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Leading the Way: Inspiring Maori Enterprise

John Tamihere Speech: Leading the Way: Inspiring Maori Enterprise

Keynote opening address to inaugural University of Auckland Business Alumni Conference, University of Auckland

Welcome/mihi

I would like to start by offering my congratulations to the Auckland Business School on the 10th anniversary of the Post Graduate Diploma of Business (Maori Development). 160 leaders have graduated from the Diploma course since it’s inception and many are here today. These people are “leaders” because, with the assistance of the diploma course, they have developed the wisdom to influence the future. Each graduate has contributed to their own learning, but also to the learning of others including lecturers, course members and the Auckland Business School. I want to reflect on some of New Zealand’s leadership challenges in the area of small business and entrepreneurship. Leadership

In 2001 a research team in United States, led by Jim Collins, published “Good to Great.”1 The purpose of the research was to understand what made some companies great but others only good. Their research was limited to listed international companies due to accessibility of data over a long term. The criteria for a “great company” was that it had maintained cumulative returns exceeding three times the market average over 15 years – achieving consistent, excellent performance over the long term. The research team was looking for insight to explain the factors that caused these companies to be great. One of the insights involved leadership. The leaders of those great companies are not names you are likely to recognise. They are not Jack Welch of General Electric or Richard Branson of Virgin. They are people who displayed personal humility and professional will. They were ambitious for the company, not for themselves. They displayed “a compelling modesty, were self-effacing and understated. They are fanatically driven, infected with an incurable need to produce sustained results. They were diligent. They attributed success to factors other than themselves. When things went poorly they took full responsibility. The point is these leaders were not charismatic, table-thumping celebrities. They were hard working, committed people who valued the people around them. When asked where to find examples of similar leadership, Jim Collins replied: “Look for situations where extraordinary results exist but where no individual steps forward to claim excess credit. You are likely to find great leadership there.” This type of leadership is displayed everyday in many aspects of our own community. In our community we have people with those qualities: community groups, sports clubs, emergency services, social services. And business. Wisdom is knowing what to do, leadership is doing it. And great leaders achieve consistent results, over the long term. A shared vision is vital to any leadership. This government's vision for New Zealand was articulated in the Growth and Innovation framework released in February 2002. That vision for New Zealand is:
· a land where diversity is valued and reflected in our national identity

· a great place to live, learn, work and do business

· a birthplace of world-changing people and ideas

· a place where people invest in the future.

An essential part of this vision is a high value-added economy, driven by innovation - the key to sustainable economic growth.

The goal of the government’s Growth and Innovation Framework is to return New Zealand to the top half of the OECD in terms of income per head. We will do this by focusing on the things that matter:

· doing better at turning good ideas into world-class products;

· developing the talents and skills of all New Zealanders;

· fostering our linkages with the rest of the world; and

· focusing on three sectors (biotechnology, information and communications technology, and the creative industries) that have high growth potential and can help grow other parts of the economy.

As a country we need to do more to improve our economic performance. At the same time our efforts need to complement the government’s broader set of sustainable development objectives.

So how are we going? Let us look at one aspect, entrepreneurship.

Entrepreneurship

First I'd like to share some general observations supported by various research sources, including the 2002 Global Entrepreneurship Monitor. Research shows that: · Entrepreneurship is a vital determinant of economic growth

· Entrepreneurship means the commercialisation or exploitation of innovation

· New Zealand has one of the world's highest rates of business start up activity - but this hasn’t translated into consistently strong economic growth

· New Zealand is one of the world's most entrepreneurial countries

· New Zealand has a very high proportion of opportunity entrepreneurs compared with the OECD and developed countries

· Maori are every bit as entrepreneurial as Pakeha New Zealanders. One research report noted that Maori (if ranked as an individual country) would be the world’s seventh most entrepreneurial country

· Maori and Non-Maori have similar proportion of start-up. But non-Maori firms outstrip Maori firms in “staying power” of new firms (still in business up to 42 months)

· Maori are likely to perceive just as many good start-up opportunities as non-Maori but have a higher “fear of failure” rate.

The expert panel in the 2002 Global Entrepreneurship Monitor study included 15 Maori. Their comments included general themes such as:

· Maori society lacks business expertise, financial skills and experience in acquiring capital

· Maori businesses are often hampered by lack of experience in governance and management

· The experts saw disenfranchisement, alienation and assimilation policies as undermining Maori self-confidence, ambition, motivation, and independent thinking

· Maori intrapreneurs (entrepreneurs operating within large corporate entities) and entrepreneurs are increasingly realising visionary joint ventures that bring together Maori capital and human and physical resources. These resources include tribal land, coastline, fisheries, ownership of tourism facilities and mineral deposits.

· Maori entrepreneurship is a major contributor to the New Zealand economy. The more youthful and fertile nature of Maori means they will represent an increasing proportion of New Zealand entrepreneurs in the twenty-first century.

There are many examples of Maori entrepreneurship. Here are two.

“IC Solutions (Indigenous Corporate Solutions) is a business that helps corporate companies work with Maori people.

It has developed a range of proven best practice models for corporate organisations with respect to Maori protocol training, consultation, alternative dispute resolution and Maori project management.

IC Solutions was hatched through Carter Holt Harvey's New Ventures incubator.

Its rise from an idea to a profitable business was meteoric. In a year it went from an idea to an established business with annual expected turnover of approximately $800,000.

In July 2001 it was one of 1500 New Ventures ideas. By April 2002 it was operating as a business. CHH New Ventures' support has been key to its success.
A comment from Willie Te Aho, co-founder, in NZ Business magazine: "It (CHH New Ventures) provided the discipline. Many people have ideas, but not all ideas turn into business because people don't have the discipline to go through the planning process. We had a great coach, Simon Rupapera, who had been through the process, and New Ventures provided seminars where we got to share ideas with others. In these ways the incubation process was invaluable."

Wendy Bennett, who has been in the food industry 26 years and owns Food Queens Catering, won the overall excellence in business award at this year's Maori businesswomen awards, beating 15 other finalists from around the country.
Dame Georgina Kirby, the founder and director of Maori Women's Development, said Food Queens, which was formed in 1999, offered a sophisticated and inventive indigenous menu that helped raise the awareness of Maori foods and herbs.
Hangi-flavoured chicken with watercress on a kumara pancake, wok-fired pipi and cockles, and Tohu chardonnay and garlic,'' are among the gourmet delights offered by Food Queens.
This year Food Queens won a contract with Fonterra. It has also worked on the sets for Once Were Warriors and TV's Street Legal.

The awards have been held every two years since 1995 to recognise and celebrate the achievements of Maori women in business.

The entries are judged on sales and profit results for the previous 12 months, management processes, the number of jobs created, marketing strategies and the contribution to the Maori community and economy.”

These are entrepreneurs that have overcome the “fear of failure,” I hope they also display staying power.

Most entrepreneurs are people working in small businesses - so what are we doing for small business?

Small Business

The performance of the economy as a whole largely depends on the performance of businesses. If businesses are not actively seeking economic growth, the economy’s cycle of growth will remain stagnant. If New Zealand is to achieve the government’s aim of returning to the top half of the OECD, close co-operation and partnership between central and local government, the private sector, and community groups is essential. This government is getting serious about small business. It is getting more sophisticated in thinking about small business, helping create new businesses, making small business productive, and growing small business. Small-medium enterprises or SMEs (defined as businesses with fewer than 20 full-time employees) make up 97% of all New Zealand companies. They employ 43% of all employees and produce 39% of all the goods and services produced in New Zealand.

We know that vibrant SMEs are important for New Zealand’s successful economic and social development, and sustained economic growth requires a pool of capable, talented and innovative SMEs.

Globally connected SMEs with international networks of customers, competitors, suppliers and research and development networks can grow faster than those solely focused in the domestic market. But they also face challenges managing the growth and taking full advantage of the resulting opportunities. Improved growth by SMEs, as well as larger firms, will drive the improved economic growth envisaged in the Growth and Innovation framework.

SMEs are not a homogenous group, and the government is moving away from dealing with them as if they were a “sector”.

We recognise that many of businesses have the potential and desire to grow into larger companies. Such companies will be assisted by the integration of Trade New Zealand and Industry New Zealand into New Zealand Trade and Enterprise. NZTE will be able to provide seamless support for such companies from start-up to the time they go global.

Other SMEs will always be small businesses. For some, being compact, fleet-of-foot and focused on their main product is their competitive advantage. Others, while small, provide essential products and services that support successful larger businesses. These firms are supported by government business information and training services and will benefit from our continuing focus on reducing government imposed compliance costs.

We still need to understand more about what motivates small business owners.

Recent research in the USA2 looked at the attitudes of small business owners. They categorized small business owners into three attitudinal profiles:

Mountain Climbers, Freedom Fighters and Craftspeople.

· Mountain Climbers are entrepreneurs motivated by growth and achievement, achieving something important. Freedom Fighters are motivated by independence, free spirits who dislike being told what to do. Craftspeople are independent professionals who chose to practice their crafts independently as opposed to working for others.

· The proportion of each attitudinal profile were as follows: Mountain Climbers 2% Freedom Fighters 24% Craftspeople 74%

· The results may be different if we did the same research in New Zealand – but I doubt it. We need to understand the attitudes of small business owners if we want to support and encourage their business aspirations. We need to get smarter in our dialogue with business owners.

We are working on this in a number of ways:

· Small Business Directorate: This year a directorate within the Ministry of Economic Development has been established specifically to support and champion small business initiatives.

· Small Business Advisory Group: The government is also establishing a Small Business Advisory Group to give SMEs a greater “voice” in policy development and to advise Ministers of issues facing SMEs. The nine members of the Small Business Advisory Group will be drawn from the business community and will have experience as an SME, or with SMEs. The appointment process is now in its final stages, and the group will soon begin its work providing ongoing advice to Ministers on any issues affecting SMEs. The Group will work with and advise the new SME Directorate.

· Ministerial Group for Small Business: Overseeing this enhanced SME focus is a group of Ministers led by the Minister for Small Business. The other Ministers are Finance, Economic Development, Commerce and Labour. Associate Ministers for Economic Development and Small Business are also members of the group.

· SME Summit: We’ve also provided funding to enable more regular communication between the government and SMEs. A feature of this will be the Small Business Focus events to be held in various centres during February to April 2004. This initiative was announced as the SME Summit in the budget. The events in main centres will be preceded by a series of visits by Ministers to small businesses. The Small Business Focus will review government initiatives and acknowledge small business achievements. Based on the dialogue generated during these events we will reset the priorities for our efforts, focused on how government services can be improved or enhanced to help small business grow and lower their costs of doing business.

· Additional support for research on New Zealand SMEs and analysis of the potential impacts of proposed Government decisions on SMEs is also provided for. Research projects contribute significantly to our understanding of SME performance and key issues. Research reports are widely used by SMEs, academics and government agencies.

The government’s new approach is developing a coherent, aligned policy and service focus across the whole of government.

The focus for small and medium business is consistent with the broader vision and framework of the Growth and Innovation framework and the Government’s sustainable development objectives.

There are many challenges for small businesses (both Maori and non-Maori) and for government in building a business environment conducive to growth

SMEs may be smart when it comes to taking opportunities. But SMEs need leadership: leadership from government, leadership from larger corporations and leadership from kindred entrepreneurs. The kind of leadership that creates great enterprise, enterprise that consistently sustains great performance.

We all have roles as business leaders. You may be an entrepreneur owner of a small business or an entrepreneurial manager in a big business. The Auckland Business School has helped you develop the wisdom to know what to do. I encourage you to continue to provide leadership by doing it.

As I said to you earlier, wisdom is knowing what to do. Leadership is doing it

New Zealand’s vision for small business is in the hands of business leaders like you. Leaders who know what to do and who to dare to be great.

Again, congratulations to the Auckland School of Business on the 10th anniversary of the Post Graduate Diploma of Business (Maori development), and congratulations to all the graduates over the last 10 years. Best wishes for the next 10 years.

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