Magazine article New Zealand Management

Top 200 : Deloitte Message -- Be Bold, Be Different

Magazine article New Zealand Management

Top 200 : Deloitte Message -- Be Bold, Be Different

Article excerpt

When we were developing the theme for this year's Top 200 Awards earlier this year we knew that business was in for some difficult times. Be Bold, Be Different was a challenge to business to take advantage of adversity. There have been many examples in the past where businesses have taken major strategic moves in times of turbulence that have improved their competitive position. We did not foresee just how challenging those times would become.

Over the past few months the world has experienced a financial crisis of a severity and scale unseen since the 1930s. Governments and central banks have been vigorous in their response as they seek to unlock credit markets, underpin trust in key financial institutions, and mitigate the flow-on effects to their real economies.

New Zealand is not immune. We have had three quarters of negative growth and the slow-down underway in the global economy will delay the hoped for export-led recovery, perhaps until late next year or longer. Bank lending criteria have tightened, retail sales are weak and unemployment is on the rise. The weakening dollar is a rare bright spot.

The hunt for scapegoats is on in earnest. Irresponsible financial institutions, loose monetary policy, highly paid chief executives, and even accounting standards setters have all been implicated by politicians and the popular press. There have been few mentions of the role of consumers and their appetite for living beyond their means, or the role of governments (including our own) in encouraging financial institutions to lend to people who could not afford to borrow.

This is not the end of capitalism or the market-based economy that many critics would welcome. Markets will remain better than governments at allocating resources and better than governments at alleviating poverty. But there will be changes. There will be calls for a return to some of the failed policies of the past and greater government intervention. These must be resisted. Increased regulation of financial markets will be inevitable. Risks will be redistributed now that governments have guaranteed deposits in financial systems. There have even been bizarre calls to regulate the salaries of financial institution executives. Many of the regulatory responses will have unintended consequences, and most of them bad. …

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