Bridget Liddell: Revenue focus can prove damaging

Photo / Richard Robinson

Opinion

Short-term thinking is undermining the ability of New Zealand's businesses to make a serious impact internationally.

Finding new ways of boosting productivity and growth is a priority for New Zealand and expanding our companies' international presence is pivotal to this. However, we need to think more strategically about the ways we are approaching overseas markets.

Going global from New Zealand requires new capabilities.

We're creative, innovative producers, but too often fall down when pursuing strategic growth beyond our borders.

In particular, many kiwi companies don't focus on the full life cycle of their businesses and tend to make short-term tactical decisions that can cost them dearly.

The immediate imperative might seem to be entirely around bolstering revenues, improving distribution and getting more products on more shelves. But total shareholder return is unlikely to be maximised by such short-term thinking.

Building equity value is not the same as building revenue on a one-year basis.

To fully mine opportunities, perhaps culminating in an offer from a major overseas firm in your industry, requires developing a complete commercial ecosystem around your business.

Our most successful companies overseas build constituencies across every aspect of their business, including governance, management, branding and marketing, channel partnerships, funding partnerships, media, interest groups and communities, online and off. All these pieces of the networking puzzle combine to build significant equity value over time.

Patient cultivation of networks is also important in building shareholder value.

In a market as vast and complex as the United States, how you access a target customer is a matter of huge strategic importance.

In many cases, our companies can generate sales momentum quite readily in the short term.

But which do you think is most effective in building sustainable, long-term value for your company and your brand: cold-calling the R&D department from New Zealand or being introduced to the CMO by a trusted insider?

My experience with New Zealand Trade and Enterprise's Beachheads programme and through the KEA network confirms that there are many experienced executives in the United States who can offer strategic advice and support for our high growth companies.

One of New Zealand's small food ingredient companies, BioVittoria, has recruited a director who just retired from the senior executive team at Coca Cola and a second who formerly ran Pepsi International.

Both of these people have been invaluable in providing strategic counsel and providing introductions to customers and funders. Having such skilled 'curators' creates enormous value, providing legitimacy and access to new 'insider' networks, replete with first-rate information.

Short-term thinking is also prevalent in our attitudes toward brands and consumers.

Too many New Zealand companies with exciting and innovative product propositions under invest in the marketplace.

Companies and brands arrive without strategic preparation, never taking the time to clearly articulate their value proposition, thoughtfully craft a brand story, intelligently select channel partners or carefully develop the community around their company.

Investing in engaging with consumers and in clever channel selection is essential for building a sustainable, robust brand that delivers value to shareholders over the long run.

And building a powerful community around a brand is now so much more possible with social media tools like interactive websites and blogs.

Any company anywhere in the world can cleverly manage its online profile to seem far more significant and more credible than they may be in reality.

Companies that do not participate in the community conversation around their company and brand will risk having others set the agenda for their product and their industry.

While there are some obvious exceptions (Icebreaker, Phil & Teds), our collective heritage as commodity exporters persists.

We need to build companies in overseas markets, not just focus on revenue.

Now is the time for our companies to get smart about pulling the strategic levers that generate long-term gains in the United States and around the world.

* Bridget Liddell chairs New Zealand Trade and Enterprise's North America Beachheads Advisory Board and is a director of BioVittoria.