Magazine article New Zealand Management

A Step Beyond: Taking Business to the Next Level How Do Today's Business Leaders Help Companies Realise Their Potential in a Turbulent World? Going a "Step Beyond" Is the Theme of This Year's Top 200 Roll-Call of Corporate Success and We Ask Jonathon Ling, Head of 2006 Company of the Year Fletcher Building and Deloitte Chair Nick Main What That Takes

Magazine article New Zealand Management

A Step Beyond: Taking Business to the Next Level How Do Today's Business Leaders Help Companies Realise Their Potential in a Turbulent World? Going a "Step Beyond" Is the Theme of This Year's Top 200 Roll-Call of Corporate Success and We Ask Jonathon Ling, Head of 2006 Company of the Year Fletcher Building and Deloitte Chair Nick Main What That Takes

Article excerpt

After a performance that earned it the Company of the Year' accolade at the 2006 Top 200, Fletcher Building hasn't been resting on its laurels. Its recent purchase of US-based Formica for close to a billion dollars makes it the world's biggest laminates maker--and a Kiwi company with growing global reach.

That, says Fletcher Building's chief executive Jonathon Ling, is part of taking the company a step beyond its traditional business models and established markets.

"If you look at our performance from 2001 to 2005, that was all about turnaround--taking a company that wasn't performing to its potential and actually getting it to that level. By the time we get to 2005, we've got a business with high market share and excellent business metrics--so it's performing very well.

"The question in the chase for growth--particularly from the sharemarket's viewpoint--is how to grow from that position. And there's only one answer: back to basics--back to developing new products and new services, and creating new business models. That's where we're focusing a lot of attention--on creating a new business model and new business chain.

"Also, given our size, we're now looking at broadening our geographic horizons. As a company with six billion in revenue and six billion in market capitalisation we're finding that growth opportunities by acquisition are just not there for us in New Zealand and Australia. If we want to continue growing, we have to go beyond these shores."

While start-ups are now being encouraged to think global almost from first breath, Fletcher Building's growth model has been one of steady expansion.

"It's been focused on managing the risk, generating the performance and doing it step-by-step on a learn-as-you-go basis. You can't sprint before you walk or run," says Ling.

But there are other models of going global from New Zealand, notes Deloitte chairman Nick Main.

"The reality is that you are never going to become a world leader in a finite market and typically a lot of start-up companies are working in areas where early movers have an advantage--they have to get out there pretty quickly. And there are now models of how companies have done that successfully from a small capital base. But to make it work you have to have a lot of confidence, ambition, a sense of restlessness about what you can't achieve in the New Zealand market."

While our export challenge is demanding, says Main (ie, equivalent to adding three Fonterra scale companies or 150 extra Pumpkin Patches to our economy by 2020, according to the New Zealand Institute), it doesn't mean we give up.

"In some ways we under-scope the challenge but also under-scope the opportunity. I think we've demonstrated we can produce competitive product; we have competitive people; we've shown how we can succeed in all sorts of areas. We just have to package them up better--and don't sell out and give up when we get to a $100 million turnover or NZ-dominant position."

What about other means of generating offshore income?

As an (Australian) 'outsider' Ling questions the Kiwi fixation on exports and "having to reinvent something New Zealand offshore". Why not buy an existing offshore enterprise?

"I don't know whether there are statistics around ratios of offshore ownership as a percentage of GDP but I bet New Zealand would be lower than just about anyone else. The thing is all I have to do is take some of the New Zealand resources and cash and buy something overseas. I don't need to reinvent it--just own it and run it well."

Too much of New Zealand's equity goes into property but, adds Ling, just like the rest of the world owns New Zealand, we need to have equity in the rest of the world. "If we get too much imbalance then there's no future for the next generation--they'll be toll manufacturers or toll service providers ..."

Or we lose our best and brightest offshore. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.