Nous Winter 2012

Succeeding online: NetValue | Creating a sense of purpose: Prolife Foods

WINTER 2012

Divergent thinking: +

Matt Currie

Design: Putting design at the centre of your business Diversity: A variety of decisionmakers means more good ideas to choose from

winter 2012 In this issue: Built to last

The benefits of difference Fixing gender disparity is just one way that adding variety will create successful, enduring businesses.

By Ellie van Baaren PAGE 22

“We had always seen research and development as a cost centre, but now it’s the core of our business.”

Designed to last Design is not what you think it is. It’s a way of behaving and creating value at every level within an organisation.

By Greg Bruce PAGE 18

Taking it to the next level NetValue has been busy: buying companies, securing venture capital and nurturing a skilled team.

By Ellie van Baaren PAGE 8

NOUS WINTER 2012

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winter 2012 PROFILES

Beyond the numbers

Prolife Foods is guided by a strong sense of purpose.

By Vicki Annison PAGE 10

Little seed, deep roots The Enviroschools Foundation

By Vicki Annison PAGE 12

Breaking new ground

Design service company Divergent found its niche – then had to explain it.

By Ellie van Baaren PAGE 14

INFOGRAPHIC

What design thinking looks like.

PAGE 16

OPINION

When millions of dollars are at stake, says Gordon Chesterman, trust takes on a new level of importance.

PAGE 26 Design thinking can liberate your business from the shackles of the past, says Stephen Cummings.

PAGE 28 Top chef Josh Emett tells Vicki Annison the secrets of balance.

PAGE 34

GALLERY

Publisher: Tim Collins Managing editor: Ellie van Baaren Designer/media coordinator: Rebecca Walthall Design: Richard Thomson Scott Thomson Media Contributors: Vicki Annison, Brooke Baker, Greg Bruce, Anne Challinor, Gordon Chesterman, Stephen Cummings, Richard Han, David Lashlie.

Proofing: Sue Geraghty Printing: Format Print Web: Crescendo Multimedia Advertising enquiries: advertising@nousmagazine.co.nz Feedback: editor@nousmagazine.co.nz Nous Magazine PO Box 11808 Wellington 6142 Ph 04 470 7649 www.nousmagazine.co.nz © IN-Business Media Ltd reserves the right to accept or reject all editorial or advertising material. No part of the magazine may be reproduced without the written permission of the publishers. Letters and emails addressed to the magazine will be regarded as for publications unless clearly marked not for publication. All rights reserved.

While the publishers make every effort to ensure that no misleading claims are made by advertisers, responsibility cannot be accepted by Nous magazine, IN-Business Media Ltd or any of the publisher’s related entities for the failure of any product or service to give satisfaction, inclusion of a product or service should not be construed as an endorsement of it by Nous magazine, IN-Business Media Ltd or any of the publisher’s related entities.

ISSN 2253–2374 (print) 2253–2382 (online) Published in partnership with IN-Business Media www.in-business.co.nz

Wintec honorary fellowships Nous launch PAGE 30

FROM THE DESK OF Bettle and Associates As told to Ellie van Baaren PAGE 32

NOUS WINTER 2012

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welcome

Beyond skin deep Welcome to the Winter 2012 issue of Nous magazine.

This issue we look at matters of balance – where do you put your time, money and resources, who do you involve in governance, how do you deal with growth – and talk to some of the Waikato’s most enduring businesses about how they’ve made it work.

Women currently hold only 9 per cent of private company directorships in New Zealand.

It’s a statistic that crops up in the media on a semi-regular basis, followed in almost the same breath with warnings of how we need to ensure there is more “diversity” in the leadership of our business community.

But diversity is about more than the gender imbalance.

That’s just an easy target.

According to the dictionary, diversity means “a range of different things”. Range being the operative word. In a business sense it can, and should, incorporate gender, ethnicity, experience, age, qualifications, political leanings and socioeconomic groups. But it could also go a lot deeper – family structure, marital status, how people speak, the language they use, and how they present themselves.

If you drill right down to the root of it, diversity means people who are different from yourself.

The other problem with the oft-brought up gender imbalance debate is the focus on numbers.

What usually accompanies that is talk of quotas – “things aren’t changing fast enough on their own, so we need to force the issue”. Talk to any of the women who make up that 9 per cent, and I’d say they find that a trifle offensive. They want to be seen as a valued, experienced and

Mailbag . . .

We love getting mail – of the postal or electronic persuasion – and we’d like to share this with you: “I just wanted to congratulate you on your new Nous magazine, which I have just read. I’m sorry I was unable to be present at your launch, due to Parliamentary obligations, but really pleased to see what a wonderful celebration of the innovative and ground-breaking things going on in the Waikato region your magazine represents.

“As a local MP, I am always trumpeting our region’s strategic importance in New Zealand’s future and I see we are on the ‘same page’ if you will excuse the pun!”

– Sue Moroney

6 NOUS WINTER 2012

effective director, not simply as a woman. And why shouldn’t they?

Instead we need to be working on the issue from three sides – increasing the opportunities for potential directors to ready themselves for the challenge, opening up the networks that feed this recruiting pool, and ensuring that people at all levels of business learn how to connect and engage with people who are different from themselves.

It’s not going to change overnight, and we can’t expect it to. The important first step is awareness – of the fact that diversity is essential in creating enduring businesses, and of the effect our own assumptions, attitudes and ideas can have on integrating different people into our businesses. Management and leadership need to set the tone, but it’s also something that needs to change throughout all levels of business.

Essentially we are all living in our own worlds, each of them slightly different from the other. It’s unavoidable. We’ve all grown up in different households, countries and cultures, had different experiences, and surrounded ourselves with different groups of people. All of that has affected how and what we’ve learned along the way and therefore how we interpret what we see and hear.

As we find in our feature on diversity (page 22) it’s no longer

acceptable to say ‘the world operates how I operate’. Having a diverse group of voices with equal weight in our boardrooms enables us to consider ideas that are outside the norm, minimise risks that otherwise wouldn’t have been picked up, and be more representative of the changing face of New Zealand business and the country’s communities.

All three of these factors are essential in creating enduring, internationally competitive businesses and by extension in creating a robust and growing economy.

ELLIE VAN BAAREN MANAGING EDITOR

Congratulations to . . .

Sally Graham, whose feedback has won her a copy of The Village on the Hill: Celebrating 125 Years of Waikato Hospital.

If you’ve got an opinion, response or comment on anything in this issue of Nous magazine, let us know. Email editor@nousmagazine.co.nz

Letters must include your full name.

in association with Nous magazine is a quarterly publication focused on leading edge technology and business innovation in the Waikato region. Our purpose is to provide insights, connections and inspiration to business decisionmakers. This is a unique initiative supported by partners with a shared goal: to stimulate and support Waikato business growth. We acknowledge our foundation partners – Wintec, BNZ, Mainzeal and Gallagher – and associate partner Prolife Foods.

Foundation Partners “To be an integral part of the community, we partner with many different organisations and businesses throughout the region. Nous is about showcasing innovation in the Waikato and providing credible insights, connections and inspiration to our businesses, industry groups and organisations. Having a wide range of stories to inspire people and stimulate growth in our region is key to our commitment to this magazine.”

Mark Flowers, CEO, Wintec

“Large, small or in-between, Waikato BNZ Partners offers businesses the support they need to grow and prosper. We believe there is no substitute for local knowledge and experience, which is why we provide access to local business specialists who can help you expand into new markets, manage foreign exchange, or simply enhance your cashflow – amongst many other things. Because, like the publishers of Nous, Bank of New Zealand is dedicated to the growth and success of the Waikato business sector.”

Phil McKinstry, Managing Partner, BNZ Waikato

“Mainzeal has a proud history of constructing some of New Zealand’s most iconic buildings and the Waikato is no exception. The Gallagher building, Tainui Novotel, Braemar Hospital and Wintec House are fine examples of Mainzeal partnering to build a better Waikato. We support Nous in stimulating business and innovation in the Waikato.”

Finlay Irwin, Manager, Mainzeal Waikato

“We’re strongly of the belief that this particular medium reaches all organisations with a passion for doing the best in business, and we’re delighted to be involved. We see sponsorship as one of our core principles. It’s our commitment to the community. We’re always delighted when we find a sponsorship that fits all our criteria: the community, our staff and our stakeholders.”

Margaret Comer, Corporate Services Executive, Gallagher Group

Associate Partner

“Prolife Foods is a major supplier of quality food products in the Waikato region. We believe, as we obtain our revenue from the greater community, we have a social and commercial responsibility to invest back in that community. Accordingly, Nous magazine is a tremendous opportunity to communicate with the Waikato business world by celebrating Waikato successes and promoting topical commercial issues.“ Bernie Crosby, Prolife Foods

We also appreciate support from: New Zealand Trade & Enterprise, SODA Inc, Opportunity Hamilton, Global Entrepreneurship Week and Blue Star.

NOUS WINTER 2012

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Built to last

Taking it to the next level The past few years have been all about growth for software development company NetValue – acquiring companies, securing venture capital backing and nurturing a high-level team. It’s exciting and fun, but it’s also hard work.

Words by Ellie van Baaren Photograph by Dave Lashlie

T

he number of businesses built to take advantage of the opportunities presented by the online medium has exploded.

All you need is a computer, an idea and a little bit of skill. Right? Technically yes, but there are two main problems with that theory.

One: it’s easy to get distracted by how many associated and complementary services you can also offer your client – it’s kind of like pulling that loose thread and unravelling your whole sleeve. And two: it’s hard to come up with products and ideas that are difficult for others to replicate.

For NetValue, the solution to issue number one has been to acquire niche technology companies that already have the capacity to offer some of those complementary services. CEO Graham Gaylard points out that it’s by no means the easiest option, but it has proven to be effective.

“Acquiring companies that were established in areas we wanted to get into was always a main strategy, but each time it’s a decision between whether we develop those skills in-house or acquire a company that already has them. Being able to merge with another company and develop it so that it runs as an effective part of your business takes around six to eight months.

We’ve made a number of acquisitions and taken the best bits of each company.”

The latest two mergers were with Webspring (which is now their web development brand) in 2010 and DigiCreative (design and optimisation) in December last year.

While some of those external brands have been taken into the fold, the company differentiates its services under three main retail brands: Webspring; Interspeed for hosting; and NetValue for the end software.

For issue number two, NetValue brings

8 NOUS WINTER 2012

some serious firepower to the table – how does six PhDs and a professor in computer science sound?

“The problem with the internet is that if you have a good idea it’s very easy for people to replicate it. We have put in some serious intellectual property which is very hard for people to replicate. That’s our competitive advantage.”

An example of their work is Infovet, a groundbreaking software program they built and operate for Pfizer. It is now the benchmark for best practice information management on the farm.

Another is SLIM SearchTM software, which has the potential to help leading researchers and corporations make breakthroughs in gene-based science. It has also enabled NetValue to establish itself in the global market. After heading off to Silicon Valley, Gaylard and NetValue managed to secure the backing of an international venture capital firm, partnering with Catamount Ventures in the USA to launch Real Time Genomics Inc in 2009.

Gaylard says not a lot of New Zealand companies have successfully done that, but “we showed that raising US money for innovative projects can be done”.

While Real Time Genomics is based in San Francisco, research and development will still take place in Hamilton. Gaylard sees it as NetValue’s “core engine” to help fund standard operating areas, freeing up funds for strategic projects. “It’s always a balance as to how much are we putting in for R&D, which is a longer-term payoff.

And then you get hit with financially difficult times . . . It’s about having the right people, the right sales team and the right growth strategy.”

Staffing challenges include finding quality employees and keeping a team that is operating at a high level motivated and excited. Cash isn’t always the answer.

“We want to provide a great working

environment and part of that is the other people. We want to attract good developers and there is a bit of self-selection involved – the good people attract other good people.” And the not-so-good people?

“In a good environment, those who don’t perform, often end up leaving of their own accord.”

Gaylard says one of the benefits of being based in Hamilton is the quality of the educational resources. “Hamilton has the number one management school in the country in Waikato University’s business school as well as the computer science school, so there is a good talent pool and a lot of our team came through there. The Wintec IT school is pretty good at delivering skilled people, as well as their applied research and applied learning resources.”

Gaylard studied at both institutions.

Most of NetValue’s business lifecycle has been focused on growth, and Gaylard says that means they’ve come up against a number of “glass ceilings” as the business goes through each stage. “Getting to two or three employees is quite difficult and then you go well until you get to about 14 and then you need another layer of management,” he says. “Then once you get to 45 or 50 people you need to punch through again to get to 60–70 so you can support the different layers. It’s been fun but it’s hard work.”

Especially over the past two years.

Gaylard says the measure of a good business is how you do in a recession.

“Diversifying and getting US capital has helped because we’re not playing in the field in New Zealand as much.

It’s a new normal and we need to look at how we balance the business to deal with that.

“One of our strategies is that no single customer account is more than 15 per cent of our revenue, otherwise you run the risk that if one customer leaves or goes under it threatens the business – if they sneeze you catch a cold. We have kept that strategy from the beginning, and it has slowed growth, but it’s worth it.” n

“

The problem with the internet is that if you have a good idea it’s very easy for people to replicate it. We have put in some serious intellectual property which is very hard for people to replicate.

“

For NetValue CEO Graham Gaylard success is about having the rght people, the right sales team and the right growth strategy: “The good people attract other good people.”

NOUS WINTER 2012 9

Built to last

Beyond the numbers Founded in a family garage in 1984, Prolife Foods now turns over $100 million and is still focused on its original business purpose and ethics while employing 500 people.

Words by Vicki Annison Photograph by Dave Lashlie t all began by accident. In 1984 a large quantity of dried apricots had to be stored in Bernie and Kaye Crosby’s garage after they received them as payment for an outstanding debt.

With true entrepreneurial spirit Bernie packed his car boot full of apricots and went out to sell them. The quality of the food was good and soon people began to ask for more. The business grew and turned over $100,000 in its first year.

Today, Prolife Foods turns over $100 million and produces more than a million muesli bars a week from its Te Rapa factory. It is a significant supplier of quality food products with four key brands; Alison’s Pantry, Value Pack, Mother Earth and Donovan’s Chocolate.

The success of the organisation is due to its focus on service and strong customer relationships.

Bernie and Kaye have now stepped down from the business but the success, passion, integrity and accountability they instilled in the early days still underpin the culture of the business.

CEO Andrew Smith says that, although the business has grown substantially, they try to retain what they can of the entrepreneurial past while being able to service customers in a much bigger way.

Smith has been CEO for three years, after working for multinational companies such as Fonterra and Unilever. He joined Prolife shortly after it acquired the Mother Earth brand from Cadburys.

He admits to a pretty good success rate since acquiring Mother Earth: a $6 million turnover will this year reach $20 million in New Zealand and $10 million in Australia.

Smith thinks the introduction of a company purpose has helped the business endure. “The company ran very well for 24 years without a company purpose, and had values that were just being developed, but soon after I arrived we said that we need to define what it is that makes us who we are.”

Prolife shareholders and staff came up with a purpose statement – providing great food with obsessive service – that they felt captured what had originally made the 10 NOUS WINTER 2012

Crosbys successful in the business.

“Good purposes should define what you do,” says Smith. “The obsessive service reflects where we came from and who we are. It’s a strong word but we didn’t want to be safe or boring.”

He is happy to see his staff living and breathing the purpose. “I’m very concerned that people know what we are here for and where we came from. That’s who we are.”

The culture that Bernie Crosby developed was very staff-inclusive and some of the original staff members are still with the company. The Crosbys themselves remain shareholders and directors, and still maintain long-term relationships with many of the customers.

“That’s part of that entrepreneurial drive – to take people with you. I don’t think you are successful as an entrepreneur unless you do that. It’s not just sitting in a little room by yourself, it’s leading and motivating,” says Smith.

After starting small and buying more food products, Bernie Crosby began processing foods and roasting nuts. Prolife is now one of New Zealand’s largest nut roasters. The business introduced a bulk food range in supermarkets which quickly grew in popularity. A partnership with cook and bestselling author Alison Holst saw the birth of Alison’s Pantry, a brand based on goodness, honesty and integrity.

Smith believes that one of the competencies that Prolife has developed over the years has been its ability to source the best products from all over the world.

“It’s always about quality, good value food. We are very comfortable with what we do. Consumers know that they can get the freshest products by buying the way that we suggest – that’s how you get a strong repeat market.”

He admits there are always challenges but says that is a good thing. “We’re up front. Sometimes we may fall short but our commitment is to get back there. These things do present you with something to live up to and that’s a good challenge, it’s a healthy one but our customers know that we are absolutely committed to them.”

Prolife has a strong product development team. The fast-moving nature of the consumer goods business, Smith says, means that many products have life cycles.

But although innovation is necessary to stop things going backwards, he says, innovation can also have a big failure rate.

Prolife could launch a fantastic product, but if it’s not on the right shelf at the right time, or something else happens, it may not work.

In the last two years Prolife has had good success in Australia and it is looking to opportunities in the Asian market.

“I have a view that Asia will look increasingly to New Zealand for food, so we as a company need to have some knowledge of that. We are testing what works and what doesn’t work. But at the moment we are very strongly a New Zealand business that sells to New Zealand customers – that’s the core of what we do.”

Donovans Chocolate, another Hamilton-based family business, is Prolife’s latest venture, although Smith says it is more of a coming together than an acquisition in the purest sense. “We’d been buying quite a bit of chocolate from them for Alison’s Pantry so we had a relationship already. All the staff are working with us, we are just adding our skills together.”

The chocolate company had a good presence in Hamilton but was not big enough to make that next step. The plan is to get the brand to a critical mass so it can compare with brands like Lindt.

Prolife has a desire to be part of the Hamilton story and is focused on the local community. This includes links with local schools, Wintec, the University of Waikato and the Enviroschools Foundation.

The company was recently awarded silver medal for Best New Zealand Owned Company by NARGON, the Grocery Retailers’ Association. Smith says it is a good measure of their service but shows they can still go a bit further.

“Work on your company purpose,” he advises, “but make sure it fits where you come from and can guide you going forward.” n

Prolife Foods CEO Andrew Smith says the introduction of a company purpose statement has helped the business endure.

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Built to last

Little seed, deep roots

A

decade ago a seed was planted in Hamilton. It was the beginnings of a groundbreaking programme focused on creating health and wellbeing in the lives and communities of New Zealand’s young people. Nurtured by community support, passion and commitment, that seed has grown into the Enviroschools Foundation, a nationallyfocused, Hamilton-based charitable trust.

Launched 10 years ago with support from Hamilton City Council, the Community Environmental Programme and three pilot primary schools, the programme now involves 29 per cent of the country’s schools. It is designed to help children and young people plan, design and create healthy, sustainable and resilient schools and communities.

Students are provided with leadership, support and opportunities to explore real life challenges and apply their abundance of energy and ideas.

Enviroschools operates in early childhood centres through to post-school youth and community groups. Learning centres applying to be a part of Enviroschools must commit to integrating sustainability into the whole of the school’s life, involving students, teachers, boards of trustees and members of the school community. Many of the schools involved are reporting immediate financial benefits.

Enviroschools National Director Heidi Mardon says building partnerships is critical for the longevity of the charitable trust as it creates resilience and the necessary networks.

“As the network matures, the expertise becomes more and more within the network itself. It’s not at head office

12 NOUS WINTER 2012

Photo: Enviroschools

The Enviroschools Foundation fosters strong relationships with local businesses to provide role models for young people, but they choose their partners carefully.

“

We never want to be in a position where we are just taking the money.

”

– it’s with the students, the partners, the community.”

Close relations with businesses are also important to Enviroschools, not just to create sustainability but to provide good role models. Students develop creativity, decision-making, entrepreneurship and are encouraged to think about their future and the world they want to live in.

They are empowered to become citizens and leaders in the present and the future, and Enviroschools realises the importance of them learning the good, environmental and social ways to run businesses.

The foundation works with a diverse range of organisations, including regional councils, the Ministry for the Environment and the Department of Conservation. In April 2010 it formed a partnership with another Hamilton company, Prolife Foods, establishing the Mother Earth Regional Events Fund to help Enviroschools run professional development and networking events that enable schools to get together to share their sustainability journeys and best practice.

In 2011, Prolife launched a competition called “Mother Earth Reward”, which Enviroschools participants can enter to showcase the outstanding contributions being made to healthy food and eating.

Mardon says the sponsorship with Mother Earth helps young people with opportunies for decision making, getting them thinking about design, giving them confidence-building exercises and

undertaking real-world actions that make a difference now.

However, the partnership between Mother Earth and Enviroschools is not just commercial brand sponsorship. Prolife CEO Andrew Smith says it is a longer-term relationship that is constantly developing and the two organisations regularly discuss what they can do to work together.

Mardon says it is important to Enviroschools that they have partnerships with mutual benefits, where everyone is working toward the larger goal of a healthy and sustainable community. “We never want to be in the position where we are just taking the money and don’t agree with the group that we are taking it from.

“A partnership with us does leave them open to kids wanting to question how they are doing things, and maybe giving suggestions about what they think would be more sustainable or healthier.”

Mother Earth is open to the feedback it receives from children and teachers, which to date has covered healthy eating, new product ideas and packaging.

Smith says the business is constantly looking to make environmental improvements in packaging. While looking at better options for cardboard they received useful feedback from the Enviroschools networks.

“It’s all a process,” says Mardon. “We are never going to beat them over the head and say you’re not doing it.”

She admits that everyone faces constraints but says the main point is to keep a conversation going. “So that we are all aware of what people are thinking about and that we are supposed to make changes.”

– BY VICKI ANNISON

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Built to last

Breaking new ground There are advantages and disadvantages to setting up a business in an emerging industry – there’s not as much competition, but people also don’t have a clue what you do.

As a design services business in Hamilton, Divergent is discovering and dealing with both sides of the coin.

Words by Ellie van Baaren Photograph by Brooke Baker

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T

alk to many business owners and they talk of an overwhelming desire to be their own boss and make their own rules. Not so Matt Currie.

“I’m not in business to be in business, I’m in business to make the world a better place,” he says. “It just so happens that a company structure is the best model to deliver that. It was more about my vision and goal, than a desire to be my own boss.”

He started Divergent in early 2010 after taking voluntary redundancy from the IRD. Considering his aim was to make the world a better place through design-led innovation, it seemed to him that he could make more of a difference from outside the tax department than inside. He was fortunate to be able to take voluntary redundancy and use the money to go into business for himself.

The young company helps service organisations uncover who their customers are and what they really need from them.

Then they help develop the services to deliver on that. It’s a small but growing area in New Zealand, but it’s already big in Europe and the US. Here design agencies have traditionally fallen into areas such as brand and marketing design, industry and web design.

“We believe we’re the first of its kind as a firm focused on the design of services,” Currie says. “We have a belief that design is fundamentally a creative problem-solving process that can be applied to all sorts of industries and issues. It’s a methodology and philosophy.”

But as with any other emerging area, the challenge has been communicating to potential clients exactly what Divergent can offer. To deal with this they focus on the value of what they do rather than how they do it. It’s an approach that Currie says has come up again and again from a variety of sources.

“It’s not about selling what you do, but about why you do it. I heard it early on when talking to experienced businesspeople, but I probably didn’t appreciate it then for what it was. Then I’ve seen it in different talks, business books . . . it’s a

recurring message about trading on your values and beliefs.”

He continues that despite the fact many people may be unfamiliar with the process, the concept comes down to the fundamentals of being in business. “Business is about finding out what people need and how to give it to them. We focus on a deep and authentic understanding of people and what they need; if you want to provide something that people are going to engage with and treasure then you need to figure out what they really want otherwise you are likely to miss the mark.”

Growing their team is the next step, but that, as well the nature of their business, can make it difficult to find the right staff members. Aside from the usual challenges involved in hiring staff, there is not exactly a wealth of degree or diploma programmes around pushing out graduates qualified in services design. Plus, as a young business, bringing that first person on board feels like a huge step.

“We’re talking about bringing people into our family and investing in our whole mission and business,” Currie explains.

“We’ve come to the conclusion that the most important things are attitude and mindset. Having said that we don’t have the capacity to upskill someone from scratch. We’re looking for people who have some specialised technical skill but who also have an overall affinity for what we do.”

Finding those like-minded people will be essential in achieving Currie’s goal for Divergent – to become New Zealand’s premier service design agency, serving the entire country and beyond. “That means growing a really strong team so that we can manage projects from start to finish in-house.”

They are already working with a wide range of businesses – from a car rental

“

I’m not in business to be in business, I’m in business to make the world a better place.

“

company to a healthcare provider and a software company in the Czech Republic.

“We are working in collaboration with another company in the [Soda Inc] incubator and AUT on an amazing piece of work about learning and teaching endangered indigenous languages; there’s a wide applicability in the approach we take.”

The job with the Czech software company came through some work Divergent had done with the Microsoft Innovation Center, a business incubator in the Czech Republic, helping start-up businesses learn about design-led innovation. They created a piece of training and led a hands-on workshop and seminar from Hamilton via the internet.

It bears out Currie’s firm belief in using tools such as Skype and Twitter to connect remotely with people internationally and around the country. And one of the reasons that helped allay any concerns he had about basing himself in Hamilton.

Born in Tauranga, Currie lived in Hamilton from the age of four until he moved to Wellington in his 20s. When he returned to have a think about what his business could look like, the city’s size, geographic location and the number of potential clients were all concerns.

“When I came back a number of things had happened that make it a good fit for us. When I left I still considered it a bit of a rural town and even a bit bogan, but I was surprised by how much more cosmopolitan the place felt; how much more palpable the conversation was about innovation and creativity. It was uplifting to feel that positive change, the open-mindedness.”

Besides, inspiration isn’t limited to a particular area or business. Currie says one of the lessons he’s learned along the way is that inspiration is everywhere. “There are businesses in Waikato doing obscure, unpublished but fascinating things.”

But the biggest lesson by far is that while practical elements such as business plans, accounting practices, business skills and so forth are important in creating an enduring business, it’s vision, passion and commitment that really drives business success. n

NOUS WINTER 2012 15

Built to last

BUSINESS BY DESIGN Design thinking has led to many of the innovations we have become (very) accustomed to; think the computer mouse and almost anything turned out by Apple Inc. But design as a means to drive innovation isn’t limited to products. Designing processes, services and even whole organisations from a user-oriented mindset can lead to innovation as well as cost savings and competitive advantage. But what does design thinking look like? And what does it involve? In this infographic, Infovision, in collaboration with design practitioners, academics and speculators, outline the anatomy of the design process.

Quick prototyping Prototype, test, prototype, test… Initial prototyping should be used to gain feedback to aid thinking. Then building and iterating until you get it right.

Making multiple versions of the same thing until you find the one that works.

usEr cEntric Design thinking puts the user’s experience first.

That is, the user’s needs and how they will interact with the end product. This ultimate focus on those who will benefit drives the design process from end to end.

UNCONSTRAINED IDEA GENERATION

1

CRAFTING AND MAKING SENSE OF IDEAS

2

3

4

5

thinking out Thinking out means looking beyond regular planning periods, which typically restrict thinking to what can be achieved in the short term – design is not a process which respects arbitrary financial milestones.

rEfinEmEnt

Embracing constraints

The culmination of all that hard work – from rough-and-ready prototypes it’s time to refine, prepare and polish to perfection.

“The more constraints one imposes, the more one frees oneself.” It’s an idea that takes some getting used to but constraints can drive innovation, find a way to use them to your advantage.

The whole design process should be infused with the values of empathy for the user, intuition and a will to execute and communicate.

16 NOUS WINTER 2012

CaSE StUDY: fIShEr & paYkEl New Zealand companies have had great success using design thinking to overcome technical challenges. Using the design thinking technique of storyboarding, we show how the development of Fisher & Paykel’s game-changing Dishdrawer was created by focusing on the user’s needs, constantly problem-solving and innovating to create a superior product.

1

USER CENTRIC:

The Dishdrawer was designed to be more in tune with the way people lived their lives, that means smaller families, fewer people per household and different eating patterns than “three square meals”.

kEy

The Dishdrawer comes in one and two drawer variants to allow users to choose how to integrate the device into their kitchens and lifestyles.

= IDEAS

2

THINKING OUT:

The creation of the Dishdrawer goes beyond the typical product update cycle and led to the creation of a new product category.

1

3

Heavily patented, the Dishdrawer was used to establish a flagship brand for Fisher & Paykel which was used to enter markets including the US, Middle East and Europe

EMBRACING CONSTRAINTS:

Many of the technological requirements for the Dishdrawer didn’t exist at the time it was being designed. Instead of letting current levels of technology constrain them, Fisher & Paykel assessed what technologies were required and drove innovation in those areas.

This led to the creation of 19 patented technologies; for example a 70mm high pump and motor. These innovations made the uniqueness of the Dishdrawer a competitive advantage.

To work well, most dishwashers have high energy and space requirements as well as having significant environmental consequences. Fisher & Paykel focused on minimising these, leading to a product which was highly differentiated from the competition.

The results of testing were measured against critical success factors, before further testing.

A review team analysed the product to date against the original project goals.

rinsE and rEpEat The steps in this process are likely to have to be repeated several times.

4 INFOGRAPHIC BY:

QUICK PROTOTYPING:

Fisher & Paykel vigorously tested prototypes under both laboratory conditions and with consumers.

CONTRIBUTORS: Infovision and IN-Business would like to thank contributors: Andrew Burns, Hadley Smith, Stephen Cummings, Kieran Nolan and Terry Bowe.

SOURCES: Brown, T. (2009). Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. HarperCollins; Liedtka, J., & Mintzberg, H. (2010). Time for Design. Design Management Review, 17(2), 10–18; Martin, R. L. (2009). The Design of Business: Why Design Thinking Is the Next Competitive Advantage. Harvard Business Press.

5

REFINEMENT:

After review, the Dishdrawer is refined, tooled and tested again.

NOUS WINTER 2012 17

Built to last

DESIGNED TO LAST Design is not just about pretty products.

It’s about building a better business – from the ground up and the top down.

Words by Greg Bruce Illustration by Rebecca Walthall

18 NOUS WINTER 2012

W

hen Hamilton-headquartered Gallagher Group started to overhaul its design process in 2007, it was a large international company with a range of diversified business units often operating under different brand and product strategies.

Today, it is a unified organisation, operating under one brand worldwide, with a common vision, cause and philosophy. And a large part of the reason for that is the commitment it made five years ago to improving design.

What is design? It’s not what most people think it is. At least, it’s not only what most people think it is. That is to say it’s not just a group of people sitting around trying to make things look pretty.

It’s serious business. So serious that in 2004 the government introduced the organisation Better By Design under its New Zealand Trade and Enterprise banner to help boost the country’s economic growth through improved use of design.

Judith Thompson, director of Better By Design, says the type of design the organisation focuses on is all about improving customer performance. While a company like Apple has products that look good and function well, Thompson says that what makes it different from other companies is the entire experience people have when interacting with the company.

“What design is about in terms of companies is when the company fully understands not just what its customers want, but

“

“It’s really dependent on the understands latent or unmet or The companies that succeed chief executive being committed to future needs of the customer and it,” she says. “So for example, Steve can deliver either a product or a through design need to start Tucker, the deputy chief executive service for its customer that is from the point of having unique of Gallagher, he has engaged really unique, that no other company is providing. That’s what design can insight into a need that’s not being significantly with Better By Design.

He takes every opportunity that do. met. we offer to connect with other “The companies that succeed CEOs, he’s been on our study tour through design don’t just get there to Silicon Valley to learn, so it’s not something he’s delegating to a by thinking ‘what’s a good thing we can do? How can we make this designer. He’s taking responsibility to really stand in front of it, to product really well?’ The companies that succeed through design strongly own and sponsor it as well as supporting his team and his need to start from the point of having unique insight into a need people to the best of their capability.” that’s not being met.”

Better By Design’s design specialist John Hatrick-Smith has A key element is building a culture of design. Thompson says worked particularly closely with Gallagher. He says the Better By this doesn’t come out of a traditional engineering-type culture. A Design assessment team conducted a “design 360” assessment design-focused culture is one where everybody knows what the on Gallagher focusing on the company’s capacity to make use organisation’s purpose is, what it can do better than anybody else of design and the report that followed addressed how Gallagher in the world, who its customers are and what needs they’ve got. might be able to apply design to its business at a number of levels, It’s in stark contrast to the more stereotypical view of design, particularly around process, brand and product. where a team of people take an effective product and try to make it “So at a process level, what have they got in place, what do they look better. need? At a brand level, what does it look like today, what might be She says it has to be driven from both the top down and bottom possible? At a product level, what are they doing today that they up, but it can’t only come from the bottom up. In other words, it could do better?” requires strong commitment from the CEO.

”

NOUS WINTER 2012 19

Built to last

“

customer-focused.

In working with a company We talk about ‘brilliant Six months ago Gallagher to improve its design, Better By Security launched a new piece Design encourages the identisimplicity’ . . . we want customers of software, Command Centre fication of a design champion to pick up our products and say and a design sponsor within that version 7. In developing the company. In the case of Gallagher, software, feedback came not ‘wow, that’s cool’. the design sponsor is deputy chief just from product managers and executive Steve Tucker, while the research and development people, design champion is research and development executive Rob but from asking customers about what they’d like to see in a new Heebink. version. As a result, the user interface has been changed and Heebink says the key recommendations to come out of the improved and, Edgecombe says, the response from end users is that Better By Design review process were around branding and it’s as good as anything they’ve seen globally. innovation.

“The way we design our products, we talk about ‘brilliant The company’s brands were consolidated. There was one global simplicity’, and that’s a direct outcome of Better By Design. We website. Consistent global external communications and an want customers to pick up our products and say ‘wow, that’s cool’. internal engagement programme would communicate to staff what You see that in Apple and that’s pervaded that organisation. In a the brand stands for and how it is perceived in the market. similar manner, from the way we think about our customers on The innovation process, meanwhile, which was formerly led by the factory floor, right through to how we position ourselves in the the sales force, was to become much more customer driven. market, it’s all about design as well, and branding is obviously a “What we have done,” Heebink says, “is a lot of work on the huge part of that.” front end of our process to let our whole design be led by customer Heebink says that design thinking is not merely a part of the insights instead of straight market feedback. It’s about getting Gallagher organisation. people out, spending time with end users and letting those “The whole innovation process is something that is across the customer insights drive the innovation.” entire organisation. In the past, innovation was an R&D activity.

My mantra is ‘innovation is a team sport’. All aspects of the business need to be aligned to that, and that is one of the innovaetter By Design has remained involved with Gallagher tions I have been driving – moving away from the silos within the throughout its efforts to implement its new design business to a much tighter organisation.” focus. Heebink says the level of engagement has been It fits in nicely with the thinking of Better By Design, as “really good and really helpful”, with Gallagher now expressed by John Hatrick-Smith. reaching a greater level of self-sufficiency.

“When you start thinking of design as being the cross“Better by Design has helped the whole executive team here functional, collaborative, value-creation methodology, you see realise the importance of the brand and what it stands for,” Heebink that it can be applied to every aspect of the business. It’s not a says. “Innovation and design – customer-led innovation. One of department any longer; it’s a way of behaving. It’s a way of creating the profound statements from Steve Tucker a little while ago, being value. It’s value at every level within an organisation.” an accountant by trade, was that he had always seen research and Gallagher has always been a highly entrepreneurial company development as a cost centre, but now it’s actually the core of our with an opportunist streak, Heebink says. What the company is business.” doing now is seeking to build a greater strategic focus without Curtis Edgecombe, Gallagher general manager – security, losing any of its entrepreneurial spirit. And that is all about good says that the thinking that has flowed out of the Better By Design design. n process has meant his part of the business has been far more

”

20 NOUS WINTER 2012

Growing into it Stainless Design is another Hamilton-based company that has put design to good use. Stainless Design was initially producing equipment for commercial dairy, food, pharmaceutical and marine sites, and has now diversified into servicing almost any industry, working with stainless steel, aluminium and mild steel.

In the early days, the company had limited involvement in design, but when it looked at its direction in 1999 as part of a desire to broaden its

customer base, it quickly developed a much stronger design focus.

Stainless Design’s John Cook acknowledges that the company has grown into its name, with its greater emphasis on design emerging as the result of a re-think during a period of economic recession. Where Stainless Design initially only had one engineer, it now has a team of nine.

“We have stiff competition from offshore.

We’ve had to learn how to reduce our costs through clever design concepts of how we do what we do, and so it’s been a great

motivation to come up with simple functional design to keep us in the marketplace, and more importantly, to keep the work in New Zealand.”

Cook says that the company builds in an investment of time and effort at its own cost for innovative design and sometimes the customer will contribute to the cost of development.

“We want to value add our customers as best we can, and share our knowledge with them, and where we see opportunities to improve product design, we’ll endeavour to help.”

NOUS WINTER 2012 21

Built to last

If everyone has the same skill set, opportunities and risks that are outside the box can be missed.

22  NOUS WINTER 2012

THE BENEFITS OF DIFFERENCE Diversity may have become a bit of a trendy buzzword, but that doesn’t make the theory behind it any less valid. An increasing number of studies are showing that a variety of voices in all areas of business can have a direct effect on creating successful, enduring businesses. Gender disparity is just the start.

Words by Ellie van Baaren Illustration by Rebecca Walthall

W

e instinctively seek out people who look, act and think the same way we do. It’s part of human nature. There are the emotional reasons: we feel we understand their motives; we know where they’re coming from; we don’t have to explain ourselves. In short we feel comfortable wrapped in our bubble of commonality.

In business there are also practical reasons for doing this. Important decisions need to be made quickly and there’s little room for error.

The consequences of involving the wrong person could be dire. Someone who comes with a recommendation from someone you already trust eliminates part of that unknown factor; it’s a more comfortable platform to start from. It makes sense.

But surrounding yourself with like-minded people also has its risks. Everyone sees the same risk factors, but anything that’s off that shared radar is missed. Faced with a wall of emphatic unanimity, dissent can be muted both through self-censorship and denial. By the time the cliff

is nearing, you’re rushing towards it without enough time to pull on the brakes.

It’s a simplistic and extreme analogy, but an increasing number of studies and hard-won experience are pointing to the fact that business success relies on incorporating a variety of voices. All the better if they make you feel a little uncomfortable.

Diversity, like sustainability, has become a bit of a buzzword; a trendy concept that businesses like to be able to prove they’re following. It’s also often hijacked by issues of gender representation. News stories and opinion pieces periodically bemoan the lack of women in executive and governance positions – women currently hold only 9 per cent of private company directorships in New Zealand – and posit theories on how we can change this.

While it’s necessary to shine a spotlight on the low number of women in these positions, KPMG Tax Partner Vina Hira says we need to widen our lens and acknowledge that diversity is not a simple issue of gender.

“Diversity comes in a number of shapes and

NOUS WINTER 2012 23

Built to last

forms. It can include sexual orientation, family structure, marital status, how people speak, the language they use, how they present themselves,” she says. “And I don’t think it’s something specific to boards, we have to come to terms with the impact and benefits of diversity in business.

The board level is where we set the tone, if you can’t get them to understand the importance then it won’t be felt at other levels.”

Hira is taking part in Global Women’s Women in Leadership, a 12-month programme that includes high-level mentoring and targeted professional and personal learning in order to significantly increase the number of women progressing to senior positions. Having worked in the professional services environment for more than 15 years, she has seen a lot of different businesses and a variety of governance structures.

“

Diversity comes in a number of shapes and forms. It can include sexual orientation, family structure, marital status, how people speak, the language they use, how they present themselves.

the business in the right direction, pushing it as hard as it can go while at the same time ensuring the wheels don’t come off. “You need to hold management to account, add value to the business and not be afraid to ask the stupid questions. Diversity encourages a much wider discussion of the issues. Everyone has a different perspective based on their experience and you can’t underestimate the value in that.”

Having said that, Devlin also cautions that a diversity of opinion and increased debate means the chairman’s role becomes more important than ever. “If the discussion gets to a stage that it’s impacting on moving forward then someone has to be strong enough to steer it back again.”

Hira also emphasises the importance of the chair’s role. “The chairman progresses the agenda and plays a very instrumental role in the dynamics of discussion and making sure that every voice is heard.” She cites the example of cultural differences: In the USA if you speak out loudly you’ll get heard and rewarded. If you don’t, it’s assumed you don’t have anything of value to say. In China, on the other hand, if you speak up out of turn you may get penalised and observing the hierarchy of those in the room with you is very important. Their feedback needs to be

“

People think in boardrooms let’s bring in a woman, bring in ethnic groups, let’s mix it up. Then they think they’re diverse, but what’s important is how you recognise and deal with differences.

“

“

Vina Hira

“People think in boardrooms let’s bring in a woman, bring in ethnic groups, let’s mix it up. Then they think they’re diverse, but what’s important is how you recognise and deal with differences. If you don’t know how to tap into the different skills or engage them then you won’t reap the benefits of diversity. To really reap the benefits you need to have an awareness of the unconscious behaviours that you bring to everyday life and the impact this has. If you come into that meeting with your own beliefs and perceptions you may be closing yourself off to other possibilities.”

Professional director Margaret Devlin made the move from the UK to New Zealand six years ago, and also used it as an opportunity to move from executive roles into the non-executive governance sector. She holds a variety of non-executive chairmanships and directorships as well being an accredited member of the Institute of Directors (IoD) and sitting on its accreditation board.

She says an effective board should steer 24 NOUS WINTER 2012

actively sought, rather than waited for.

“We’re going to see minority groups emerge and become stronger. Not only do we have to deal with this within New Zealand, but also in our dealings with offshore companies.”

S

o does it actually make a difference, or is it all about political correctness?

After all, business success is still, by and large, measured by financial success. Associate professor and Director of the Institute for Business Research at Waikato University Stuart Locke’s research indicates it does. Most of the institute’s recent work relates to whether different qualities of governance enhance financial performance. They looked at publicly listed companies as well as smaller businesses and, more recently, not-for-profit organisations.

They found that boards with more women on them had enhanced financial performance, although he points out that because women have such a low representation on boards, it basically

means that one is better than none and two are better than one. To take it further would require a higher starting point.

Age was another area that appeared to make a difference. The institute’s research showed that as the average age went up, financial performance tended to slip.

Devlin is already seeing a difference when it comes to age. “We are now at an interesting crossroads. People are not waiting until they get to the end of their executive careers before moving into governance. It used to be that they would wait to 60–65, but lots of people are making that transition earlier.”

Dr Locke also found there is a very low level of directors who are members of the IoD, and the boards with more professionally qualified directors did better. “Professionally qualified directors are subject to a code of ethics, continuing professional development and have done entry level studies. We need many more people who have gone through the IoD programmes and who engage with other IoD activities. That’s how you enrich your ideas, by talking with other directors and being reasonably open and candid, without breaching confidentiality.”

Which brings us to another sticking point.

Part of the reason often given for the lack of diversity in governance is the lack of qualified people with the necessary skills and experience.

Interestingly, although perhaps unsurprisingly, the perceived extent to which this influences the statistics differs between women and men.

“

diversity, not just Maori versus Pakeha, but also a broader ethnic mix.”

T

he IoD is active in promoting excellence in corporate governance, providing current and aspiring directors with resources, recruitment advice, events, training and mentorship. The Aspiring Director Award was set up in 1999 to help those with the potential and desire to take on a non-executive role get their foot in the door.

The winner is taken on in a trainee capacity with their local IoD chapter for 12 months to get experience and then is mentored nationally so they can experience diversity.

“There are lots of things going on but it’s an evolution rather than a revolution,” Devlin says.

“There are more women coming through the executive roles and that will increase the pool.

“

That’s how you enrich your ideas, by talking with other directors and being reasonably open and candid, without breaching confidentiality.

“

There are lots of things going on but it’s an evolution rather than a revolution.

”

A canvas of a sample of ASX100 and NZX50 directors during the final quarter of 2011 by Harvard Business School professor Boris Groysberg and researcher Deborah Bell showed 60 per cent of male board members attributed gender disparity on boards to a lack of female senior executives to recruit from. Meanwhile 70 per cent of female directors felt the problem stemmed from a lack of access to maledominated networks.

“In the private sector you often hear that you can’t get enough quality women or Maori but it’s not a persuasive argument,” Dr Locke says.

He says the public sector has a lot more diversity, pointing to the work of the Crown Company Advisory unit which takes responsibility for the interviewing and selection process for Crown companies before advising the shareholding minister on who would be appropriate to appoint. “They do try to ensure that it’s not stacked with certain types of people; that they put in the best people for the job. They try to get 40 per cent women but they also look for ethnic

Stuart Locke

But it’s a rapidly changing world and change could be quicker.”

“We’re not doing enough,” Hira says frankly.

“The status quo is not good enough, it’s going backwards. We need to keep moving forward, thinking about the innovative thinking that comes from diversity and reflect on how we’re reaping the benefits of diversity. Some businesses are already advanced in their thinking but others are barely scratching the surface.”

She says boards, and companies in general, should be hiring with diversity in mind but should be very clear on how they will fully realise the benefits of that diversity in everyday business actions. “Leaders and management need to make sure they are facilitating discussion so that the person that speaks up isn’t the only voice heard; making sure they’re hearing the voices of the non-dominant group. We’ve got to have a conscious awareness of the impact our own behaviours, cultural and social assumptions can have and be more open to possibilities that diverse groups bring.” n

NOUS WINTER 2012 25

opinion

Circle of trust Trust is a fragile component of any relationship but, as Gordon Chesterman points out, when millions of dollars and the fate of an organisation or company is at stake it takes on a whole new level of importance.

I’m here to talk about Fockers. I’ve met a few of them in my time around the board table, as you will have. Remember the Fockers in the American movie unsurprisingly named Meet the Fockers?

Despite its cheeky title, this was a family film designed to generate a bundle of laughs. The favourite character for me was the protective but manipulative father and former CIA agent portrayed by Robert De Niro. He zeroed in on hapless son-in-lawto-be, a male nurse played by Ben Stiller. The surname of Stiller’s character was, of course, Focker.

So what’s this got to do with governance?

You could say everything, because De Niro’s character’s life revolved around his “circle of trust”. This was a value that could never be compromised.

Once broken, relationships were unforgivingly destroyed.

Trust is a fragile component of any relationship. Governance without trust equally is a recipe for dysfunction and grumpy shareholders.

When a board cannot trust its chair, or the chair and the board cannot trust the chief executive, or the CEO cannot trust his management team (or even the board), it’s a slippery slope indeed.

In recent weeks we’ve all been reminded of the trust placed in the senior executive team of failed Lombard Finance by board chairman, Sir Doug Graham.

That trust saw him facing charges under the Companies Act and being found guilty alongside his fellow directors.

Sentenced to community work and a fine, as were his fellow board members, Sir Doug’s distinguished career at the end of his professional life is left in tatters, his reputation destroyed.

[Sir Douglas Graham and the other 26 NOUS WINTER 2012

three Lombard directors are all appealing their convictions – ed.]

Critics, and particularly the shareholders in Lombard who lost their life savings, want the Government to recommend to the Royals that Sir Doug suffer the removal of his knighthood.

If that happens, and it probably will, that’s about as complete a fall from grace as you can get.

Until instinct failed him,

“

The question has to be asked: At what point do you no longer trust? It’s a question Sir Doug must be asking himself now.

”

Sir Doug was widely acknowledged as an outstanding New Zealander, and highly respected

by Maori over Treaty of Waitangi settlements.

The question has to be asked: At what point do you no longer trust? It’s a question Sir Doug must be asking himself now.

I’ve survived my professional life of 50 years in the media, 34 years of those as a director, by trusting people. I’ve been privileged to sit on governing bodies of major enterprises in the Waikato region: as chair of the Waikato Institute of Technology; deputy Mayor on the Hamilton City Council; the Waikato District Health Board; the Hamilton International Airport; the Waikato-Tainui College for Research and Development; Radio Tainui; Waipa Power; Waikato Rugby Union; Waikato Chamber of Commerce; and as national president of the Public Relations Institute of New Zealand.

What has been unique about these roles is that they have mostly been elected, rather than appointed, however, they are all governance roles but instead of shareholders you face the voters.

Yet in terms of directorships, I rate these governance roles as more satisfying than those based in Wellington and Auckland.

Only once have I really been let down, and badly, perhaps through my own fault in not asking enough questions, or the right ones. The mistake was in letting my guard down in terms of trust and accepting the answers to the questions I did ask without further challenge, allowing euphoria to consume common sense.

But let’s talk first about when trust really works.

Wintec is a fantastic example.

I was first elected as chair of the governing body in February 2001 after serving a 12-month “apprenticeship”. Every year my leadership was tested at council elections, and in 2010 as a result of government tertiary education reforms, the role switched to a two-year government appointment.

It’s fair to say that back in 2000 Wintec was not in great shape. That changed the day we completed a successful recruitment process to appoint a new chief executive, Mark Flowers.

Our council told Flowers that we wanted a “no surprises”, “no-blame” culture, and that we expected to be in the top five tertiary institutes in the country.

And quickly.

I recently retired from the Wintec Council and as I handed over the reins, Wintec had become one of the country’s top-performing institutes, moving towards the completion of a $100 million campus modernisation.

Flickr.com user ravisha.wijesinghe. Used under a creative commons licence.

The ITM400 Hamilton: According to Gordon Chesterman, what started as an exciting opportunity has ended in grief.

The relationship between the chair, council, the CEO and the management team has been outstanding, at all times open, frank and honest. From the start we challenged our chief executive and his management team to deliver and they did.

We’ve embraced at least two processes of government reforms. Rather than resist, as is happening right now with local government reforms, we have led from the front, embracing change.

We down-sized our governing council from an outdated community representation model of 20 members to a more manageable and mostly skillsbased 13, and finally down to a government-prescribed eight, four of whom were ministerial appointees.

Those who lost their roles over those years did so with full participation in the debate, accepting the outcomes having put the interests of Wintec first.

Less than satisfying, however, has been my experience as a Hamilton City councillor during our V8 moment of madness.

What started off as an exciting opportunity for the city has ended up in grief.

The vision was great. Under the leadership of marketing guru Michael Redman as mayor, we set out to build a reputation as an

events city, a city where we made things happen.

The outcome has been heartbreak.

Trust placed in the then young Mayor who subsequently became chief executive before completing his first term, finally evaporated when it emerged we had bought a lemon.

What councillors understood was a track build cost of $7.9 million, $21 million for 7 years of licensing fees and marketing, less $4.2 million over the contract period for commissions from ticketing and merchandise, and a profit share. Add that up, you get $24.7 million, less any share of the profits.

When the barriers came down at the end of April, the race event will have cost the city the thick end of almost $40 million for just five years if you refuse to recognise economic benefits in excess of $100 million.

Councillor Roger Hennebry, colleague committee chair Glenda Saunders and I were on the contracts committee called to sign off council’s unanimous support for the V8s decision to enable the contract to be signed.

The contract was kept from us because it was “commercially sensitive” but the staff recommendation tabled for our consideration said it contained

all of the key contract points.

This included a track build of $7.954 million and commissions of a minimum $600,000 per year from ticket sales and merchandising. More importantly, the staff wrote that the contract had been “reviewed by both parties’ legal advisers and reviewed by council’s accounting team”.

The report stated council’s costs were “capped with significant income opportunities” and included an annual profit share, guaranteed to reduce the overall cost of hosting the event.

There was no question this was what councillors understood and supported.

When the actual contract was signed, incredibly six months later and only a few days before the first event, Mayor Bob Simcock and chief executive Redman’s signatures were on it.

What none of us knew was that the contract did not reflect all of the information in the staff recommendation to us.

No longer did the contract specify capped costs nor were the costs for the track build of $7.9 million mentioned.

The contract never came back to full council, nor were the changes ever identified to councillors.

Like Sir Doug, I’m still wondering what hit me when the circle of trust was broken. n

GORDON CHESTERMAN IS AN ACCREDITED MEMBER AND FELLOW OF THE INSTITUTE OF DIRECTORS, AND IS A LIFE MEMBER OF THE PUBLIC RELATIONS INSTITUTE OF NEW ZEALAND. HE HAS JUST RETIRED AFTER 11 YEARS AS CHAIR OF WINTEC, AND IS CURRENTLY DEPUTY MAYOR OF HAMILTON.

NOUS WINTER 2012 27

opinion

Management – art or science?

People get excited about design thinking and its possibilities for business, but as Stephen Cummings points out, it’s not a silver bullet. And if it’s treated like one, it can have the opposite effect.

Thinking of business or management as a design problem has many advantages. The main one may be that it can move us beyond that old chestnut about whether management is an “art or a science”.

Science has never really been a good fit. In business, the big picture at least is generally about how to compete or add value by utilising differences and unique capabilities. Applying traditional scientific methods to determine what businesses should do thus contains a fatal flaw – even if we were able to determine the things that have led to improved

business performance for other companies in the past, there may be little point in attempting to copy them in our company in the present.

The business environment is always changing (there is no uninfected test tube in the real world of business) so applying the same routines in different contexts will lead to different results. Moreover, copying success in business only makes you a follower, not a leader.

The broad application of best practice in an industry over time leads to declining margins, a reality first highlighted by a study of telecoms in the McKinsey Quarterly in 2000, and subsequently reinforced by a further study in the same publication in 2011.

The notion of management as an art is problematic too.

Great works of art adhere to no timetable and often defy explanation. When you’re minding someone else’s money, saying that the business you’re conducting is an art is just too vague and “un-accountable” sounding.

Perhaps managing a business is better thought of as a craft: we set out with a broad view of what we would like to achieve, but, over time, experience and advice

from your community of peers helps you adjust expectations and goals accordingly as you work with your material and see things take shape. And if management is more craft than art or science, then design is a very good way of thinking about it.

This is not a new idea. Henry Mintzberg wrote an excellent article for the Harvard Business Review in 1987 called “Crafting Strategy”. One can find in it many of the ideas now popularised as “design thinking”.

I’m not undermining its potential by saying that design thinking isn’t new. But remembering this could be helpful in making sure we avoid getting caught up in the growing hype surrounding design in business.

I’ve been involved in a project recently with researchers from the Schools of Management and Design at Victoria University.

Earlier studies from Britain and the US claimed that winning design awards would lead to increased business performance when it comes to things such as share value. But when we looked closer, these studies were often based on selecting sub-sets of companies who had already had successful track records.

So we surveyed all American, British, Australian and

New Zealand publicly listed companies that had won reputable design awards in the decade from 2001 and tracked the average share price of these “Design Indexes” over the same decade against the price for all shares. In all cases the results were similar to the graph shown below of the New Zealand “Design Award Winners Index”.

Being recognised for good design does not necessarily equal better performance.

Indeed, the fuss around design right now should make us nervous that management is in danger of making a habit of hyperbole: over-promising universal solutions, the application of which can only lead to disappointment if expectations are too high.

Remember Total Quality Management and Business Process Re-engineering? These too sought to grab insights from other fields (Japanese corporate culture seemed great, so let’s copy from them = TQM; and engineering, start with a blank sheet of paper… ). We should be wary of doing likewise with design.

Design thinking, just like anything else in business, is no quick fix. Our Design Index

NZ Design Index Average Shareprice Performance (Jan ‘01–Jan ’10) vs.

NZX Gross Index Shareprice Performance (Jan ‘01–Jan ’10) 180.00% 160.00%

Average Shareprice Performance

140.00% 120.00% NZX Gross Index

100.00% 80.00% 60.00%

NZ Design Index 40.00% 20.00%

-40.00%

28 NOUS WINTER 2012

Date

Jan ‘10

Jan ‘09

Jan ‘08

Jan ‘07

Jan ‘06

Jan ‘05

Jan ‘04

Jan ‘03

Jan ‘02

-20.00%

Jan ‘01

0.00%

findings fit with other research we have done. This suggests that design innovations must be well matched with effective entrepreneurial efforts that meet the market, smart leadership and organisational processes that support more innovation and extracting value from it. Clever design or design thinking on its own will not lead to increased performance.

Having issued this health warning, however, there is little doubt in my mind that design thinking can be extremely useful.

In my experience, the most liberating aspect of design thinking in business is the notion of “abductive logic”.

Science is based on the combination of inductive and deductive logic: induce patterns from observing what has happened in the past to deduce what should happen in the future. Abductive logic seeks to break free from the shackles of the past and incremental “same-as” thinking by encouraging people to dream up what a better future would look like (it could be a better chair for your company) and then letting that picture “abduct” you or take you toward it.

The classic example is JFK’s vision of putting a man on the moon. At the time the call was

“

The fuss around design right now should make us nervous that management is in danger of making a habit of hyperbole: overpromising universal solutions, the application of which can only lead to disappointment if expectations are too high.

“

issued the science didn’t add up – but it became so compelling that people developed new approaches to problem solving, constraints became reasons to think laterally to make things happen rather than reasons to stop or resign oneself to mediocrity as they so often are in business and science.

Our knowledge and subsequent achievements then took off in some incredible new directions. It would be well worth asking yourself how your strategic planning process might work differently if you started with a picture of what your company could be in 2025 and worked backwards, rather than thinking about what you could get away with this year based on what you managed to achieve last year. n

STEPHEN CUMMINGS IS PROFESSOR OF STRATEGY AND HEAD OF THE SCHOOL OF MANAGEMENT AT VICTORIA UNIVERSITY. HIS LATEST BOOK, CREATIVE STRATEGY: RECONNECTING BUSINESS AND INNOVATION, LOOKS AT THE IMPORTANCE OF EFFECTIVELY INTEGRATING INNOVATION, ENTREPRENEURSHIP, LEADERSHIP AND ORGANISATIONAL STRUCTURE IN BUSINESS AND THE ARTS.

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infovision COMMUNICATING COMPLEXITY

www.info-vision.co.nz NOUS WINTER 2012 29

opinion gallery › Wintec Honorary Fellowships

Two distinguished men from very different countries and industries have been awarded honorary fellowships by Wintec. The institute’s highest award is given to people who have made a significant contribution to Wintec, the region or the nation through innovation in industry or business, scholarship and research, or enhancing society.

Professor Jiliu Zhou

As president of Chengdu University in China, Professor Zhou received Wintec’s inaugural international honorary fellowship signifying the importance of the relationship between the two institutes. Chengdu has sent around 45 staff members to Wintec to study English since 2008 and there are 10 currently on campus. There is also a regular flow of students coming over from Chengdu, with 20 studying here at the moment.

Professor Zhou

Photographs by Anne Challinor

Louise Willis, Jocelyn Parker, Joanna Morley and Blanca Valdez

Dong Yang and Jung Mi Ko

Wintec Chairman Gordon Chesterman, Professor Zhou and Wintec Chief Executive Mark Flowers

Stijn te Strake, Steve Tucker and John Gallagher

Trevor Wilson and Surya Pandey .

Tony Palmer, Mary Cave-Palmer and Tame Pokaia

Josh Emett

Dame Jocelyn Fish, Gordon Chesterman and John Fish

A former Wintec student (or Waikato Polytechnic as it was then known), Emett has gone on to become a Michelin-starred chef and Masterchef NZ judge, as well as working for Gordon Ramsey at his restaurants around the world including as head chef at the Savoy Grill in London. About 130 invited guests were present at the Wintec Atrium to see him receive an honorary fellowship for his services to the hospitality industry. He currently lives in England but is opening a new restaurant in Queenstown.

Raewyn Emett, Josh Emett, Helen Emett and Paul and Anna Gestro

Sheena and Laurie Pilling with guest of honour Josh Emett

Wintec’s Rosemary Wyborn and the guest of honour’s mum, Raewyn Emett

Kevin Laurence, Gordon Chesterman and David Lugton

Wintec Council members Aaron Rink and Clint Baddeley

Victoria Street Bistro’s Julia and Andrew Clarke and Mount Bistro’s Stephen and Deborah Barry

Emett family friends – Pam Lugton, Brian Hamill, Gail Laurence and Elizabeth Hamill

30 NOUS WINTER 2012

opinion › Nous launch

Waikato’s business community gathered at the Wintec Atrium in January to celebrate the first issue of this magazine with its new name Nous. It may have also had something to do with special guest (and that issue’s cover subject) Ray Avery, who spoke about his life and work. Hosted by Wintec in their fabulous Atrium venue, Hamilton turned on a stunning evening and Avery was a natural at entertaining and inspiring the crowd.

Photographs by Anne Challinor

Deborah Duffield and Craig McLure (Draw Inc)

Erin Anderson (Wintec), Mark Flowers (Wintec), Ray Avery, Peter Buckley (Waikato Regional Council)

Darin Gillies (Talking-tech), John Cook (Stainless Design), Geoff McDonald (Norris Ward McKinnon)

Scott McGill and Mike Aston (MEA Mobile)

Margi Moore (Wintec), Dr Pip Gerard (Chair of Science and Technology EPG)

Lisa Pemberton and David Christiansen (Wintec)

Lisa Finucane (University of Waikato), Sharyn Cawood (Board of Wintec Foundation)

Wayne Walford (Unitec), Diane Yates (Wintec), Tony Kane (Phae Group)

Michelle Farrell (Prima Group), John Backhouse (United Travel), Owen Embling (Convex Plastics)

Hayden Dillon (BNZ Partners), Matt Crosby (Prolife Foods), Andrew Smith (Prolife Foods)

Ellie van Baaren (Nous), Michelle Farrell (Prima Group)

NOUS NOUS WINTER WINTER2012 2012 31

From the desk of . . .

Bettle and Associates George Bettle has found a novel way of celebrating his advertising agency business’ 10-year anniversary – carving off part of the business and running it under a not-for-profit structure.

As told to Ellie van Baaren Photograph by Ellie van Baaren

We’ve got a very strategic bent because that’s what interests me. For many of our customers we’re actually their marketing manager as well. We need to put some things in place so that the client is very clear that we’re doing it for the good of the brand rather than ourselves, but it puts some really good discipline in place.

We have a good team that makes things look beautiful after making sure it’s smart. Some companies are just making 32 NOUS WINTER 2012

pretty things rather than ensuring they get to the core message. We try to do work that messes with people’s heads – doing ads isn’t fun, changing people’s minds about things is the fun part.

I was sent down to Hamilton to work on a strategic pitch on how to get businesses to stay in Hamilton and how to get them to move there. I thought it was a pretty cool market. I was at the stage in my career where I was working on the big brands

but the decision makers were overseas. What appealed about Hamilton was that the decision makers were here with the cheque books in hand. I wanted to change things rather than just climb the corporate ladder. I went back to Auckland and we had decided to shut the doors in Hamilton, but I said that I would like to buy them out instead.

The agreement we came to was that I would go down for six months as General Manager and then decide whether I wanted to buy it or come back up. When my friends heard that I was going down to Hamilton – I couldn’t tell them about the

rest of the deal – they were all like “what did you do?”

In the beginning there were four of us in an office on Hood Street and LIC was 70 per cent of our business, so it wasn’t sustainable.

Now we’ve got a team of 22 and no one client makes up more than 10 per cent of our business. [Bettle & Associates work with brands such as Mother Earth, Alison’s Pantry, Tainui Group Holdings, Fletcher Building, The Langham, Power Farming, Ngai Tahu Tourism, Fulton Hogan and CAL Isuzu.]

We’ve alwa always been reluctant to celebrate anniversaries, but one

of the big achievements is that LIC is still here.

We’ve been through four or five marketing managers and therefore four or five opportunities to get fired, but they’ve decided to stay with us. We’ve become established and sustainable and that’s why we can do things like this non-profit venture.

There are two parts to the agency. We bill about $10 million a year and of that about $1.5–2 million is through recruitment advertising. Adplace is all about fast turnaround and accurate templated advertising. It’s a distinct unit. Someone made an offer to buy it in mid-2011 and I knew that if we did do that then I wanted to give a portion of the sale

to charity. But I liked the people who worked in it and it was working well. Plus if we did that it was a one-off cheque for someone rather than ongoing support.

That got me thinking, why not create something sustainable? We have the opportunity to create something that provides ongoing monetary support, but it’s not something that people have to apply for.

It’s about being able to say we will pick one or two organisations a year and give them some income that can make a real difference.

We’re lucky because we’ve got a discrete piece that we can do that with.

Hamilton in particular has relied in large part on the Gallagher and Perry families, and while we’re

not in their league, if more businesses start to carve off a piece, we can all contribute. We’ve been doing something similar for a long time [including associations with Nest, Hamilton Women’s Refuge and The Enderly Breakfast Club], but never really talked about it. The only reason we’re talking about it now is in the hope that some other businesses may do it as well.

Part of the reason for coming here was the business opportunity, part of it was family. I had just had my eldest daughter and my second was very much on the way.

I had been in Auckland for about eight years and the opportunity to bring them to Hamilton appealed to me. I’m not really a city boy and this is the perfect place to bring up children.

There are people, particularly of the generation in political power, who were born in Hamilton and have a chip on their shoulder and over-compensate for it. We’re not Auckland and we’re not Wellington and we should just be happy with that.

Hamilton is probably the world’s best agricultural city and other cities aren’t even close to being the world’s best in anything.

If we don’t get wound up about being in Hamilton then you can see what a great place it is.

Every city needs a little brother to pick on – when I was in Wellington we picked on Palmerston North.

It’s my favourite place to come to work and that’s what I wanted to create. I get to think for a living and get to do it with cool people who make me laugh. n NOUS WINTER 2012 33

opinion

Cin on Quay and at the end of that they gave me a job and it all continued from there.

Balancing act Michelin star chef and Masterchef NZ judge Josh Emett is living with one foot in England and the other in New Zealand, while he opens a new restaurant in Queenstown and launches a new meat product range.

Balancing his work and family lives has been a learning experience.

As told to Vicki Annison

The hours are pretty rough when you work in the restaurant industry. It can be very hard and there’s lots of time away from friends and family. But it was important to me to focus on work back then, even if it meant making sacrifices. That’s got me where I am now. Over the years I’ve worked with a lot of people that get to a point when they just cannot carry on, I’m not that sort of person, I just keep going.

Deep down I’m a country boy at heart. I was born in Hamilton and grew up on a Waikato dairy farm. When I was a kid I knew I never wanted to end up in an office. I used to like going shooting and in my wildest imagination I thought I could be a ranger. In reality I’m not sure what I’d do if I wasn’t a chef – cooking is all I know. Maybe a golfer or professional tennis player . . . that would be nice.

I’ve always cooked from a really young age. When I lived at home I used to make myself massive breakfasts and do lots of baking. We were never allowed to buy biscuits or cakes from the supermarket, but I was allowed to buy baking ingredients. I soon learnt that if I baked at home I could eat as much cake as I liked.

I didn’t finish high school. My parents went on a trip to Japan and when they came back I hadn’t been to school for most of that time. They said, ‘What the hell are you doing? You may as well leave then.” I applied at Waikato Polytechnic to do a cooking course; it was about the only thing I qualified for.

Cooking was perfect for me.

You need common sense and I’ve got plenty of that. I’d been working since I was 15 years old.

I used to wash dishes at Wilson Carlile, a rest home in Hamilton East, and I worked on the Waipa Delta riverboat and part time in other restaurants. As part of my course I did a seven week work placement at Auckland’s Cin

34 NOUS WINTER 2012

“

Over the years I’ve worked with a lot of people that get to a point when they just cannot carry on, I’m not that sort of person, I just keep going.

”

It was important to me to find a partner who was outside of the industry. Work occupies so much time that I think if your partner is involved in it as well then everything is just soaked up. It’s good to have something different in your life.

I met Helen when we were both working in New York. She is English and we live in Surrey with our two boys, Finn (3) and Louis (18 months). My work/life balance is better now than it’s ever been; it was just a matter of refocusing. A lot changed when I stopped working for Gordon Ramsay. I took some time off work and was at home with the kids, we try to do some fun things every day.

I’ve had some pretty stressful times like when I took over the Savoy Grill and ran that for Gordon. That was really intense and I was extremely stressed out at the time. When it gets like that you cannot relax as work is so full on. I had to understand

the balance and try and learn to do things on my days off. Now I wind down by playing golf or tennis and I like to travel and eat out. When I get to take trips to the Coromandel I go fishing and can literally feel the stress coming out.

I’m really excited about opening the Queenstown restaurant, Rata, with my business partner, Fleur Caulton.

It’s something I’m hugely passionate about. There will be a lot of intrigue in the dishes, using ideas I’ve developed overseas, but really focusing on New Zealand produce. I’m also involved with a new range of slow cooked meats in New Zealand called Chef Series. It’s something that I’ve been thinking about since I was in New York and I think this is the perfect place to launch it.

This year will be tough as I’m travelling a lot between London and New Zealand. We are living between the two countries at the moment, which can be hard although lots of fun as well. I travel out here on my own for the short trips but Helen and the kids come when it’s a longer visit. It works quite well for us and the kids have travelled from an early age so are used to it.

Masterchef was a huge amount of fun for me to do. I find the whole filming aspect really enjoyable plus we get to eat so much food! The contestants that go in there, especially the ones that make it to the top four or five, are changed people when they come out. They get put through week after week of really tough stressful challenges and learn a huge amount on the way. It’s a life-changing competition for those guys.

I’m extremely proud to be awarded an honorary fellowship

by Wintec for my contribution to the hospitality industry. It’s a huge deal to me. I had a great couple of years there and the tutors instilled in me a discipline and work ethic that prepared me well for my life ahead. Wintec is where my journey began. n

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