Jim Anderton Speech: Quality Conference

3:30 pm Thursday, 6 March 2003 Speech to the NZ Organisation for Quality Institute of Management 307 Madras St, Christchurch

For nearly 30 years much of New Zealand’s debate about improving our business performance and our economy was conducted at the level of vague generalities.

Although there was some recognition that there were problems with New Zealand management, or perhaps the policy settings, much of the Government contribution to the debate prior to 1999 was at a ‘macro-mush’ level.

Problems were to be solved by ‘lowering tax rates’, ‘diversification’, ‘letting the market find a solution’ or ‘better management training’ without much analysis of what specifically was happening at a business, regional or industry level.

As the first Minister for Economic and Industry and Regional Development for 30 years I knew that the Government had to re-engage with businesses and industries addressing real issues.

There is no point attempting to assist New Zealand industry without working out what is specifically impeding the regulatory environment, the infrastructure, management performance and industries.

This Government created both the Ministry of Economic Development and Industry New Zealand.

Both are working on and addressing specific business, industry and regional barriers to growth.

I have led a number of industry taskforces which as well as having industry representatives have a “whole of government” presence.

These industries including Wood Processing, TV and film Production, Textiles, Clothing and Footwear and the Design Industry have identified specific measures which would improve their industry’s performance.

Industry New Zealand is working closely with businesses to assist them to grow and create jobs. A Christchurch based company provides a typical example:

Mooring Systems

Mooring Systems Ltd is a Christchurch company which has invented an automated docking system called QuaySailor. QuaySailor is believed to be the first docking system of its kind in the world, and was recently trialled at the Interisland ferry terminal in Picton.

The company received a development boost with an Industry New Zealand business growth grant of $100,000 which helped the company carry out the patenting and commercialisation work required to bring the QuaySailor system to world markets.

Last month the company announced a deal to sell its QuaySailer docking units to Dover Harbour in Britain, a contract potentially worth $5 million.

The QuaySailor uses vacuum pad technology and the vacuum pads are able to position ships, sense loads, and can detach and reattach to accommodate vertical travel with rising and falling tides. No-one has been able to develop an automated mooring system on a generic basis before.

MSL managing director Peter Montgomery described the Dover deal as "the best thing I can think of happening to us."

The company has also received support from Technology New Zealand which helped fund the construction of a full-scale 40-tonne model of the unit at Lyttelton Engineering.

Mooring systems will be added to Industry New Zealand's Fast Forward programme designed for businesses demonstrating high growth potential.

Fast Forward is a programme involves case management of high performing companies to build their capability and to realise their potential for growth.

HITLab (Human Interface Technology) Business Growth Fund recipient

Christchurch based HITLab was set up as an annex of the highly successful HITLab in the USA.

HITLab investigates how to improve human-computer interaction and research products that could eventually replace monitors and keyboards.

Industry NZ gave funding of $331,250 (281,250 for establishment under Sector Initiatives Fund and $50,000 from Major Investment Service for feasibility study) to establish HITLab at the University of Canterbury in June 2002. Industry NZ funding allowed HITLab to enlist a consortium of businesses to push the boundaries of virtual reality in medicine, telecommunications, architecture, education and manufacturing.

The potential impact of HITLab's research is tremendous. It will influence the development of innovative students, researchers and businesses across a wide range of industries - not just ICT.

Like its US equivalent, HITlab NZ has the potential to create high-tech jobs, new companies, patents, international links and revolutionary new technologies.

HITLab’s New Zealand born and education director Dr Mark Billinghurst, returned to NZ to take up the position. He has been described by US technology trends guru, Richard Wurman as one of the 1000 most creative people in America.Dr Billinghurst's former boss, Professor Tom Furness at HITlab in the USA says Mark is a world treasure and will end up being revered one of the pioneers of our age.

KeyGhost (Business Growth Fund and Enterprise Award Scheme recipient)

KeyGhost is regarded as the leading hardware keylogger in the world.

Organisations suffer substantial losses due to increased cyber crime, unauthorised access and unacceptable use of computer resources. To combat this problem, software based keystroke loggers are used for monitoring computer activity.

KeyGhost Ltd has developed a hardware device which records all keystrokes typed on a keyboard, and can then display them at request. The device may be externally attached to the keyboard cable, or hardwired inside the keyboard.

The languages supported by the device have now been expanded to include all the major European languages, as well as Arabic and Hebrew

The company's products are offered for sale, via the company's website, over the Internet world-wide, to individuals (retail) and distributors or resellers (wholesale).

The company has appointed distributors in the USA, Canada, Europe (Germany, Italy, Sweden), UK, Israel and South Africa and is currently negotiating with distributors in other countries.

The company received Business Growth Funding to identify a comprehensive market entry strategy to the US for each of the main market segments identified, and to implement the market entry strategy to the US retail market for the KeyGhost Home Edition model.

The Business Growth Service provides established high growth companies with advice and funding of up to $100,000 to assist them to undertake significant expansion. To qualify, companies must have sound track records and high growth potential, and : an existing, operating business to build on have identified a significant market opportunity a product or service that would be competitive on world markets but presently find themselves constrained from fully exploiting the opportunity.

KeyGhost recently also won a Trade NZ export award.

And if we need thousands more business successes like these.

If we are to have real and sustainable improvements in our standard of living we need to improve productivity.

Studies of productivity showed that in the past too little attention was being given to the quality of New Zealand business management.

Late last year the Ministry of Economic Development released the most comprehensive study ever taken undertaken on business excellence in New Zealand.

Over 2,700 enterprises were surveyed about they way they run their businesses.

I believe good policy comes from looking at what works in practice – rather than what works in theory.

MED can’t develop effective policies to help businesses to grow by basing its thinking on an ideal world.

It can’t develop policy for New Zealand solely from text books written in other countries.

Business development policy will be better if it is based on the real needs and circumstances of people in businesses and communities in the New Zealand economy. That is what this study has provided for us for the first time.

This study is a snapshot of present day reality inside New Zealand businesses.

It identifies their strengths, weaknesses, and their uniquely Kiwi characteristics.

Government agencies involved in economic development need this information.

The study showed that some progress has been made over the last 20 years.

New Zealand business has moved from cost based strategies to increased attention to quality and customer requirements.

Encouragingly, a number of New Zealand firms have built a firm foundation from which they can be internationally competitive.

The study pointed to some key areas that deserve further attention by all those involved in business development, particularly long-term planning, environmental management, staff performance management, and research and development.

The Ministry of Economic Development’s study also points to a number of key factors that distinguish leading businesses in the drive for business excellence from other firms.

Leading businesses have a greater commitment to developing long-term relationships with all stakeholders in planning and developing their processes. They are more concerned about staff welfare, rewarding staff performance, and providing training and development opportunities. They invest heavily in developing new and improved products and services.

The study raises at least as many questions as it answers. It found once again that, in a small economy of small businesses, size does seem to matter. Many small firms appear to be operating in contradiction to the international models of business excellence but were still reporting good outcomes.

This suggests that we need to consider whether there is a different recipe for business excellence in SMEs.

But is was also clear that if small firms wish to grow successfully they must be able to make the shift from the small business recipe to a model more suited to larger businesses – which means investing in quality and capability.

The study also found that New Zealand firms do not cultivate strong relationships with other firms – networking, clustering, supplier chain relationships, or benchmarking. These have been identified by other work as an important source of competitive advantage.

That suggests to me that organisations and policies that encourage networking, sector strategies and clusters are on the right track.

The basic question at the heart of this work is: what does New Zealand have to do to meet our goal of moving back into the top half of the OECD?

For businesses, the issue is what they do internally to lift their performance, to ensure they have the skills and systems in place to thrive in the global economy.

For government, the issue is how we continue to develop and refine economic development policy to ensure that public resources go where they can add most value and how we ensure that policy across the board contributes to a positive environment for business.

Key points for government to take on board from the study are growing skills gaps, the pressures facing small business in particular, the impact of compliance costs and the accessibility and relevance of publicly funded business development assistance.

Over the last few years we’ve been working in all these areas. Initiatives like the Modern Apprenticeships and the Talent Visa will help address skills gaps. Late last year we announced a new work programme on SME issues. The Government is continuing to respond to all the issues covered by the Ministerial Panel on Business Compliance Costs.

Integrating Industry New Zealand and Trade New Zealand will give business a one stop shop for business assistance and we rigorously monitor and evaluate those programmes to ensure that our policy objectives are being met.

Let me show you why lifting productivity and moving into the top half of the OECD rankings for growth is important.

Overheads; New Zealand versus Australia and where we would have been What that would have meant Where an additional 1 per cent growth will get us versus Australia in the next ten years.

I have noted recently the excellent Annual plan statement from the Christchurch City Council which has a detailed triple bottom line statement as well as economic social and environmental indicators.

The way of the future is to develop methods of measuring and promoting sustainable businesses which use continuous improvement to benefit themselves, their customers and their communities.

New Zealand’s future is in the hands of New Zealanders.

This Labour Progressive Government is committed to sustainable economic development and we are prepared to work with you to make New Zealand the best small country in the world.

I congratulate you all on your commitment to quality.

Your attendance here today signifies your resolve.

I want to thank you for your efforts to make businesses stronger.

And I look forward to working more closely with you in the future.

Thank you.

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