What Boards Can Do About Brain Drain
Not only are individual companies and industries battling for talent, but countries are, too. In the global competition for top talent, emigration of highly skilled workers —brain drain — can result in an especially pernicious drag on the source nations’ talent pools. Many countries are susceptible to flights of talent and experience its deleterious effects.
Is there any surprise that New Zealand has topped this category for another year? The Land of the Long White Cloud casts its spell over many people in many places, but seems to exert a special hold over British travellers with its mix of old-fashioned Englishness, stunning alpine scenery, vibrant Polynesian culture and obsession with extreme sport. The fact that it also produces some of the world’s best sauvignon blanc and pinot noir adds to its charm, while the quality (and freshness) of Kiwi cuisine continues to impress.
Apart from its sheer physical beauty, New Zealand is also a very compact country, which is fully geared to the needs of time-poor visitors, whether you’re enjoying a family campervan trip or staying at a top-notch country lodge. The roads are well maintained and largely free of traffic and there’s a modern air-transport system for those who want to pack even more into their travel itinerary. But the country’s single biggest tourism asset is surely its people, who are friendly, relaxed and a little eccentric. Passionate travellers themselves, New Zealanders are the world’s most natural hosts. No wonder so many Brits regard this plucky, outdoorsy and rugby-loving nation as their second home.
Exotic, but not too far away: that surely is the reason why our first runner-up, the Maldives, has such an enduring allure for honeymooners, scuba divers and dedicated beachcombers. Famous for its over-water resorts, flawless beaches and warm welcome, and only a 10-hour flight away from the UK, the Maldives also has one other great attraction: all year round sunshine.
Read the full article here.
Lorde’s song Royals deserves nuanced critique
The New Zealander’s song is a direct response to the sensation of being overwhelmed by overseas culture – something which doesn’t always translate abroad.
New Zealand isn’t really in the pop music export business. There are exceptions – Crowded House, OMC, Kimbra – but those drips don’t stand a chance against the torrent flowing from the US and UK. Instead, when New Zealand music has snuck out into the world, it’s generally been away from the mainstream. Flying Nun’s ramshackle guitars, Ladyhawke and the Naked and Famous’ arch synthesisers. That seems to suit our self-image as a nation – there’s a suspicion, bordering on disdain, for the unabashedly commercial within all culture.
Which is why it has been such a wonderfully strange experience watchingRoyals grab the world’s attention. The single is by Lorde, the nom de guerre of Ella Yelich-O’Connor, a singer from Auckland’s North Shore who turned 17 this week.
The production is spare and haunting, and the vocals somehow simultaneously vulnerable and imperious, but it’s Royals’ words which have propelled its ascent to the top of the UK and US charts. What’s so fascinating about its success in those vast, sophisticated markets is that its lyrics are a direct response to the sensation of being overwhelmed by overseas culture, particularly that which glories in excess and wealth. That’s a potent sensation, one familiar to millions the world over, but also the kind of subject tackled by essays and thinkpieces more than pop songs. Royals successfully tries to understand the push and pull – why we love something which so often describes a world bearing scant resemblance to our own.
The chorus goes:
But every song’s like / Gold teeth, Grey Goose, trippin’ in the bathroom / Bloodstains, ballgowns, trashing the hotel room / We don’t care / We’re driving Cadillacs in our dreams
The song then goes on to find satisfaction, even joy despite the absence of those totems from our lives. At least, that’s how it sounds to me. One of the many interesting things about Royals is the way different audiences grapple with its meaning. For some, the song is a stinging critique of consumer culture.
The New York Times noted its use as a victory song for the new New York mayor Bill de Blasio, saying that Royals “gives catchy form to what had been a major theme of the de Blasio campaign: his ‘tale of two cities,’ addressing the income inequality between the wealthy few and a struggling majority.” For me, it’s nothing of the sort – acknowledging the existence of an irony is not the same as loathing any part of the equation which causes that irony.
Other see its lyrics as disdainful of contemporary pop music. Based on the time I spent with Lorde – I wrote a lengthy profile of her for Metro magazine – the idea that she hates pop music is ludicrous. This is a woman who covers Kanye West, adores Drake and gets excited for new Miley Cyrus singles. But that is perhaps one of the reasons it has so resonated as a single – that shape-shifting ability to reflect the assumptions of the listener.
Those are a few possible ways of hearing it, anyway. Another is that it’s a privileged white woman belittling black cultural aspiration. At least, that was the take of Verónica Bayetti Flores on feministing.com, who caused something of a minor international pop cultural incident with her analysis, under the unambiguous headline ‘Wow, That Lorde Song Royals is Racist’. It goes on to ask: “why not take to task the bankers and old-money folks who actually have a hand in perpetuating and increasing wealth inequality? I’m gonna take a guess: racism.”
Predictably, because Lorde is ridiculously popular, the post became an excuse for commenters to beat up on the writer, a venting space for a bunch of New Zealanders to defend their countrywoman.
It’s funny (read: embarrassing) that whenever anything gets written about New Zealand anywhere on the internet, we as a nation all dutifully congregate to refute, apologise or agree wholeheartedly with what’s being said. Click-hungry web editors take note: as a small, self-conscious set of islands with high internet penetration, we’re easily manipulated. Praise or pillory us and the clicks will roll in for days like the waves at Raglan.
Many of the guests from the bottom of the world arrived at feministing bearing well-argued responses, often pointing out that the song’s very next line ridiculed white cultural excess. Other visitors behaved a little strangely, making the post’s author’s point seem more valid in their attempts to refute it. “Wayne” summed up one vein of the sentiment:
If this woman that did the review, would have opened her ears a little more, than she would have realized what Lorde was referring too, and that is the over popular culture in music today. Bling, Pimped out rides, half naked artist on stage and in video’s, as well as showing off their money to the point, that they look like a big damn joke.
Basically what Wayne is saying is that, even if Royals isn’t racist, he sure is, and thoroughly enjoys the way listening to it reinforces his prejudices. This is a bit of a shame. Because Royals deserves a more nuanced critique.
Fortunately, the Wayne-type response was balanced out by the biting response of New Zealand satire site The Civilian, which went digging for other racist elements in Royals. These included discovering that the line “let me live that fantasy” really meant that “Lorde desperately wants to live out her fantasy of owning black slaves.”
Which shows that, even if we don’t really know how to respond when one of our citizens becomes an international pop sensation, at least one New Zealander quickly figured out how to best defend them from the inane attacks which go with the territory.
Brian Sweeney is the New York-based Chairman of SweeneyVesty, a global corporate communications company founded in Wellington in 1987 with Jane Vesty. He is dedicated to the idea of New Zealand exporting its services, innovation and creativity, and to the related positioning and communications New Zealand must undertake to be competitive globally. He has a Politics degree from the University of Waikato. Brian has produced film, books, photography, theatre and music. He first attended TED in Kobe, Japan in 1994.
New Zealand internet security firm Mako Networks has struck a deal in the United States that is expected to provide “tens of millions of dollars” in revenue over the next two years, says its boss.
The Kiwi technology business has partnered with New York-listed Sprint, a US wireless communications provider that served more than 54 million customers in the third quarter of this year.
Privately owned Mako’s cloud-based technology is used by businesses with multiple sites, such as retailers, and provides protection from threats including credit card fraud.
Businesses in the US can now buy Mako’s technology integrated with Sprint’s wireless service to protect and control their data and payment transactions.
Mako chief executive Bill Farmer said the deal was pay-off for the company’s decision to establish a base in the US.
The firm spent 18 months based at the Kiwi Landing Pad, a business support centre in San Francisco, before setting up its own office in the Californian city in September.
“If we had not opened the office there we would not have this business or a lot of the other business that we’re getting in the United States at the moment,” Farmer said.
Mako, whose revenue reportedly reached $10 million last year, announced another deal with US payment service provider Aperia Solutions in July.
The company has 90 staff worldwide, including 75 in New Zealand at its customer support and research centre on the North Shore.
Eighty per cent of the company is owned by its founders – Farmer, Chris Massam, Dennis Monks and Simon Gamble.
Mako global communications director Kevin Ptak said the firm was not planning a sharemarket listing.
The firm’s customers in New Zealand include Telecom and the Ministry of Health.
Small Business: Shared passion all part of STQRY
There are not many New Zealand-based entrepreneurs who could say they learned about company culture from their first job at a certain well-known Seattle technology company.
Exciting though it was to work at Microsoft at the age of 16, STQRY (“story”) co-founder Chris Smith found the environment wasn’t conducive to new ideas.
“I met many amazing people but what frustrated me most in a company that big was individual employees did not have a creative voice,” says the American, now based in Wellington.
Over a year ago, when Smith and co-founder Ezel Kokcu set up STQRY, a mobile application that helps arts organisations such as museums, art galleries and zoos engage visitors by telling their stories, they put a lot of thought into company culture.
“I wanted everyone to feel like a leader. They would feel more passionate about what they were doing, they would have ownership and feel they had the ability to grow with the company,” says Smith.
STQRY has six Wellington staff, one in Seattle and one in San Francisco. They are developers, account managers and sales people.
Local staff, all in their 20s, socialise together on the weekends. “We do brainstorming two or three times a week,” says Smith, who is 25.
STQRY has 150 clients, including Auckland Museum, Wellington Zoo, Seattle Art Museum and the Walt Disney Museum in San Francisco. Smith estimates the app has reached 100,000 users and is aiming for a million by the end of next year.
He will be spending more time in the US before then and is expecting his team to expand to 15-plus in 2014 – the next hires to be in LA and then Washington DC or New York.
Smith puts the success of STQRY down to his friendship with young entrepreneur Ezel Kokcu.
“Co-founding this company with my best friend has been such a useful thing. We always have each other’s back.”
The business is preparing for its series A funding in the next six months. Gareth and Floyd Morgan are shareholders, Smith holding the majority.
He and his team are meanwhile working on adding features to the STQRY product. In time, users won’t need to scan their phone against the QR code next to the exhibit; the app will know their location from WiFi or GPS data.
Meanwhile, STQRY is helping organisations add content for special feature experiences – for instance, it will be used by The Experience Music Project Museum in Seattle when it does a Nirvana Seattle Street Tour around town.
“It is traditionally hard for organisations to do things outside the venue – it costs a lot of money to build your own product and market it. A big aspect of STQRY is we market on their behalf.”
STQRY also connects venues to each other through its Explore Mode.
In the current STQRY business model, organisations pay a subscription but a newly launched business model will allow organisations to sell any creative premium experience, guide or tour marketed by the STQRY app.
STQRY has set its pricing low. “Our objective was to have very low start-up and maintenance costs and to grow our revenue by commission, as organisations grow their revenue.
“It is about personality. It does not matter how good your product is. If the person you are selling to does not like you, they won’t buy your product.”
Top Tip
When hiring your team, passion is just as important as skill _ skills can be taught.
Best business achievement
We just did America’s Cup work with NZTE, telling stories of New Zealand businesses and Emirates Team New Zealand.
In these articles, we have been looking at how business’ awareness of its role and responsibility in society is changing.
But what is the role of governments in all this and are politicians keeping up with the thinking?
As a general observation business leads, and politicians only follow, in the wider debate on the role that business can and should play in society.
In many ways this is not surprising.
Governments have only a limited number of tools to change business and consumer behaviour – they can regulate and they can tax (or subsidise, but they only do that with revenues derived from taxation).
Both of these tools put costs on consumers who are also voters, and voters often change governments who load them with costs.
That’s not to say governments don’t have a role. They can set regulation to deal with the slow adopters who can undermine a successful shift.
But this is better done after business has innovated and can show what works. Governments can also participate in the debate. And one successful way they can do this is by changing the way they measure their own performance and the performance of their countries.
Internationally there has been some development in thinking about what success as a country might look like. In a similar manner to the way some companies are thinking about their role in the development of societal wellbeing, governments are now starting to consider wellbeing as an underpinning concept in measuring the “health” of a country.
It is now well accepted that the principal measurement of country health – growth in GDP or GDP per capita – is seriously flawed.
The basis of the measurement – the level of expenditure – would not be consistent with most people’s understanding of their own wellbeing.
The fact that it excludes many of the factors that most people consider valuable – for example, the state of the environment and the amount of environmental capital – also indicates its limited nature.
And it’s also true that when a certain level of GDP per capita is reached people’s sense of wellbeing does not continue to grow. Health benefits do not increase linearly with the amount spent on them. And some of the most contented societies are not the best off.
There is also an interesting inverse relationship between wellbeing and inequality in a society as wealth increases and after basic needs are met. Diener and Seligman’s article Beyond Money: Toward an Economy of Well-Being provides a detailed examination of what might cause a sense of wellbeing in a society.
That’s not to say that people are following the pursuit of “Gross National Happiness”, long reported by Bhutan as their key national indicator, as a measure.
But there is recognition that GDP isn’t enough.
Perhaps one of the first mainstream politicians to question GDP as the primary measure of country success was President Nicolas Sarkozy.
Declaring GDP inadequate for measuring national health, the former French President launched a report in 2009 by Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi on the measurement of economic performance and social progress.
This not only identified weakness in GDP measurement but talked about the use of measures of quality of life, sustainable development and the environment.
The baton has since passed to the OECD in its “New Approaches to Economic Challenges” framework paper.
This is a somewhat difficult topic to progress in this multinational grouping. It includes topics such as the problem of rising inequality, the undesirable effects of pro-growth policies and the under-pricing of risk, so we anticipate progress will be slow.
Academic Michael Porter, in a piece of work for the Social Progress Imperative co-sponsored by Deloitte, has been working on a Social Progress Index.
Released in April, the index looks at progress in terms of basic human needs, the foundations of wellbeing and opportunity for individuals.
In New Zealand, the Treasury is leading the development of a living standards framework that looks at the broad components of the quality of life of citizens.
Interestingly it talks about freedoms, rights and capabilities as well as the sustainability and distribution of living standards.
So governments are involved in the debate. It is disappointing that, as with the business debate, this gets little air time in New Zealand and the public is not involved.
And the public should be engaged. The current model of perpetual GDP growth being a requirement for success is just not sustainable.
There are trade-offs we make in our personal lives every day between economic and other sources of wellbeing, but we don’t do it at a national level.
No wonder we end up with such a confused and fractious debate when we are contemplating whether to reduce environmental sustainability in order to increase employment.
People too easily move into camps based on pre-established positions rather than looking for the win-win, or at least an optimised solution.
For a country that has made a national branding claim to be environmentally pure this lack of debate leaves us exposed. If New Zealand was a company and had established 100 per cent pure as a brand value then we would expect everyone to contribute and to be on message.
The development of a national framework for broader performance measurement would be a great basis for this conversation.
Alignment is one of the most powerful weapons in the business toolbox. Alignment of brand, culture, performance measurement and reporting with strategy helps keep a business focused and on track. Think how powerful the alignment of citizens, government and, yes, a national brand would be to a country’s culture.
For business this debate would be helpful.
As well as the obvious links of New Zealand strategy to business strategy when working in overseas markets it helps create an environment for explaining business engagement. And it helps with wider stakeholder engagement.
That is, of course, if you are on the journey.
Nick Main is a former chief executive and chair of Deloitte New Zealand, a past chair of the NZ Business Council for Sustainable Development and has recently completed three years as the head of Deloitte’s Global Sustainability practice.
Wallace Chapman chats to Jonny Wyles – director at Workhere. The brain Gain series brought to you in conjunction with Kea, New Zealand’s global network.
Ask most people where the world’s most popular DJ software is produced and they would probably answer the U.S or perhaps even the UK…
Home to some of the world’s most famous bars and clubs in places like New York and Vegas, the U.S. has always been the centre of popular music culture while London is famous for clubs such as The Ministry of Sound, Fabric and Heaven.
Yet, you’d be wrong. Walk into any bar or nightclub anywhere in the world and there’s a 70% chance the DJ will be using Serato software, created and developed right here in NZ.
Housed in non-descript offices in Auckland’s CBD, the external façade gives no clue to what exists within its four walls.
Stepping inside is like entering an Aladdin’s cave of technology that has you feeling as though you’ve enterted another world. It’s every teenagers dream work environment. A huge office kitchen that doubles as a late night club, a research and development team focused on coming up with even more innovative ways for DJ’s to use Serato software and working with people who get to do what they love doing anyway – reinventing the way music is mixed by some of the world’s biggest names in the business.
With DJ hardware available that can be purchased for as little as $250, the business is now within the reach of a new generation of users who previously would have been prevented from entering the market due to the prohibitive costs involved.
Like many kiwi entrepreneurial success stories, it’s a business with humble beginnings.
Originally founded in 1998 by Steve West and AJ Bertenshaw, who were both students at the time, West was learning to play the bass guitar as a side interest. He wanted to slow down complicated bass solos in songs in order to hear each note and subsequently learn them.
After a little research and some clever maths, West wrote an algorithm making it possible to change the tempo of audio independent of the pitch.
This resulted in a tool that could speed up and slow down any piece of audio (including the bass solos) without colouring and distorting the resulting sound. Conversely, it could also alter the tempo of a piece of audio without changing the pitch. Not only that, but it was all done in the time it took to make a cup of tea.
A lucky break finding the dream job
Fast forward a few years and current CEO Sam Gribben discovered Serato while on his OE and the business has now become his life’s passion.
With a background in engineering, Gribben couldn’t quite believe his luck when a friend stumbled on the very idea he had been wanting to pursue
“Previously, I had been studying electrical engineering at Canterbury University and at the same time learning how to DJ and I was really intrigued by the fact that you’ve got this big 12 inch vinyl record that you interact with, manipulate and literally get your hands all over it to create these unique sounds.”
“The music itself is almost secondary. I was learning about how you can control computerized systems through my engineering studies. And I was thinking: wouldn’t it be great if you could use a vinyl record to control an MP3 playing on a computer. I didn’t quite have the technical skills to actually be able to pull it off so I tried to talk all my engineering mates in to helping me build it.”
“10 years on and I was living overseas at the time and I get this call from a friend saying: Hey, I’ve just met these guys at a barbecue and they’re doing that thing that you’ve been talking about for the last 10 years and they’re just down the road here in Auckland. So that was quite a surprise and so I moved back to New Zealand and teamed up with the original founders of Serato, Steve & AJ.”
Low profile but high visibility in its sector
Google Serato and you won’t find too much written about the company in this country which Gribben says has been a deliberate strategy.
“For a long time, a lot of people didn’t know that our products came out of New Zealand. We’re very strong in America and most of our American customers assumed it was American, to the point where there’d be internationally touring DJs who’d come down here from the States and they’d meet local promoters and be like: Oh, you’re using Serato, do you want to go meet the guys that invented it? And the DJs would be like: What do you mean they’re from New Zealand. They had no idea…they had all assumed that we were an American company.”
“It’s something I believe very strongly and I’m quite passionate about. There’s no reason why a company like ours can’t come out of New Zealand and can’t be headquartered here. We don’t have a very big profile in New Zealand because for such a long time our focus was on the US and Europe and Asia, that’s where our market was.”
“There’s also the issue of the way we’ve structured the business where our software is supplied as a licensing deal, so it’s actually supplied to hardware companies such as Pioneer for example, and they sell the product with our software already pre-loaded. Even in New Zealand you didn’t buy the Serato product, you bought that American product through their distributor.”
“In recent years we’ve started to push the NZ angle a bit more and raise our profile, but for a long time I guess we were seen as an American company.”
It’s all about the passion for music
Serato is a business built on passion where many of its staff have music in their blood. It’s also a business that was born global.
“We knew that we had something big because we’d take the product to trade shows and we’d get these amazing DJs try it and say: this is something, this is going to change things.”
“We’ve certainly grown up a lot in the last few years and it feels really good as an employer to be able to employ people in a job that they absolutely love doing.”
“As someone who has done that kind of typical Kiwi OE – gone overseas and worked in Europe and then come back – I’ve got lots of friends that didn’t come back and they’re still over there. What I’ve been conscious of is creating the kind of jobs that people would want to move back here for and be a world leader in technology from New Zealand. There’s no reason why that can’t happen. And I really think that you’re seeing it more and more with some of these emerging technology companies such as Xero.”
“I talk about technology companies because that’s my space. But I think that collectively we have a real opportunity to develop New Zealand as a brand for technical excellence and being a place where the amazing technology based products and services can come from.”
Staff recruitment
However, recruiting staff with the necessary technical expertise is as much a problem for the likes of Serato as it is for many other business operating in the technology space.
“Staff recruitment is always an issue for us. It’s always tough to find the right people. We operate in a kind of unusual tech space in that we’re not web developers. We do develop more desktop software so that makes it harder in some ways as there’s a smaller pool of people to choose from. But on the other hand if someone is interested in the technology we use and interested in music, it’s a very, very easy hire to say come work for us because they’re really into it.”
“We’re actually a very international collection of people, as I recently discovered. I did a little snap survey on our internal Yammer network and between us we speak 27 languages. The definition of that is that you could order a beer and then debate with the bartender what flavour of beer they would give you!”
“We also have a varied range of musical interests from hard-core metal, rock singers, punk rockers even opera singers. All different sorts but were all driven by a love of music. It really fuels a lot of the passion here.”
Being honest with customers pays off
So how does the customer engagement process work for a business like Serato and how does the development of the product reflect the different needs of its DJ end users?
“It’s evolved over time and it’s challenging because you have so many inputs now, so much information coming from so many different places. It’s interesting to talk about how it started. When we first launched the DJ product we had a web forum in 2004 and we built the website later around the forum. It was all about that forum where we tried a few interesting things. We did our tech support on the forum which at the time was quite unusual. People’s problems were very much out in the open which meant their solutions were also out in the open for everyone to see.”
“That did a couple of things. Firstly, it showed people that we weren’t trying to hide anything, and at the time tech support was mostly done by e-mail. If other people saw what problems people were experiencing and what the solution was that meant helping one person often meant you were helping several people. From a customer service point of view if we had really difficult customers, sometimes it was quite clear that they were just being difficult and it wasn’t because we were being the evil corporation and everyone could see that. That has evolved and now we do a lot on Facebook, Twitter and through all different channels, but the openness remains.”
“In recent years we’ve adopted a user centred design philosophy which basically means we design something we develop something and then we get people in to try it. We get them into our studio – we’ve got a little studio – and we don’t tell them too much what we expect them to do with the product.”
User experience
Serato has plenty of competition to consider with others wanting to muscle in on the space but as the brand leader it focuses on the user experience.
“Historically we’ve never been about being the first. We weren’t the first into the DJ space, but our approach is to try to be the best and to really focus on the things that matter. Usability and performance are our two key metrics that we focus on and if you’re playing in front of thousands of people, the most important thing if you’re a DJ is that the music keeps playing. So we put a lot of emphasis on stability.”
“We’ve had a really good run over the last 10 years, but it has become a lot more competitive. A lot more companies are getting into it. Everybody wants to be a DJ. There’s mass consumer brands like Casio and Philips who are starting to get into this space, so it is getting more and more difficult. I think it’s important to know who you are and how you fit into that space.”
Gribben says the most important thing he’s learnt is the value of honest customer engagement.
“You really have to listen to customers; that’s something I’ve come to appreciate along the way. One other thing that we did that was unusual was that we didn’t censor the user’s forum. We had three rules, don’t pass yourself off as one of us – don’t pretend to be one of us, don’t sell anything, and be nice to others. And so people talked about competitive products, and they talked about how the other products were better. At the time, our competitors were shutting down those conversations, shutting down their forums and we just let it all happen. We watched and we listened to them, we were able to be pretty open and authentic with them and I think particularly the American customers were taken by surprise with our approach.”
“In a world where they’re used to customer service representatives who said: so is there anything else we can help you with today and we were saying things like: Hey DJ So-and-so, I really liked that mix tape you put up, I’m into this kind of thing, here’s my mix tape and they were like, wow, these are real people. We fessed up when we made mistakes and we were quite open with them. So really engaging with customers honestly – and I know this sounds like something out of a business school text – but being real with them is so important to build that loyalty factor.”
A template for NZ?
Gribben believes Serato is the ideal model for NZ to replicate. Highly skilled, with strong brand leadership and expertise in a defined space, it’s a classic weightless export that is creating real value for the country.
“I’m a really strong believer in this type of company as a model for future New Zealand success. There are lots of niche markets out there for us to compete in and there is no reason why New Zealand companies can’t get in and dominate those markets. We’re a small country and obviously we don’t have a huge population but we have highly skilled, highly educated and very smart people who are very good at developing very clever technology.”
“I like to refer to it as creative people with a can-do attitude. So we have a lot of those valuable characteristics to develop a brand as a country that does really interesting things. You know, we’re far away from the rest of the world but these days that matters less and less because so much is done online. We’ve seen a change in our industry from doing things at trade shows to doing things purely online. To have the space to really get your message out and it’s something that can really grow. It really scales, unlike our traditional industries, these markets and these types of companies can really grow quickly.”
“Basically what we do is we get a whole bunch of really smart people together in a room and then we think up ideas in the form of software and then we sell that out to the world. To me that seems like an obvious formula to make NZ even more successful in the future.”
It would be hard to find anyone who would disagree.
Vital contributions to society require change in thinking, by World Class New Zealander Nick Main
In this series of articles we look at the evolving role of business and of its growing involvement in helping solve some of the most pressing issues that face society. We have also looked at developments in the measurement of success at a country level.
So what steps should a company take to participate in this new direction? What signs would you expect to see as a shareholder, employee or other stakeholder to show a business is on the path?
In this final article we set out some of the activities leading organisations have undertaken and some of the processes to underpin what can be a significant organisational change.
While they are presented in a linear manner they are mutually reinforcing. They will not be achieved with perfection the first time. Even for the most sophisticated business this is a developmental journey.
Start with strategy – To be effective a business must be clear about its purpose, its responsibilities and its values. An awareness and commitment to a broader role in society should permeate the firm as part of its culture. There needs to be alignment between what the company believes, what it says and what it does.
For this to succeed, there needs to be an understanding that caring about society and the environment will lead to a more enduring, resilient and profitable company.
Just as the purpose of engaging with sustainability as a society is to ensure our long-term survival and prosperity on the planet, the purpose of incorporating social and environmental responsibility into business is to ensure the longevity of business and the society upon which it depends. In the words of Peter Bakker, head of the World Business Council for Sustainable Development, “businesses cannot succeed in societies that fail”.
As with many fundamental strategy-setting processes, complexity needs to be reduced into a simple, easily grasped statement of intent that includes what makes the business different and what gives it a competitive advantage. Detail can be built back in later.
A framework is needed as a basis for thinking about what the social and environmental benefits of the organisation might be. A common framework is to look at the areas of marketplace, workplace, community and environment. An emerging framework is to assess the flows across six “capitals” as defined by the International Integrated Reporting Council (IIRC) – these broaden the current focus on financial and manufactured capital to include intellectual, human, social and relationship capital (all linked to human activity), and natural capital.
Typically this is a broad engagement within the management team and other interested groups. Those who are closest to customers will have a strong voice and so will those closest to employees.
Engage with a broader group of stakeholders – Leading firms have formal and informal ongoing engagement with a broad group of stakeholders. Often this includes advisory panels, which can not only provide input into the strategy process but also comment on outcomes.
Most businesses understand the need to engage with customers and employees, but increasingly non-governmental organisations (NGOs) can play an effective role on advisory panels. It is now widely accepted that helping businesses in this way is a legitimate role for NGOs and need not cause any loss of independence.
Change reporting and performance measurement – Nothing underpins strategic change and operational performance like reporting. Setting targets and reporting against them is a key feature of all high-performance firms. It is no different for a business which embraces its broader role in society.
The measures are of course different. As mentioned above, one of the most influential frameworks for thinking about broader reporting is the Integrated Reporting Framework being developed by the IIRC.
The breadth of this approach can be seen in the concept of the six “capitals” and the need for firms to discuss their business models in terms of how they enhance or limit these capitals to create value.
Feedback from users of the draft has been that it enforces a focus on wider issues of strategy and risk, and for that alone it is a valuable tool.
Think long-term – Underlying this approach is the need to think long-term. For public companies this is a particular challenge with a requirement for frequent updates on results. Some have changed their constitution to make it explicit they are a long-term investment, while others have refused to update forecasts with its quarterly financial results reporting.
Some have made their position clear through statements from their chief executive to gain market understanding of their approach.
Embrace transparency – Finally, an underlying component of the broader approach is transparency between the organisation and its wider stakeholder group.
These days if a company is not transparent voluntarily, social media and their customers will take care of this for them. This includes transparency along supply chains, where a business accepts responsibility for what has happened in the supply chain that feeds it raw materials and other inputs.
To recap this series – business is changing. Partly because it can, but also out of a sense of responsibility for past financial crises and because the environmental and social issues the world faces are huge and potentially destabilising to business.
Leading practitioners are recasting strategy in terms of the wider benefit their company brings to society and the environment. Sustainability issues are no longer just add-ons but are aligned to basic business strategy.
How companies and countries report success is evolving, as is the debate about what success means.
In NZ the debate does not seem to be at the level it should be. This is a wasted opportunity and also a risk. Leading businesses are engaged but typically not in a public way. We need to be at the front of the debate. Many of these issues align with how we view ourselves, our culture and how we act. Get involved.
• Nick Main is a former chief executive and chairman of Deloitte NZ, a past chairman of the NZ Business Council for Sustainable Development and has recently completed three years as the head of Deloitte’s Global Sustainability practice.
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