

GDP per capita in New Zealand is about $US17,300 compared with $US21,000 in Australia. Your GDP is very much in line with the Gross State Product of Tasmania over the past 15 years.

With a small population of just 3.5 million people, you also support some of the best infrastructure of developed nations.

You're a sovereign state, so you have your own taxation system, your own health system, and your own social security system. You have a well developed education system. But you have to provide those from an earning population of just one million people.

If we were a group of executives doing an MBA project on New Zealand - New Zealand Inc - you'd have to say that we have to do some fast brainstorming, because there are some big challenges to overcome.

To put our New Zealand Inc on to a competitive footing poses questions that are not dissimilar to those that you would look at if you were running a company.

How can we get the economies of scale to compete in our market? How do we get our cost structures down? How much do we need to invest - and where do we invest - to grow in the future? What do we stop doing? What are our chief assets and our competitive strengths? And where do the opportunities lie?

This is not an exercise that New Zealand alone needs to undertake. Every nation has to accept that in a globalised world their economy is open to contest. Noone can try and erect fences to keep out technology or capital (not unless they want to see their currency plummet and their standard of living plummet with it.)

Today half of the world's top 100 "economies" are not nations, but companies.

Australia may be larger than New Zealand, but we still rank only eighth in the APEC list. We too have to keep running. Our economy is around the same size as Korea, but we're just a tenth of Japan. And compared with the US, we represent a miniscule 5 per cent - hardly worth registering.

The reality for countries like both Australia and New Zealand is that major companies can be just as easily based in New York or Bonn as Wellington or Sydney. Westpac operates in a domestic market, but we still have to compete against the might of any global player that wants to set up shop (regulation permitting). We have to continually look at our strengths, our assets, and our costs. In New Zealand, increasingly your major companies are based elsewhere - yet you are regulating as though they are not.

So there's some hard thinking for everyone to do.

From the outside looking in, can New Zealand afford totally separate regulatory systems from that of Australia? There must be ways to further integrate the systems of New Zealand and Australia and create stronger trans-Tasman synergies.

Collaboration and partnering are emerging as the business models for growth and value in the information era, not strict, stand-alone competition in the old sense. Where is the government model that recognises this is more than the odd Trans Tasman Ministers meeting?

Possibly we could think about the historic invitation in Australia's Constitution that allows for New Zealand to join the Commonwealth. Australia is voting on whether to change the Constitution to become a republic in November, why not join with New Zealand?

The union is probably not feasible, at this point. Apart from our own citizens, and the strength of nationalism we have fostered over the last 100 years in particular - I suspect the International Rugby Board would have to step in to ensure that the Bledisloe and World Cups remains a contest!

But what is feasible is generating synergies between our economies, strengthening and extending our capabilities, sharing in knowledge and expertise. This effort can offer substantial rewards; certainly it's worth investigating. We may think we've been there and tried that, but the demands of a new century urge us to do it again. Think again and be open to testing the boundaries.

Looking at your opportunities

If we're looking for opportunities for our New Zealand Inc, we could easily start with the events that are scheduled for the next 12 months.

In fact, the first major event really started with the recent APEC conference. As the host of a major political and economic conference, New Zealand became the focus for the leaders of the region's nations - and their media.

Bill Clinton's desire to return as the ambassador to New Zealand may sound like a flight of whimsy, but it was an enormous thumbs up from a person leading the biggest economy in the world.

The next event as I've mentioned is the dawn of the year 2000 when you will be literally ahead of the rest of the globe, if only for a few hours.

The eyes of the world's managers of IT, telecommunications, and infrastructure will be on New Zealand as the clock turns to midnight, waiting to see if you survive the first bite of the millennium bug.

If your systems prove to be resilient, and then problems start occurring in other nations after you - like a domino effect across the time zones - then your reputation will be given a triple-a rating.

It's not often that you can have such global attention focused on the skills of your people and the strength and sophistication of your information and telecommunication systems. It's a niche audience that'll be taking note, but a valuable one.

I've also heard of some global corporations with call centres based in both New Zealand and Australia who are planning to call in support from us if it's needed, once the millennium moves to the later time zones in Europe and the US.

Our time zone at this end of the world is now giving New Zealand and Australia a competitive advantage thanks to our technology and people skills. Can we declare this the death of the tyranny of distance?

Distance certainly won't matter as much as it once did when it comes to the world's great sporting events.

Next year New Zealand will be hosting the America's Cup and Australia will be staging the Olympic Games. Here are two global sporting events bringing the world's attention to our nations and our region.

Are we doing enough to benefit from that? Are we showing off our wares? Are we marketing the technology and the superior service delivery that underlies them? Are we telling anybody about it? Are we linking the tourism potential?

The America's Cup may seem a trivial way to spend an awful lot of money, and we won't even mention the cost of the Olympics, but it represents a contest that truly deserves the name leading edge. It's a technological and logistical challenge probably unequalled outside of NASA.

For the America's Cup, New Zealand doesn't let its small population base or distance from Newport, Rhode Island, prevent it from taking on the challenge of the Cup. Nor should it prevent New Zealand taking on other competitive challenges.

I'm told that New Zealand company Virtual Spectator Yachting has developed computer animation and pay-to-view broadcasting over the Internet for the next America's Cup, and the product is being licensed for future Challenger series around the world.

Enthusiasm and innovation can carry New Zealand forward to world's best performance.

And looking at your intellectual assets ...

Of course New Zealanders aren't shy of performance-enhancing challenges.

More and more people are coming to Australia from New Zealand. With the slightest breeze at their back, New Zealanders seem to believe they can conquer the world. And they do.

Edmund Hillary did it in the most literal way in the fifties. Today Xena the Warrior Princess is conquering the television industry (even if she is fictional). Jane Campion the film industry. Colette Dinnigan fashion. Sam Neil acting. And Neil Finn popular music.

They are all people who are excelling at what they do, and excelling at an international level. Their New Zealand roots, and for some, their New Zealand home base, is not an issue.

The funny thing is that Australians when they hear most of those names would think I was talking about Australians. They don't really worry too much if their heroes were born across the Tasman. They're happy to ignore borders if they can get away with claiming the brightest and the best as our own.

And New Zealand does have some of the best and brightest. Your intellectual assets are exceptional and they cross the spectrum. I've experienced that myself in Westpac.

Westpac, as the Bank of New South Wales, opened for business here in New Zealand in 1861.

To place this in context, it was 21 years after the Treaty of Waitangi and just ten years after we opened our first branch beyond the Colony of New South Wales, in Melbourne.

The New Zealand branch opened 16 years before we opened in Adelaide, 22 years before we went to Perth, and a full half-century before we opened in Hobart.

Yes, New Zealand is important.

Since then Westpac New Zealand has shown they can do things better than Australia in many ways. New Zealand has developed many operation models that are much more efficient than those in Australia. The revenue generated per employee in New Zealand is higher, and the income to expense ratio is lower.

In New Zealand, they're leaner, less hierarchical, and they're actually more leading edge. The capacity of NZ employees to pick up new ideas and implement them is superior to their Australian counterparts. That might have to do with the size of the organisation here, but it also reflects an innovative capability and preparedness for change that isn't as evident in Australia.

You could say the question now for Westpac is also "what do we do with that?" First of all, we've invested heavily in New Zealand - $1.2 billion in the Trust Bank acquisition and creation of WestpacTrust. That's a huge vote of confidence by our board and shareholders in the New Zealand market and the New Zealand people plus gives us scale.

But more generally, what we aim to do is to learn from the innovation that is developed in New Zealand and take that back to Australia. It's actually an intellectual capital issue. How do you nurture ideas and make them flourish, and at the same time make them useful to your organisation ... to create what I call living knowledge.

The same intellectual capital issue is critical for government. I was interested to see The Knowledge Economy report prepared by the IT Advisory Group recently. If we're thinking, "where to for New Zealand?", then how to leverage intellectual assets is critical.

In the information economy, power will belong to those who can harness their intellectual resources the most successfully.

The opportunities are out there for skilled and educated nations to drive their production and their economic growth through meeting the diverse needs of diverse markets.

Sometimes even the buyers themselves haven't identified their needs. It's a fast-moving market place that depends as much on the capabilities of suppliers as on the identified needs of buyers. Hence an internet-based viewing of a yacht race!

Intellectual capital gives small nations the ability to carve out their future.

Just look at Ireland and its return to growth through serving as an IT hub for Europe. Or at Finland and its supremacy in the mobile telephony market. That most famous Finnish company, Nokia, spends more on R&D every year than does New Zealand in total. What's not so famous is that Nokia was once a pulp and paper company.

How to nurture intellectual capital to enable the transformation of a company or an economy is one issue. Another equally important challenge is keeping the intellectual resources.

With today's market for labor becoming global, everyone will be competing to attract and then retain the intellectual power of the best people. There's no doubt the "gold collar" knowledge workers of the future will be highly sought after.

Australia is also keenly aware of this issue. Just as New Zealand loses people to Australia, we then lose them to the US.

In the information technology industries, major companies and industry groups have recently formed an IT & T skills taskforce to assess the precise skills requirements that Australia will need in the immediate and long-term, then to devise strategies to fill the gaps that are already emerging.

From the outside looking in - New Zealand runs the risk of not managing for the skill gaps of the future.

Opportunity can often be a great reward for talented people: opportunity to advance their career, to work in a stimulating environment, to gain experience and responsibility in a range of areas, and to work with respected peers - salaries are 5 times what can be earned here is another lure (as has been mentioned).

New Zealanders are obviously keen pursuers of opportunities. You might say that the most interesting thing about Australians is that 325,000-400,000 of them were born in New Zealand. Your people are highly mobile.

This should not necessarily be seen as negative. Going out and gaining valuable experience elsewhere in the world can actually boost New Zealand's intellectual stocks. The challenge is ensuring that New Zealand can then attract those people back - you will know better than I do whether your national investment in education is serving you well or serving other labour markets better.

The encouraging news is that workers in Ireland where the brain drain has been chronic are now starting to return home, partly because of an active recruitment program, but also because simply Ireland now offers opportunity for its people.

Smaller nations such as New Zealand and Australia might hate the idea of a global labor force and a global world of competition, but it can have its advantages. While globalisation can homogenise markets or peoples or cultures, it can also fragment it - an issue that academics, business people and political leaders are currently grappling with.

The fragmentation means that while we might have the global players in our market, and lose our people to the greater opportunities they can offer, we can also start encroaching on their ground.

I was interested to read recently that production companies in Hollywood are starting to complain about losing work to lower-cost and more innovative providers around the world.

Lucy Lawless is a warrior princess because New Zealand has the technical and creative expertise to make the Xena series here. For the same reason the X-Files conspiracies about the US are made in British Columbia and the next two Star Wars films about intergalactic power plays will be made in Sydney.

Technology and globalisation have changed market dynamics forever. The array of knowledge-based services to export is really only limited by your capacity to have ideas, to innovate, and to implement to make it happen.

The Power of the NZ Brand

Making it a reality, of course, by having the agility to spot the opportunities and go for it, could be your greatest challenge.

I noticed that some of the world's biggest media companies such as News Corporation were being criticised by a business writer last week for failing to see the potential of the Internet. A new player, Yahoo!, had outmanoeuvred them.

Industry lines are truly disappearing as competitors start to experiment with new ways to tap customers. Media, financial services, telecommunications ... we'll all be on-line and all competing with little acknowledgment of national boundaries.

In the ensuing confusion of converging industries, we should remember what we're actually selling is our company name. In traditional business, brand name equalled a particular product. But increasingly, the brand name will equal reputation and it will equal our people's capacity to deliver service.

Customers, not products, are the focus. The company that owns the brand can actually try and sell anything on the strength of their brand.

The value and power of Microsoft, after all, is not in software factories. It doesn't own them. It owns the power of its intellectual resources to be the fastest and the best in the software market. Its assets are intellectual, not physical.

The power of New Zealand Inc in a global market revolves around what does the New Zealand brand offer - what does it deliver?

I have heard the brand defined as a particular can-do mentality. If you buy New Zealand, then you buy quality. You buy strong customer service. The people of New Zealand Inc are agile in responding to challenges. They embrace technology, they innovate in their work processes, and they are change resilient.

These strengths are the very strengths now taking preeminence in the information economy. Companies that have powerful intellectual resources, and are proving to be agile in the face of change, are winning.

If I'm being honest, then the brand also has its negative points. One New Zealander told me, "we're not prepared to beat our own chest". Nationalism may not be such a positive force - as we have seen in Europe.

Part of seizing opportunities is being able to assess your strengths and communicate your achievements - what you do best - to the market. You also have to actually recognise your way of doing things as innovations and find a way to create a market for them. You have to decide whether New Zealand Inc is viable longterm and if so why and in what form?

I can think of some examples of innovations - worth mentioning:

• The management of the Maori-European interface in New Zealand is different to indigenous policies in other countries. But is that knowledge being captured and marketed? Shared?

• The New Zealand labor market is highly deregulated and as a result, the workplace is more flexible, productivity is greater. Is that experience being packaged, quantified and put out to the market?

• The issue of genetically modified food is creating customer concerns around the world. Is New Zealand marketing its clean food status? Is the message on-line? Is the message getting out?

• And the GST. It's just about to be implemented in Australia. I wonder if New Zealand organisations are selling their expertise to Australian firms.

Ladies and gentlemen, I think we share many of the same challenges. Change is sweeping through the competitive landscape and changing how we do our business and our governance and where we look for our solutions.

Here in the New Zealand public sector you'd know more about change than many of your counterparts. No public agency can expect automatic funding for its activities any more. Communities are demanding better value from a diminishing public dollar, and you have to deliver it.

We should remember that considerable intellectual capital resides in the public sector. Peter Drucker in his ground-breaking study of knowledge management, The Coming of the New Organisation, used as one of his models the British administration of India. It lasted for 200 years with never more than 1,000 staff.

The conceptual and administrative skills, the stores of knowledge that are called practice and precedent in the public sector are keenly sought in many countries. They're highly valuable. (Unless you subscribe to full upgrade).

For New Zealand, oceans, mountains and national boundaries are illusory barriers. It doesn't matter to the market whether the next great internet idea comes from Wanganui or Wollongong or Washington. You just have to make it happen!

New Zealand has outstanding intellectual capital and a long-held ability to be innovative, agile and when it comes down to it, fearless. The question now is do you have sustainable advantage - can you move fast enough - and are you simultaneously planning the next innovation - if not .....?

I wish you well.