Taking the Plunge The key to business success - newzealandinc.com - Informed ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Taking the Plunge
The key to business success
T
his year marks the 25th year English at a black tie event at Auck-
of the Deloitte Top 200 — a land’s Vector Arena last night .
time to celebrate the stand- The Deloitte Top 200 list gives a
out performers from the keen insight into the domestic busi-
past financial year — but also to ness landscape, illustrating how our
remember the vanguard companies best and biggest companies are
and business leaders who have performing in what has been another
helped shape the New Zealand econ- strong year for the New Zealand
omy over the past quarter of a cen- economy. Our Top 200 outpaced
tury. national growth, improving revenue
It’s also a time to look at the major cumulatively by 6.6 per cent. The real
trends which stand to influence the story however was profit margins,
direction business takes in the which grew by an enormous 64.4 per
coming years — as the Herald’s Busi- cent — as total profit across the Top
ness Reports team talks to chief 200 improved from $4.8 billion to
executives riding major disruption in $7.9 billion year on year.
their sectors like Spark CEO Simon Heading the list once again is
Moutter, Air New Zealand’s Christo- Fonterra — still far and away New
pher Luxon and ASB’s Barbara Chap- Zealand’s largest company — turning
man. in another strong year despite inter-
And it’s a time to be challenged national hiccups and a variable mar-
by prominent business leaders — like ket for milk. Ebos Group was a stand-
Westpac acting chief executive out performer, rising from 21st to 4th
David McLean — to come up with in the list after more than doubling
fresh ideas to leverage New Zealand’s revenue following their acquisition
strong international competi- of Australian pharmaceuticals giant
tiveness. Symbion.
For the second time, Air New Seventeen new companies made
Zealand has taken out Company of an appearance on the list this year,
the Year, as our national carrier set with a healthy mix of debutants,
a new high-water mark for profit and mergers and acquisitions, as well as
won over the judges with the im- the return of businesses off the back
pressive strategic direction outlined of markedly improved perform-
for the business. ances.
It was double honours for Air New It was a relatively pedestrian year
Zealand with Tony Carter being for our finance companies, who
singled out as Chairperson of the improved overall revenues by 3.7 per
Year — a mark of his stewardship, not cent.
just at the airline but also at Fisher There was a healthy increase in
and Paykel Healthcare. profit after tax, up 24 per cent — but
Ryman Healthcare’s Simon none of the top four banks — ANZ,
Challies scooped the prized Execu- Westpac, BNZ and ASB — emerged as
tive of the Year award, lauded as a a standout.
“master of detail’’ who had “devoted For the first time this year, Maori
himself to his company for a long, Risk Appetite: businesses have been featured as a
long time with great results’’. Eagle Technology part of the Top 200. Though only one
This year also sees the advent of chief executive qualified for the main list, running the
the inaugural Diversity Leader award Gary Langford's special section on Maori companies
which was given to BNZ. The Gov- company sponsors reflects the significant and growing
ernment sponsorship for this award the Young part of our economy they comprise,
was made possible by the Prime Executive of the and it is an encouraging step forward
Minister’s Office. The award was pre- Year Award. to see them taking their seat at the
sented by Deputy Prime Minister Bill Picture / Jason Oxenham Top 200 table.
D2 nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014
Our
domestic
seats
Four simple options
every time you book
Flexitime lets you change to an earlier or later flight on the same day (same route). Flexitime available on all
domestic routes that fly more than once per day, every day. Any flight changes are subject to flight availability.
The New Zealand Herald | Friday, November 28, 2014 nzherald.co.nz D3
Now, no matter where you are going or how long you
want to stay, there’s always an option to suit you best.
seat is perfect for those who like travelling light or are heading off on short trips.
seat+bag is designed for longer trips where you may need to take a little more
than carry on; and it’s only $10 more than our seat option.
flexitime is ideal for short breaks where you might want to stay a few hours
longer or even get home a bit earlier. With flexitime you’re able to change to an
earlier or later flight on the day of travel, for free, through the Air New Zealand
Mobile App or airnewzealand.co.nz. You can get all of these benefits for only $20
more than seat+bag.
flexiplus is our most flexible fare. It’s fully refundable and only costs $20 more
than flexitime. flexiplus let’s you change your flight day, time, destination or origin
prior to travel without incurrinzg a fee (though a fare difference may apply). You’ll
also get an extra checked bag of up to 23kg, so it’s great if you’re staying longer.
Visit airnewzealand.co.nz
AIR1309
D4 nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014
Inside
Section One: The Power of Ideas
5 Leading CEOs put ideas into action 15
6 It all has to start somewhere
Section Two: Disruption
7 Alexander Speirs on the big picture
8 Microsoft back on track post-iPhone
9 Simon Moutter of Spark and Christopher Luxon of Air New Zealand
11 Intense competition puts pressure on telecommunications companies
Section Three: Exclusive Report
12 Thomas Pippos: Twenty-five years of the Top 200
13 Standout performers from past Top 200s 21 22
Company of the Year
15 Winner: Air New Zealand
Executive of the Year
16 Winner: Simon Challies of Ryman Healthcare
Chairperson of the Year
18 Winner: Tony Carter from Air NZ and Fisher & Paykel Healthcare
Young Executive of the Year
19 Winner: Michael Lewis of New Zealand Post
Excellence in Governance
20 Winner: Fletcher Building 18 19
Visionary Leader
21 Winner: Bruce Plested of Mainfreight
Most Improved Performance and
Best Growth Strategy
22 Winners: Tourism Holdings (Most Improved Performance) and
Delegat Group (Best Growth Strategy)
Section Four: Diversity Section Five: Top 200 tables
23 Diversity Award winner: BNZ
32 Top 200 winners
25 The hidden advantages of diversity 33 This year’s figures show our continued problem with tax
loopholes; A seat for Maori at the Top 200 table
26 Diversity is woven through Xero’s core values; Diversity of leaders
is imperative
34 Top 200 results tables
27 ASB Bank CEO Barbara Chapman on being awarded the Rainbow
Tick; The rise of the ageing workforce 42 Top four banks hold their places
28 Managing the many faces of Auckland Council; Westpac looks at
the future workforce
43 Top 200 criteria
Dynamic Business 2014
29 Tracey Cross of Phillips Fox on equality in business leadership Executive Editor: Fran O'Sullivan. Writers: Alexander Speirs, Bill Bennett, Greg Hall, Grant Bradley, Holly Ryan, Hamish Fletcher,
30 The benefits of LGBTTI and religious inclusiveness
Christopher Adams. Data Analysis: Alexander Speirs, Greg Hall. Subediting and Graphics: Isobel Marriner, Shandelle Battersby.
Cover Design: Justine Black. Advertising: Sandra Evans, Nancy Dudley. Top 200 Awards Event Event Director: Ash Lomberg.
Event Producer: Sue Duncan. Administration: Lucy Campbell. PR: Evie Aston PR. Designer: Graham Stride. Graphic Designer:
31 Our community’s changing face John Christall. Consumer Marketing: Gemma Lewis. Radio Marketing: Emily Travers Online: nzherald.co.nz
nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014 D5
The Power of Ideas
Back in the habit of winning In his own
words . . .
B
efore Spark NZ chief execu- chosen, what we did need to do was ● Our realisation that we needed to
tive Simon Moutter was of- move on from Telecom because that make the transformative shift from
ficially named to the top job name represented our past and not our infrastructure based Telco to
at what was then Telecom, he future. competitive digital services company
saw a business in dire straits that Is there a precedent for such a large has been the Big Idea that has
needed to make a fundamental shift to telecommunications company to underpinned the last two years of
survive. Moutter went into the final successfully make such a change. The world around us is
interviews for the top job with a trans- fundamental shift? changing rapidly, with much of that
formative plan and a timeline for get- Probably the best example not too far change driven by communications
ting it done. away is Telstra. They achieved a big technology — we call it the data and
The Herald talked to Moutter about change from what I understand, mostly mobility revolution.
how he’s navigating Spark through a off the back of Vodafone’s really ● It has motivated us to do a
period of unprecedented disruption in complete collapse in Australia. They complete strategic reset of the
the telecommunications industry and had enormous network problems a few business, and completely re-architect
the company's transformation to a digi- years ago which drove most of their where we allocate resources and
tal services company. customer base away, so Telstra investment and what types of
When you first took over as Chief invested extremely heavily in mobile business we are in.
Executive at Telecom, what state did capability and established massive ● It’s driven our decision to invest in
you find the business in? market leadership on that front. more 700MHz spectrum than anyone
Mobile growth and market growth was You’ve been in the job over two else, because we understand the
very strong, so the company was years now, how has the transition importance of 4G mobile to NZ’s
prospering off the back of that. At the gone compared with the blueprint future. It’s driven our decision to set
same time though, the rise of the get back into the habit of winning. unknown set of digital services in the you set out before you even took the up Spark Ventures to focus on growth
competitive position of OEM’s (original What steps did you take to try and future as opposed to our telco past. job? opportunities and build a portfolio of
equipment manufacturers or device re-establish the habit of winning Why do you think it was necessary It’s been tough, but we’ve accomplished new businesses.
makers), the over the top operators — within the business? to rebrand from what was an iconic it sooner than I expected. We’re either ● It’s led to the decision to change
Google, Facebook and the like — We had tried small changes, but when New Zealand brand in Telecom to on or ahead of the plan I set out. The our brand from Telecom to Spark, to
combined with the regulatory impulse you have massive inertia, you have to something completely unknown one piece that have proved to be more better represent our future not our
really started to hit the company from apply a lot for to it to change its like Spark? difficult to move has been Spark Digital past. It’s reoriented our business to
2004 onwards.. direction. The conclusion we came to The rebrand was the most visible sign — what was previously Gen-I. I put customers, rather than the copper
The industry structure was also was that we have to stop dabbling and to our customers that we were making underestimated the degree of the wire, at the heart of what we do.
changing. We saw the combination of make several very significant and far- a new stand to be a different business challenge there and that’s been driven ● It’s motivated our ambition to help
our two biggest competitors — reaching moves — taking on quite a bit from what Telecom was and I signalled by the revolution of cloud computing customers unleash their potential, and
Vodafone and Telstra Clear, plus the of risk in the process. That’s what led that as part of my plan when I was — which I knew of, but I didn’t really help them do great things for NZ
arrival of 2 Degrees as a third entrant to the idea to move from a fixed mobile interviewing for the role. The name understand. ● It has motivated us to do a strategic
into the mobile market — and that infrastructure company to a digital Telecom means telephone to most Cloud computing really took off when reset of the business, and completely
altered the competitive landscape. services company. people — particularly younger people I was working at Auckland Airport and re-architect where we allocate
Grimly put, we were on a ten-year That led to a series of decisions around — and telephones are increasingly I had been a part of Gen-I prior to that, resources and investment and what
losing streak from 2004 to 2014 and what exactly is a digital services becoming a less significant element of I understood the business well and the types of business we are in.
we’re still trying to pull ourselves out retailer, what are the dynamics of the our business. We needed a name that position we had it in. But the big ● It’s driven massive change in terms
of that. It’s a challenge anyway you look business and how do we deliver it. can roll with the future of digital correction occurring, which is a funda- of getting more cost-competitiveness,
at it and I often use a sporting analogy From there, we undertook a series of services — Cloud applications, mental change in the way a business refocusing on the NZ market and
— if you get a team on a losing streak, moves from office simplifications television, media, data services. While buys IT services in the next 20 years exiting Australia, and investing in
the first job before you can even begin through to a change in brand to adopt you might have an opinion on whether or so, meant we had to make a bigger things like Cloud and data centres.
to think about winning the league, is to a name that would work with an Spark was the best one we could have adjustment there.
Global growth powered
by local innovation.
If you are looking to grow your business in overseas markets, look no further than ANZ.
Our cross-border specialists lead the market in trade, foreign exchange and overseas payments,
delivering innovative and tailored banking solutions across Asia Pacific and beyond.
To learn more speak to Paul Goodwin,
Head of Institutional Relationships on 09 252 3478.
ANZ Bank New Zealand Limited was Rated No.1 in the Peter Lee Associates Large Corporate and Institutional Relationship Banking New Zealand Survey, 2014, conducted from February to April 2014. A copy of any applicable
product disclosure statement in relation to Markets products, is available, on request and free of charge, from 0800 107 562. ANZ Bank New Zealand Limited. ANZ2151_DR/NZH
D6 nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014
The Power of Ideas
W We don’t know how
estpac acting CEO David “Auckland is one of the world’s most
McLean says his experi- diverse cities. There’s also a trend
ence working as manag- here of women working and getting
ing director of the bank’s into positions of responsibility.’’
New York branch gave him a unique The All Blacks are a metaphor for
competitive we are
insight into New Zealand’s interna- this. McLean says a generation or so
tional competitiveness. ago the team was largely made up of
“Some of the first things you notice farmers or people who came from the
when you go and work offshore are meatworks. Now the team is made up
the gains we made when we restruc- of people from a range of back-
tured our economy. When you deal grounds, it actually looks like New
with government agencies in the US, Zealand’s diversity.
it feels like you have gone through Since they first arrived, the people
a time warp.
“Their practices are an inefficient
Westpac’s David McLean tells Bill Bennett we need fresh ideas who emigrated here from non-
traditional sources have had children
drag on the American economy. It is and grandchildren. Many of the next
something that we just don’t have. We generation have been well educated
need to be proud of what we here — taking the opportunities the
achieved. We need to recognise the immigrants came looking for.
advantage it gives us and stiffen our Now they are going into business
resolve not to let the old ways of and into the commercial world.
working creep back in.’’ he says. McLean says they are bringing their
The irony of talking this way about fresh ideas and diverse perspectives
the US isn’t lost on McLean. with them and that’s a real strength
“When I first went to America I had for our economy.
this idea that it was the land of the McLean says New Zealand needs
free and the brave. Listening to the to set objective, aspirational targets
way they talk you’d think it was all for international trade and worry less
about laissez-faire economics. How- about what our neighbours are doing.
ever it just isn’t like that.” “We need to concentrate on our
He says in the US he ran up against strengths. At the same time, we need
layers and layers of government, to benchmark our performance.”
regulations and bureaucracies. “It’s That’s where we do need to start
like a hardening of the arteries. Much worrying about what others are up
of it is structural and stems from to. He says to benchmark properly we
America’s dysfunctional political sys- need to compare ourselves with the
tem. Often all those strange regula- nation that is most like us, that means
tions are the result of political trade the Australians.
offs that don’t make sense when “We have some real strengths
taken in isolation.” when compared to Australia. Lower
McLean says American politics tax rates, less red tape — New Zealand
has structural issues. Short political is the second best place in the world
cycles mean they are almost never to start a business.’’
not campaigning. They have gerry- McLean doesn’t want the Govern-
mandered electorates, which means ment to subsidise businesses to invest
politicians on both sides tend to pan- need to make tax concessions or pay Another insight he got from work- wire way of thinking was a strength in New Zealand. He says that model
der to the more extreme elements. subsidies to attract overseas business ing in the US was being able to look in its day, but now it’s gone. is counterproductive and works
That leads to polarisation and politi- and investment. McLean thinks we at New Zealand culture from outside. The good news is that something against our advantages.
cal deadlock. could get more traction if we learnt He says there’s been a noticeable just as useful has stepped into the On the other hand, he thinks there
This is something we don’t think how to sell the business advantages change since the days of rough, hardy space. New Zealand’s new national are worthwhile things our Govern-
to use to our advantage. Often we of our political and economic struc- farmers making do with few strength is diversity. McLean says it ment can do. That mainly comes
think governments and countries ture. resources. That number eight fence is something we’ve become good at: down to selling those advantages.
IDEAS ARE THE
BEGINNING POINTS
OF ALL FORTUNES
Napoleon Hill
The Deloitte Top 200 Awards are proudly presented
by The New Zealand Herald & Newstalk ZB
nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014 D7
Disruption
The power of disruption
funding. At the same time contactless
The don’t fix what isn’t broke attitude has payment technology and online sys-
tems such as PayPal are become
been the downfall of many once- increasingly prevalent.
ASB Bank CEO Barbara Chapman
dominant firms, writes Alexander Speirs says: “Disruption in our sector is more
accelerated than we’ve seen for a
S
while. I don’t think of it as anything
ome of the most important ruption are perhaps no better illus- other than exciting — it creates real
inventions in history —disrup- trated than the changes apparent in opportunities to innovate and do
tions that revolutionised in- news media. Social media and — more things differently.
dustries, created new ones en- broadly — the internet, have trans- “It’s important that as a bank, we
tirely and changed how we see the formed the way we receive news. don’t just look at banks, we look at
world — were laughed out of the The internet has enabled lower- where disruption is going on in the
room. cost journalism to capture main- sectors around us and how that might
When Alexander Graham Bell stream attention. Traditional media potentially impact on us.”
invented the telephone, he offered outlets are diversifying their offerings Perhaps the innovation with the
the patent for sale to Western Union and morphing into digital companies. most potential to disrupt the banking
— the dominant communications No better is that illustrated by the industry is virtual currency, the most
company of the day — who saw no integration of APN (NZ), TRN and prominent of which thus far has been
use for his invention when the tele- Grabone into NZME. in an effort to the controversial bitcoin.
graph was already purported to be a combine efficiencies and maximise “There are some very smart people
vastly superior alternative. the company’s potential as an thinking about the protocols of an
That “don’t fix what isn’t broke’’ amalgamated digital media entity. internet currency. That will be disrup-
attitude has been the downfall of “NZME. is uniquely positioned to tive and it raises issues like is there
many once dominant firms. Kodak is deliver relevant and vertically inte- going to be an NZD/bitcoin cross?
a prime example, failing to recognise grated content. We can provide the Which bank will lead that? How do
and subsequently capitalise on the innovation and solutions our adver- banks make sure they remain rele-
disruptive potential of the digital tisers need to connect with our audi- vant in the face of this disruption?”
camera despite having invented the ences so they can better market their asks Chapman.
core technology itself. brands, products and services. This is Bank of America has already
As advances in technology con- another important step in our excit- tipped the anonymous, decentralised
tinue to shorten the product life cycle, ing journey,” says NZME. chief execu- currency to become a major means
sector-leading companies must now tive Jane Hastings. of payment for e-commerce and has
fight harder than ever to retain such Elsewhere in the communications talked up its potential to emerge as
status. It’s an age where complete market, competition is savaging the a serious competitor to traditional
industries can be turned on their margins on broadband and forcing money transfer providers.
head by something as seemingly in- companies to adapt and innovate to Air travel has undergone a number
significant as a mobile application. remain relevant. of step-changes in the past few
Look at the advent of Uber — the Simon Moutter, chief executive at decades, as low-cost carriers have
social ridesharing app just starting to Spark explains “disruptive forces in undercut established airlines while
gain traction in New Zealand. Already our industry escalated with the rise the proliferation of online shopping
it has disrupted the market for taxi and ubiquity of mobile and internet, has added new levels of price trans-
drivers internationally, cutting red particularly in the late 1990's. Serious The emergence of NZME. means the company can can provide innovation parency. The risk now facing the
tape and regulation in order to slash disruption started when software and solutions for clients, says CEO Jane Hastings. industry, says Air New Zealand CEO
prices, and it looks set to replicate that apps started to substitute existing or Christopher Luxon, is that airline
success here. legacy telecommunications products In-phone services and apps have travel will become completely
Dr. Geoff Perry, Dean of AUT Uni- and services, for example Skype re- mitigated the need for traditional differentiable.
versity’s Business and Law faculties placing voice calls. telecommunications services as they “The reality for us is that our
explains “disruption enables organ- “Our realisation that we needed to increasingly become providers fo- industry could get commoditised —
isations and individuals with oppor- make the transformative shift from One has to passionately cused on mobile Internet. Vodafone’s it’s a price, a logo, a destination. The
tunity to create new ideas that chal- infrastructure based telco to competi- Craig Jones explained. “We are no one thing we’re going to have to own
lenge existing businesses and busi- tive digital services company has believe it is possible to longer in the business of selling is the customer.
ness models.
“Research indicates industries or
been the big idea that has under-
pinned the last two years of change.”
change the industry, to minutes or messages but in the busi-
ness of selling the quality of con-
“We need to move to a more
sophisticated retail model rather than
business sectors that are ripe for In a time when smartphone pene- turn it on its head, to nection.’’ an airline model. That means we own
disruption tend to be those which tration is at an all-time high and make sure that it will Banking is also facing the real the customer journey, we own the
have complex business models, high continuing to grow, it would be easy prospect of having to adapt to com- relationship with the customer and
legal or other barriers to entry, where to assume mobile providers would be never be the same again. pete in a disrupted landscape, as we commercialise it that way.”
trust has been lost and where there reaping the rewards on all fronts. everything from payments through Charles Darwin said, “it is not the
are many intermediaries between the Instead, the capabilities of Richard Branson to lending continues to evolve. strongest of the species that survives,
consumer and obtaining the product smartphones are completely Earlier this year, the New Zealand nor the most intelligent that survives.
or service.” disrupting providers and how they Government approved and opened It is the one that is the most adaptable
The contemporary effects of dis- monetise services. the door to social lending and crowd to change.”
Staying relevant in a world of change
ASB’s Barbara Chapman is keeping an watchful eye on how the banking sector is being disrupted
I’ve come back from Silicon Valley and stuff. The major change is that Are businesses still writing machine learning. We went to very possibly go to a book shop, but you’re
going around the tech companies. I if you think about things like Apple cheques? non-traditional things like Airbnb to more than likely to go to Amazon and
had the real privilege spending a bit Pay, PayPal, NFC technology (near- There are some entrenched have have a look at how they’re get it shot down to your tablet.
of time with Meg Whitman who runs field communication – known here as businesses still issuing cheques. disrupting the hotel market. It’s Consumers are very used to
Hewlett-Packard. payWave) and things embedded in There’s quite a few people not important as a bank that we don’t just purchasing through digital channels,
Whitman describes this shift and your phones. look at banks, we look at where the through mobile channels. We’ve got
disruption. She says it’s a tectonic A credit card will be in the chip of There’s a whole pile of disruption is going on in sectors to think. “Okay, what are the
shift in the plate. I certainly see that the phone pretty soon — I think it is around us, and how that might impact disruptive banking technologies that
and believe the disruption in our there now, we just need to activate people who think Bitcoin on us. It was fascinating. I could talk will enable consumers to interface
sector is more accelerated than we’ve
seen for a while. There’s lots of dif-
it. All this technology makes things
so different.
is lunacy, but there’s about tech for hours.
We look at what it is we can do for
with a bank the same way they now
interface with a bookshop?’’
ferent payment engines. I learnt a lot Is this new technology and some smart people that our customers with technology. We Because sitting there with your shop
about bitcoin. disruption a threat to banks? are thinking about the always put on a customer lens. front, that world has changed. We
There’s a whole pile of people who I don’t think it’s a threat to banks; we There’s no point having technology need the shop front, we definitely
think bitcoin is lunacy, but some just need to make sure we stay protocols of an internet no one needs or wants; [what can we] need that. How do we make product
smart people who are thinking about relevant in the payment space. If you bring forward to our customers to sales in a mobile environment and
the protocols of an internet currency. think about how the payments base currency. make it simpler and easier to do digital environment? For our sector
It was eye-opening. I go quite a lot works, you don’t see any disruptive business with us? there’s a whole lot of complications
– but this time, more than other times, company offering cheques. What is the idea that centrally around customer ID and onboarding
you can see some real traction in Banks are left with cash, cheque, comfortable with internet banking. drives what you are doing with tbe of customers and anti-money laun-
some of this disruption. I think we’re eftpos, card, internet-based payments We’re not there yet, but it’s not far bank? dering and those sorts of things that
ready for it. I think ASB is ready for – we’re covering a lot. I do think some away. I think we need a chequebook I think the idea is that it’s from an we just have to get our heads around
it and New Zealand is ready for it. of these things are going to have to amnesty! We’ll destroy them for you. observation of what our consumers and get in front of, so that those things
Where specifically do you expect switch off. There is a huge investment Where else did you go in the are doing. Consumers are interfacing don’t become barriers for what
disruption to impact on banking? in keeping something like a cheque United States? less and less through physical consumers are wanting to do. That’s
Mainly around payments. There’s a engine running for the diminishing We went up to Microsoft in Seattle, channels and more and more really the driving force though, that
bit of disruption around lending: number of transactions that are going they’re doing interesting things through digital channels. If you think this is how consumers are behaving
social lending, crowd-source lending through it. around Cloud and data, research, and about how you buy a book, you and we need to stay relevant.
D8 nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014
Disruption
Microsoft after the iPhone
It’s taken a while but the tech giant is back on track following the launch of Apple’s smartphone, writes Bill Bennett
D
isruption doesn’t come There’s a move towards cloud capital. He says that eventually
much bigger than the there will only be a handful of global
iPhone. When Steve Jobs everything as a service. players and Microsoft aims to be one
stepped on stage to ann-
ounce Apple’s smartphone in 2007,
We talk of software as a of them.
At the moment Microsoft is the
Microsoft was the world’s second service, platform as second largest cloud player. It may
biggest company behind Exxon- service, infrastructure as be a long way behind Amazon’s AWS
Mobil. It was the leading technology in terms of market share, but Scott
company. a service. But it doesn’t says the company is making money
Steve Ballmer, Microsoft’s CEO at in the cloud; AWS has yet to turn a
the time, dismissed the iPhone, telling end there. profit.
reporters it would never sell to busi- Frazer Scott The new CEO has been quick to
ness users because it doesn’t have a apply lessons learnt from cloud com-
keyboard. puting. Within weeks of taking the job
In 2007 Apple’s market capitalisa- he released iPad versions of Microsoft
tion was half of Microsoft’s. It took the Office apps the company had been
company four years to beat Microsoft Microsoft launched its Surface tablet sitting on. They were well received
on revenue, profits and market capi- in response to Apple’s disruption of by the market.
talisation. Today, Apple is the world’s the market after it launched the Since then, Microsoft has delivered
most valuable company. iPhone. Picture / AP free, full function iPad Office apps and
Thanks to the iPhone and the iPad Android versions. It now gives paying
PC sales stumbled. Not only was rocked the entire tech sector. Today vice. But it doesn’t end there. Spotify Microsoft’s Windows software. It also customers unlimited cloud storage
Microsoft no longer the largest tech- Microsoft is back on track. Its market is delivering music as a service and developed and made the Surface, accounts. Last month Nadella open-
nology company, it had gone from capitalisation is almost twice the 2010 Uber has disrupted the taxi industry which sits somewhere between iPad sourced — that is, made the code
being a significant mobile player to level and a new CEO, Satya Nadella, with what amounts to transport as a style tablets and laptop computers. available — Microsoft.Net technology.
being an also-ran. Analysts and indus- has given the company renewed en- service.’’ Two years ago Ballmer told the The company also cut deals putting
try pundits wondered if Microsoft ergy and turned its focus on some of Before the iPhone most people world Microsoft was now a devices SAP on Azure and linking Office to
had lost its edge. For a while even technology’s most exciting growth would think of Microsoft as the PC and services business. Under Nadella Dropbox. It has opened itself up to
Microsoft employees had their areas. software company or the Xbox com- it has repositioned to concentrate on the market, making its products more
doubts. Scott says there are four techno- pany. They were only the most visible platforms and productivity. Scott compelling in the process.
Microsoft New Zealand chief mar- logy megatrends that are changing parts of the business. Much of says at Microsoft platforms means Scott says inside the company the
keting and operations officer Frazer the landscape and they are all still at Microsoft’s revenues were earned be- something others can built on, so most noticeable difference is the
Scott worked for the company a nascent stage: social media, mobil- hind the scenes servicing large Windows and Xbox are platforms, so speed of change. “We’re competing
throughout this period. He says on ity, big data or analytics, and cloud corporations. Scott says: “90 per cent is Azure Microsoft’s cloud service. with people that were born in this
one level disruption is business as computing. Microsoft is a leader in the business is stuff you don’t see Nadella came up through Micro- market. They have shorter develop-
normal in the technology sector. cloud technology and one of those everyday.’’ soft’s cloud operation. ment cycles, more agility and tighter
“Everything disrupts, all of the time. chasing mobility. Under Ballmer the company re- Scott says cloud computing is not gross profit margins. We had to
We’ve done our own share of “There’s also a move towards sponded to the iPhone by first for the faint-hearted: “You need a reinvent ourselves quickly.’’
disrupting too,” he says. everything as a service. We talk of partnering with Nokia, then buying huge amount of capital to get in the This has already paid off. Microsoft
And yet the arrival of the iPhone software as a service, platform as Nokia’s smartphone division to make game and more to stay ahead.’’ Last shares have climbed 30 per cent in
was on quite a different scale. It service and infrastructure as a ser- devices using a phone version of year Microsoft spent US$4 billion on the last year.
UNLEASH YOUR BUSINESS POTENTIAL
THERE ARE 1.1 BILLION
POTENTIAL CUSTOMERS
CONNECTED TO THE
INTERNET RIGHT NOW.
TO KNOW HOW TO TALK TO THEM,
LISTEN TO AARON DIGNAN.
Aaron Dignan is one of the world’s most influential practitioners These companies are lean, mean, learning machines organised
of digital transformation. In an insightful presentation from around a new paradigm: the ability to evolve in real time. Learn
Spark Digital, he shows us how today’s fastest growing, most the techniques your business will need to thrive in the digital age.
profoundly impactful businesses are thinking and operating. Visit sparkdigital.co.nz
nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014 D9
Disruption
It’s disrupt, or be disrupted
Air New Zealand’s Christopher Luxon believes innovation is one of the best sources of competitive advantage
A
ir New Zealand chief execu- US$1200. They’ll price it dynamically
tive Christopher Luxon is a throughout the course of the day on
fan of Michael Porter — Amazon where in Best Buy it’s pretty
known widely as the fixed. There’s data that’s driving that
“father of modern business strategy”. insight on how to commercialise
Luxon says the airline has throughout the course of the week.
achieved a lot of its gains over the You’re also focused on making
last three years by optimising the strategic alliances with airline
business it had — “just operational partners — tell us more about that.
efficiency in many ways”. The big trend for me is collaboration.
Investing in people is also top of The last time we went to Singapore
mind because to Luxon the priority we lost $210 million doing that deal.
is about leaders and people determin- You go — as a business guy — how
ing policy. the hell do you let that happen? That
It’s not surprising. Luxon is known aside, this time we go to Singapore
to actively seek out intellectual stimu- profitable on Day One.
lation to keep his knowledge at the In the airline industry — you always
forefront of industry trends and lead- get three to five years to get profitable
ership best practices. on a route — it’s a $100 million
In this year alone he’s met legen- decision. But you can lose $30 million
dary investor Warren Buffet, Face- a year very quickly. But we’re
book COO Sheryl Sanderberg, former collaborating and working on an
US Defence Secretary and Huffington alliance structure with Singapore
Post founder Arianna Huffington and Airlines. Not having to do it all on your
just last week Chinese President Xi own and being innovative in the
Jinping. process — not just the product and
He’s a big picture policy wonk as service delivery — is really important.
well as a leading chief executive — Who are the major players
focused on New Zealand’s competi- disrupting the airline industry?
tive advantage as well as that of Air I think it’s a rubbish industry in that
New Zealand. it’s badly run, and it’s not innovative.
But when it comes to the airline, So you sit there and go, five years ago
Luxon singles out innovation as one we ran something called the Sky
of its long-term sources of competi- Couch, has anyone tried to copy it?
tive advantage.
The Herald talked to him about
with are facing big disruptive
forces as a result of the digital age
We have to rip the your tickets through the web — 60 per
cent of business comes that way.
No. This is a good case of Kiwi
innovation. We put it on five aircraft,
why he is so focused on innovation
and why that is necessary to offset
— what about Air New Zealand?
The big issue for me is that ultimately
business that we’ve Now we’re going to disrupt that again-
it’s going to be on mobile. We want
we promote the hell out of it. We have
105 aircraft.
the disruptive forces that could also
change the aviation industry,
the industry will get disrupted. It’s
disrupt or be disrupted. If you look
built apart again to drive all our R + D investment into
mobile. All our technology and appli-
We have 25 international ones, so
why isn’t it on the other 20?
The airline is riding high- why are
at what Google is now doing to
banking, what Apple is doing to
and rebuild it. cations, because that’s the future. And
so if we don’t do that, someone will
Until I came we hadn’t even talked
about licensing or IP. So now we’ve
you so focused on innovation? banking — those guys are scared like Chris Luxon do it to for us. We have to rip the sold it to one airline, we’ve got two
I’ve gone back and reviewed the last they’ve never been scared before. It business that we’ve built apart again others in the pipeline. That to me is
15 years of innovation at Air New was quite interesting seeing a bunch we’re going to be an airline, I think and rebuild it. a classic Kiwi thing where we get very
Zealand, what’s been core and of bankers in America recently — they our primacy will be about our rela- Why are you so focused on excited about innovation for
incremental, adjacent, breakthrough were absolutely petrified. tionship with the customer- and data, “disrupt or be disrupted’’? innovation’s sake and it’s innovation
— it’s all different. A lot of it has been The reality for us is that our industry customer insight, and digital retailing In our case I know what needs to be junkie behaviour, and we haven’t
in response to new competitors. could get commoditised — it’s a price, — all of that — is going to be so disrupted, we need to move to a more completed or converted it. You create
They’ve forced us to redo business a logo, a destination and the important. sophisticated retail model rather than innovation and then you roll it out
models. You have to go through the challenges that go with that. How hard is it to disrupt your an airline model. That means we own around other countries and you get
lens of the customer and look at what The one thing we’re going to have to business? the customer journey, we own the the scale benefits of that.
customer problems you are trying to own is the customer. So if I look at You have to have the courage to relationship with the customer and But having made all that investment
solve. Trying to avoid queues, which the world of the digital retailer, I think disrupt yourself. So, we had a big we commercialise it that way. for our own business which is very
we know was a big issue for that’s a more superior model than business with travel agents and bricks The way that Best Buy for instance successful, we’ve got it on five aircraft.
customers — was one. how an airline model works today. and mortar, and we’ve turned that — a bricks and mortar store — goes It needs to be on 25 — at least
Other companies we’ve talked So while in five years time, I think now into online. You can now book up against Amazon selling a fridge for international aircraft.
A learning curve for education
Despite rapid advancements in tech- Actual and There is much discussion and experiences that match the needs of
nology that have seen countless in- analysis of the potential impact of individuals and groups of individuals,
dustries disrupted and forced to potential digital disruption on the university rather than simply disseminating
adapt or wane into obscurity — edu-
cation has seemed to be relatively
disruptions sector. While much of this in the last
couple of years has been based
knowledge. At the postgraduate level
where research is undertaken, the
immune. The way in which students are causing around the impact of MOOCs learning experience is so individual
are taught and subsequently, how universities (massive online open courses), the that access to a supervisor/mentor
people learn has remained stagnant potential impact is broader than with the requisite capability remains
for centuries. to reflect and those alone. As knowledge becomes key. Though digital disruption will
Saul Khan’s Khan Academy de- ubiquitous, created and distributed change the way universities engage
monstrated the potential of mass consider by a wide range of people and with students and will make
online learning, expanding from a carefully organisations, universities are losing universities think more deeply about
user base of one student to more than or have already lost part of their role how to do that, it will not
ten million every month in the space their role in as a “repository of knowledge“. commoditise the learning
of eight years, in an effort to provide the learning This has led to some commentators experience.
“a free, world-class education for any- suggesting that learning will become Do your have the right people on
one, anywhere’’. space. commoditised and universities board to take advantage of the new
Now universities around the world redundant. These actual and digital opportunities in your
are clamouring to get on board, with Geoff Perry potential disruptions are causing business?
everyone from the likes of Harvard universities to reflect and consider There are several aspects to this;
to Oxford beginning to offer their own carefully their role in the learning notably leadership, academic staff
online, open courses to the masses. space. However, what the disruptions who create or facilitate learning
Geoff Perry, Dean of Business and are doing is in fact creating a experiences and professional staff
Law at AUT University talked to Greg commodity of knowledge, not who provide technical and other
Hall about the potential for disrup- stakeholders. This includes flipped classrooms and on line learning. While the nature of learning expertise. The challenge is ensuring
tion in education. connections not only to what is delivery, but also provides an and delivery will need to change to in all those areas that individuals and
What digital initiatives do you available on campus, but across effective platform for engagement match the learning styles of students teams are remaining current, are
have under way to better engage regional, national and international with current and prospective which are being impacted by digital assessing what is happening in the
with your stakeholders, students networks of institutions, students as well as community, technology, there remains a critical digital space, reflecting on what it
and staff? organisations and people. The three industry and the professions. role for the university and lecturers, means and may mean and integrating
The university has a digital strategy AUT campuses, AUT South, Central Is there a risk that digital or facilitators, to create relevant and this into strategy, planning and
which is based around providing and North are all wireless enabled disruption could commoditise useful learning experiences that actions. In other words this is a
flexibility, access and effective and the digital capability not only your sector and mass learning engage students effectively with dynamic situation and the key is
connections to information, supports research and approaches to could eventually make you knowledge to add value for them. ensuring that the right mindsets and
individuals and content for its delivery, included blended learning, redundant? The expertise is in creating learning developments ate occurring.
D10 nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014
Take your business
from strength to
strength
Independent global research shows that 61% of
Xero customers have experienced revenue growth
in the past 12 months, compared to just 33% of the
total small business market.
Join popular Auckland eatery Bird on a Wire and
more than 370,000 businesses who choose Xero.
Start your free trial today
www.xero.com
XERO CUSTOMER SOPHIE GILMOUR -
BIRD ON A WIRE CO-OWNERnzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014 D11
Disruption
Loosening the connection
Intense competition has put pressure on
telecoms, writes Bill Bennett
Vodafone gears up
for Internet of Things
S
martphones are everywhere. New Zealand prices are now on a par
Mobile phone use is increas- with those countries, but they have
ing. Exciting new services fallen from a higher point and at a One application that stands to gain a bike’s angle relative to the ground; if
continue to appear. You’d faster speed than elsewhere. In part great deal from the 700Mz towers is the bike tips, the application attempts
think everything was rosy in the this is a consequence of the Com- machine-to-machine communications, to work out what is happening and can
telecommunications industry; but merce Commission regulating mobile Vodafone’s Craig Jones (left) and sometimes called M2M. then alert emergency services to
that’s not the case. termination rates and the entry of Matt Williams. This technology, linking devices rescue the bike’s rider using GPS to
Craig Jones, the CEO’s business 2degrees into the market. He says rather than people to the mobile zoom in on their exact location.
manager and head of external com- there were big changes at Telecom The service is an network, forms the basic of the so- Another project, Methminder,
munications at Vodafone New Zea- NZ, now Spark, which has stepped up called Internet of Things. It promises monitors rental properties checking
land, calls it the “elephant in the its market ambition. essential part of life and to be big. New Zealand has roughly five for levels of toxins in the atmosphere.
room”. He says the industry as a
whole is declining: “IDC [an American
There are also external threats to
the industry. In the past mobile phone
yet it is in decline. million mobile phone connections.
When devices start talking to one
It’s a cost-effective way landlords can
check their properties are not being
market research, analysis and ad- companies earned money from sell- Matt Williams another there will be at least 10 times used as P-labs.
visory firm] has forecast it will decline ing voice minutes and text messages as many connections. Jones says Vodafone is something
at between 2.5 and 2.8 per cent until with a little data on the side. the pool of revenue with others. Williams says Vodafone already has of a pioneer in the area thanks to two
2018. It’s staggering. We talk to a lot Thanks to the so-called OTT (over- The good news for Vodafone is one million connected M2M devices in trends playing to its strengths. First the
of our stakeholders, particularly the-top providers) that’s now customers need to buy data to use New Zealand and the number is company’s cellular networks are
those in government and they all changed to the point where data is these services. That’s where the focus growing fast. becoming smarter and more capable.
think the market is growing.” becoming the main game. OTT is moving as mobile phone carriers In the field M2M combines cellular Second, Vodafone’s move into the
It’s understandable people get that providers include companies like shift from minutes and texts to networks with sensors, advanced enterprise space gives it access to the
impression. Vodafone consumer Apple, Google and Microsoft which gigabytes. Many of the more expens- robotics and automation. Many of advanced technologies needed to
director Matt Williams says there’s an have their own messaging apps that ive mobile plans effectively come these devices send data back to base capture remote data and then run the
irony: “People are now connected bypass traditional telecommu- with unlimited text and voice calls. for processing. There, sophisticated advanced analytics needed to make
more of the time, they use their nications networks. iPhone owners Williams says Vodafone is New analytics turn raw data into usable sense of the data.
smartphones more. The service is an can talk to each other using FaceTime Zealand’s leading smartphone com- information. He says: “It’s a significant business
essential part of life and yet it is in and iMessage, Google has Hangouts pany and aims to stay at the top by Vodafone’s Craig Jones describes a for us. New Zealand is leading the
decline.” and Chat, Microsoft runs Skype. “creating the right platform for those New Zealand-developed application world in some areas and that’s
Competition on a number of fronts Social media networks like Twitter apps. We are no longer in the business that uses sensors to track quad bikes something we’re helping to drive.
lies behind that decline. Williams pre- and Facebook also bypass voice and of selling minutes or messages but in working on farms and in other remote ‘‘It sets the scene for another bout
viously worked as the group com- text. the business of selling the quality of areas. of disruption, this time we’ll be driving
mercial manager for Vodafone in At the same time, there’s been an connection. Our message is that your He says the sensors measure the it.’’
Europe where he says he became explosion in smartphone apps. Most apps and services will work better on
familiar with intense price competi- phone owners have a number in- Vodafone.”
tion. When he came back to New stalled on their devices. They buy The company doubled down on its year on year growth in mobile data “We already have a site in oper-
Zealand his job involved them in app stores, not from telecom early investment with the 4G net- use. Jones says the next stage is the ation where a single tower serves
benchmarking local prices against companies. Overall, the total amount work, which in a recent survey was roll-out of the new 700Mz network customers over a 35 to 50km radius.
Vodafone companies in countries of money people spend on telecoms shown to be the fastest in the world. using the spectrum purchased from This compares with maybe 7km on
like Spain and Italy. is more or less constant, with carriers This has paid off. Williams says the Government after the analogue the older towers. That’s going to en-
Williams says he found Vodafone like Vodafone now having to share Vodafone has seen a 100 per cent TV system was shut down. able further new services.”D12 nzherald.co.nz | The New Zealand Herald | Friday, November 28, 2014
The Deloitte Top 200 Awards
25 years of the Top 200
The Deloitte awards spotlight corporate New Zealand success, writes Thomas Pippos
D
eloitte is incredibly proud to Noticeable omissions today from the disheartened by the challenges of China. Both are anticipated to play a
have been involved in recog- 1989 list are those that fell from others include Ebos Group and Fulton larger part of the capital base of New
nising our Top 200 com- favour following the structural re- Hogan whose stratospheric rise over Zealand in the future. As a result, this
panies and their leaders over form of the share market in 1987. time is materially impacted by their year we have started to recognise the
the past 25 years. Not only have the These include Elders Resources expansion into Australia. Ebos Group importance that Maori organisations
Deloitte Top 200 Awards sought to NZFP, Chase Corp, Brierley was the biggest mover on the list over play in our business markets by
celebrate and encourage corporate suc- Investments and NZI Corporation, the previous 12 months, jumping from separately listing the top Maori busi-
cess, they provide a useful data set that although aspects of their businesses 21st to 4th place due to the acquisition ness entities by total asset value. And
tracks the journey of some of our continue today in different guises. of Symbion. Showing size doesn’t in terms of Chinese FDI, a recent
largest companies, illustrating how the necessarily limit relative growth, this example of its reach is the acquisition
Top 200 have evolved and what we Sustained focus results in success year Ebos was also recognised on the by Haier of F&P Appliances, ranked
may expect from that group in the Positively however, regardless of the Deloitte Fast 50 which celebrates our as the 47th largest company by
future. Reflecting on the data, a number fall from grace of some historically fastest growing businesses, generally revenue this year. The scale of some
of interesting themes are apparent. large corporates, the upper echelons represented by companies smaller of the capital that originates from
of our Top 200 organisations are than those in the Top 200. China is hard to comprehend from
Top 200 companies are both being replenished by companies that New Zealand, but it’s noteworthy that
resilient and important have had a prolonged period of fo- Industries evolve over time Chinese companies fill 100 places on
Recognising the evolution of corpor- cused growth. Fulton Hogan has A good example of this theme is the the Fortune Global 500 list for 2014.
ate groups over time, it might be a moved its ranking over the past 25 financial services sector, in particular US companies fill 128 places.
surprise to some that 25 years ago a years from 95th to 10th place. Other the banking sector. Recognising the
number of the largest companies on examples of noticeable corporate aggregations of what were household Disruption creates opportunity
the list (by revenue) continue to be movers include Ebos Group, The brands into some of the major Austra- Disruption creates opportunity for all
around the top of the list today. Warehouse, Mainfreight and Zespri lasian banking groups that now lead market participants. The reality is
Relevant then and now are the cur- who respectively now rank 4th, 13th, the New Zealand market, there is no disruption has always existed. Mater-
rent incarnations of Fletcher Chal- 20th and 28th on the list. doubt this industry has gone from ial disruption has historically oc-
lenge, the Australasian banks, Tele- strength to strength over the past 25 curred from social or economic up-
com, Air New Zealand, the offshoots New Zealand still has few locally years, generally now towering over heaval, but now disruption is synony-
of the Electricity Corporation and based multinational corporations other industries in terms of the cur- mous with technology. It is continu-
what is now Fonterra. What’s more, Somewhat less positive is that over rent scale of its participants. ous and fast. Importantly, disruption
the relative importance of the Top the last 25 years our largest com- offers a way to break into the Top 200
200 organisations to the country has panies are still predominantly servic- New sources of capital expected as well as offering Top 200 com-
continued. They remain the back- ing the local market. Noticeable Despite the growth of global private panies an ability to adjust to maintain
bone of our economy, if not more so exceptions exist, the clearest being equity, its influence on the Deloitte relevance and enhance their position.
now, as they did a quarter of a what is now Fonterra. Growing out of Top 200 list is still somewhat muted An example of the former is Xero,
century ago. New Zealand is not for the faint- and certainly under-represented in sitting just outside the Top 200
hearted, as many examples show. our largest companies. There is no rankings. Its market capitalisation at
Even large businesses can fail They include Air New Zealand, with impression this will change any time over $2 billion dwarfs valuations that
Notwithstanding the comment its entry into the Australian market soon. Where change could arise, how- would be afforded to many Top 200
around resilience, businesses don’t through the purchase of Ansett, or ever, is in relation to organisations entrants, implying the market views
always defy gravity, particularly if Telecom’s purchase of AAPT. Ex- controlled by Maori groups and by it as likely to aggressively climb the ● Thomas Pippos is chief executive of
they are exposed to structural reform. amples of those that have not been foreign direct investment (FDI) out of list in the future. Deloitte New Zealand
PD012Newshole2You can also read
