Magazine article New Zealand Management

Growth? It's Up to Business

Magazine article New Zealand Management

Growth? It's Up to Business

Article excerpt

What's keeping CEOs of growth companies awake at night? Is it the economy? Compliance costs? Maybe, lack of government support for business?

Last year's results from the Fast 50 annual survey of New Zealand's fastest growing companies identified four main challenges: (i) managing cash flow, (ii) accessing capital, (iii) finding and retaining skilled staff, and (iv) maintaining an infrastructure that supports growth. A striking feature: the top three are challenges that the private sector can and does address--not issues for the Government to fix.

Obviously there are things the Government can do--improve the availability of skilled staff by investing in education or changing immigration policy, for instance. Certainly requests for the Government to do its job better--in the form of reduced compliance costs, reduced taxation, and more active support--came through the survey as well.

But the main challenges for business are ones where the private sector is just as well equipped as the state to make a difference. It's a sign of how far we have come.

Twenty years ago the Government held the keys to success for a business. Licences, tariffs, protections and subsidies provided the framework around which business was built. Today, much of the Government's focus should be on maintenance of the fundamentals already in place: a stable macroeconomic framework, an open economy, and a population with levels of health, education and welfare to participate actively in the economy.

Within this framework the ultimate challenges of business now sit within the private sector. While we may complain progress made in the past decade has stopped and we see a piecemeal rollback to old models, in general most of the responsibilities for growth lie with business.

Lifting the game

New Zealand's return to the top half of the OECD per capita income rankings by 2011 requires a step change across the economy. The goal requires an increase of 24 percent to current values. With OECD countries unlikely to accept nil growth, growth rates per capita of 5-6 percent over an extended period will be required. This looks challenging when we consider growth of four percent exceptionally good--much of that driven off increases in population.

Business is the creator of wealth and for national wealth to grow business must also grow. But how? M&A is no longer the automatic solution for chief executives looking to take their businesses to the next level. A less confident climate and the historical difficulties of actually reaping the benefits a merger promises have led business leaders to look elsewhere--and for many, innovation is now seen as the big growth driver. …

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