Now in part this is true. But it is not the fault of our occupations, but of how we think – and how we think is, for a while, guided by how we are taught to think or taught not to think as applicable.

Universities have become enormous factories in the last 25 years. Auckland University on its own has a student roll equal to the population of a large town, around 40 per cent of the population of Hamilton are enrolled at Auckland University.

They have also become big businesses. Their funding from government is based on enrolments, and comes from a mixture of central funding and the proceeds of course fees funded in part from student loans and foreign fee-paying students.

Thus universities compete for student numbers, and this in part is soft competition based on international reputation – that is, the respect of the bit of paper that comes out at the end, and in part it is the cost of obtaining the bit of paper. From a student’s perspective, the cost is the fees per paper multiplied by the number of times you have to sit the paper to pass it. Thus there is a commercial imperative to pass marginal students.

25 years ago the number of students coming out of universities were around a third of what they are now, and our population is about 25 per cent higher now. I suspect we are no brighter or gifted than we were 25 years ago in terms of our DNA, so the huge increase in output must be volume over quality. Attend some graduations and listen to what some of these students get doctorates for.

So generalisations that anyone is more creative than someone else is just nonsense as the pools of accountants, lawyers, engineers and scientists have been swollen by large volumes of factory-produced waste, and just as it has always been, you have to judge the quality of the individual for themselves not on the pieces of paper they carry around.

In my experience the more letters after someone’s name that appear on their business card, the more inferior the bearer. Once you have your admission into the race and have the opportunity to prove yourself on your merits, any further bits of paper after that are a waste of time. This is not to say you should not strive for knowledge, but knowledge comes from many sources.

For students to operate in a factory environment they have to respond like factory units thus they have to do what they are told and thinking is systemically knocked out of them, at least at the undergraduate level.

Once they get into the real world, sadly for many it is still a factory environment.

But regardless of the factory accounting firms that produce more factory accountants, to suggest that accountants can’t create is manifestly nonsense. Just look at Sam Morgan. He took a job in a major accounting firm, had some brains, and got out fast and created Trademe. Creation is about imagination, the ability to think, and conceptualise and then working out how to turn the imagination through intelligence and effort into something real. Often this is a team effort and the thoughts of many are better than the thoughts of one.

I have met a number of accountants and lawyers whose ability to think creatively about things outside of their core discipline is astounding and they can then bridge the gap between the concept and the vision and the practical reality of executing a business with the flair of the inventor.

So I say again, judge the quality of the individual based on what you experience of them and forget the labels they are given for the convenience of the stupid. The old saying of “don’t judge the book by its cover” is as true as it has ever been.

Fresh to the role of NZTE’s Regional Director for Europe, Middle East and Africa (EMEA), I had the opportunity to experience the realities of doing business in the Middle East when I joined the trade mission (led by Minister of Trade the Hon Tim Groser) to Saudi Arabia, Bahrain, Kuwait and the United Arab Emirates in April.

This was my first exposure to the opportunities and challenges for New Zealanders doing business in the Middle East and I learnt a great deal.

Firstly the opportunities: New Zealand is viewed very favourably because of its neutral political stance, its image as a green and water-rich paradise, and the reputation of its public sector for efficiency, transparency and ease of doing business. And New Zealand businesses can capitalise on this. The Middle East is seeking solutions that will help it to educate, employ, house and provide health care for their rapidly growing and youthful population. They can afford the best, but they need more than that.

They also need solutions that recognise their particular cultural, social, political and environmental context. New Zealanders, perhaps because our size and distance tend to make us open to outside influences, understand that one size doesn’t fit all. Successful businesses in this region have found ways to adapt their products and services in response to local cultures and conditions.

The Middle East is eager for investment and they welcome businesses setting up partnerships and production units. And with a physical base and strong relationships in the Middle East, a New Zealand business will find itself connected to the rest of the world, using sophisticated logistics and distribution operations and via global capital markets.

The people we met were all extremely interesting, articulate, generous with their time, forgiving of our cultural naivety and very polite. Their sense of humour came through very strongly as did their respect for families, relationships and cultural traditions. It was clear that they see business relationships as long term and mutually beneficial. They are not in business for a quick buck.

Although being a woman was difficult in some respects (not being able to use the gym in Saudi Arabia, for example), I faced no barriers to my engagement with business people or officials. Some of the business organisations we met, especially in Bahrain and Kuwait, had women in very senior roles. And having to wear an abaya for several days in Riyadh meant packing was a breeze!

But as with all large, distant and complex markets, the Middle East also presents challenges. We experienced some of these firsthand during the mission, the scale of which reinforced logistical issues and underlined the importance of meeting local expectations. Following my visit to the Gulf region I wrote myself some “rules of engagement”, which I would like to share with you (see below).

Despite these challenges, I would strongly encourage New Zealand businesses to think about the Middle East as a place to seek long term, profitable and strategic business partners. The Saudis, Bahrainis, Kuwaitis and Emiratis I met were welcoming, generous and astute – and most definitely open for business.

The true adventurers, pioneers, and generally brave and bold people to which we all owe our modern existence, are the dreamers and the venture capitalists. Venture capitalists are an extremely rare breed; there are many pretenders that need to be filtered out.

Genuine venture capitalists are lone hunters – more like tigers than lions. Angel networks don’t hunt in packs but they do provide effective networks of like-minded people you can share with. Or do they?

Incubators bring together dreamers and subsidise the dream for a while. The reality of venture capital is harsh: four out of five pre-screened start ups fail. Out of five successes – 25 start ups – three will be exceptionally pedestrian businesses that bore you shitless.

Of the other two, one will be really exciting. It will have rough patches and extremely rewarding patches. Every day will be a fight – but the profits will pour in. The other one has usually gone through the rough stage and will mature into an excellent cash cow.

A reality check: just going from idea to product takes anywhere between two and five years. Tack on a few more years to get from product to customer and don’t even think of actually penetrating the market and building a business in under five. Surviving predatory competition from better resourced but useless competition? Another five to ten years. Then and only then does the one-in-25 emerge.

Be prudent – budget another 10 years to achieve stability and here you are looking at 25 years of hard slog. When this reality sets in it seems hilarious the idiots in Wellington wanted to set up a venture capital fund with a three-year cycle.

Venture capitalists fall essentially into one of three groups: bankers, vulture capitalists, and true pioneers. 

Bankers are easily picked. Once a banker, always a (w)?banker. The first meeting between a banker and a dreamer will involve some banker analysis, and the question, “What is your exit strategy?” Then they will ask you how much money you need and what’s in it for them.

What started out as equity will migrate to dressed up debt.

They will want a front-of-the-bus position, a preference share, or convertible note. They will perhaps want a coupon compounded. They will want strategic control, milestones for drawdown, and a clear exit commitment – at least for them. These guys are bankers. Everyone knows what happens when you disappoint a banker.

The differences between the vulture and the venture capitalist are slight. There are however, several tell tale signs. The vulture’s objective is to put in little but get lots of control out. They then use that control to force the hapless dreamer to default on promises, at which point they lever the dreamer out – after sucking all the dreams out of them.

Usually these people will promise you funding all the way through the process, at least through to market penetration,  and will agree with you upfront the pricing of each lump sum, which will be milestone driven. They will tell you they have done all this before and can help you with management and strategy. They will take a board seat and often chairmanship as well. They might even take an operational role and you will think you have found heaven. They will then work hard to ensure you miss your milestones, and the fine print will have some pretty nasty consequences.

They will continue to fund you either on more punishing terms for equity, or they will say something along the lines of: “Look, the old deal’s off, but we will provide some more cash as debt.” The end game is a quick receivership and a new company. There are many ways in which these guys eat everyone’s lunch.

The real venture capitalists, the true pioneers, will do nearly all of the above. They will want to value the company with cash flows, will want to milestone their investment, they will want board seats. The difference is, these guys will rarely talk about exit and somewhere along the line they will say to you words to the effect: “Listen mate we are partners. If you get rich, I get rich, and vice versa.

“You are not going to get rich on salary until this thing is making cash. Don’t even talk to me about your market worth – I only care about how much you need to have a peaceful life at home.”

Then these guys will start talking to you about the management resources you will need and they will find these people for and with you. These guys are owners not workers. They rarely, if ever, take an operational role. They won’t pretend to know your job better than you.

Unfortunately the only time you will know the difference between a vulture and a venture capitalist is when you hit the first bump in the road.

The vulture will either abandon you or take you out.

The partner will simply roll up their sleeves and help you out of the hole. At the end of the day they will wipe their brow and yours and say: “That was a close one.”

The difference will be the direction and force of the hand they offer you, and sometimes that help goes beyond money.

Comment for INBusiness

The paradox that is New Zealand’s economy

by

Dr Ganesh Nana

Chief Economist

How does this quote sound to you?  ”Growth in New Zealand will be propelled by technological change, investment and higher productivity.”  To me it sounds eminently sensible.  Or, how about this quote: “Looking beyond our present circumstances, our future depends on our ability to export.”  This, too, also strikes me as indisputable.  Actually, to me they both verge on stating the bleeding obvious.

But, try this one for thought:  “New Zealand is paradoxically at the forefront of the OECD in adopting policies in many areas that have been shown to lead to high per capita income, and yet it still ranks toward the bottom end of the OECD’s productivity league.  ….  But, the root of the problem is a structural deficiency in the capacity to produce tradable goods and services.”

Wow, this one sounds heavy!  Allow me to forward my translation.  This essentially says that we (as in New Zealand) have done what we’ve been told to do in putting in place policies that have worked elsewhere. But these policies haven’t solved our productivity problems.  And, “paradoxically” is probably code for: ‘we really don’t know why’.

I could venture to shed some light on this mystery.  For starters, perhaps the policies that have worked elsewhere aren’t appropriate for a small, open economy with a large primary base persistently facing trade barriers?  Next, might the “structural deficiency” have something to do with the lack of investment in the export sector?  And, in turn, I can’t help wondering whether the lack of investment in the export sector has something to do with inappropriate interest rate and exchange rate settings?

But, rest assured, as we are at the forefront of the OECD in adopting the ‘right’ policies, we will gladly remain paradoxically mystified.

The first two quotes come from the Budgets of 1978 and 1980.  Yes, exports, investment productivity et al were recognised as central 30 years ago, if not earlier.  Yet 30 years later we remain unable to grasp the bleeding obvious by putting these at the front and centre of our economic policy framework.  Rather, we prefer the policies that keep us at the forefront of the OECD.

Consider the questions at the bottom of this page.  How would you respond to them?  More than 2 Fs?  Congratulations!  You’re training as a financial commentator is well advanced.  Or, was it more than 2 Js?  Then the mass-media journalist in you is showing through!  More than 2 Gs and you’re probably gunning for the Governor’s job.  More than 2 Es, then you’re obviously after my job – feel free to send me a CV and I’ll file it accordingly.

My motivation for these examples, admittedly exaggerated to make a point, is that we have a community fixated by house prices, petrol prices, and the perennial fixed-versus-floating mortgage question, as opposed to a New Zealand aware of business interest rates and the export sector.

Further, we now have a generation of economists and commentators that appear to know all about the intricacies of yield curves, swaps, spreads, leverage buyouts, bonds, bills, hedge funds, and credit ratings.  But, they appear to have little regard to the importance of lambing percentages, transport connections, machinery requirements, communication corridors, technology take-up, slaughter weights, average daily spend of visitors, skill acquisition, milk solids per cow, sheep numbers, or apprenticeship needs.  Nor, is importance attached to how long it takes to train a scientist, or to establish an appropriate spread of ages in a forest to enable sustainable harvesting.

The extreme was exhibited by a currency analyst the other week who commented that ‘fundamentals don’t matter’.  To me, such a comment is overwhelming evidence of the failure of the money and finance markets to serve the real economy centred on the needs of producer and service entrepreneurs.

Our adopted policy framework has seen our trade balance deteriorate from a surplus of 1.5% of GDP to a deficit of 1.6% of GDP over the past 20 years, non-housing investment stall at approximately 16.5% of GDP and net foreign debt reach 90% of annual GDP.  But, as if to underline that the fundamentals don’t really matter, we have managed to improve our credit rating, from AA- some 20 years ago, to AA+.  Or is this outcome better described as paradoxical?

Perhaps, it is finally time to put what was obvious to some at least 30 years ago, at the front and centre not only of our economic policy framework, but also of our economic commentary.  Lest we continue our paradoxical performance.

1)   The core challenge facing the New Zealand economy is to:

G)  find an additional tool with which to control inflation

J)   ensure house prices don’t fall or rise too quickly

F)   expand both the depth and breadth of our finance markets

E)   improve our ability to build export businesses.

2)   Confronted with burgeoning Crown debt you advise the Minister to:

G)  reduce spending to minimise the inflationary consequences

J)   avoid imposing a capital gains tax, fearing its impact on house prices

F)   call in S&P for a special briefing to avert a credit downgrade

E)   direct efforts to improve productivity through a concerted expansion in infrastructure investment and in the skills training sector.

3)   When a 17-year old nephew asks you for a loan to buy a car you:

G)  suggest he learn how to save, as borrowing just fuels inflation

J)   point out that petrol prices will soar above $2/litre again soon

F)   note that he should really be borrowing for a house, because real estate is always a good bet

E)   run (fast).

4)   Economics first, and foremost, is about:

G)  controlling inflation

J)   monitoring the affordability of house prices

F)   buying and selling anything and everything

E)   developing, enhancing, maintaining and utilising human and non-human resources to enable individuals and communities to prosper.

A destination needs to constantly develop new recipes to feed consumers hunger for something new. If we don’t, as the recent cultural capital ‘debate’ has shown, there is always somewhere else waiting in the wings wanting to be the next you.

You’d be hard pressed to find more passionate Wellingtonians than those who occupy the Positively Wellington Tourism office. But to earn friends and maintain our old ones, we must constantly view Wellington with a critical eye to ensure we continue to attract both new and seasoned visitors. Our destination can never be considered ‘perfect’ – we must always aim to improve.

The ‘events capital’ model has been an incredible success story for Wellington. We need to continually develop our iconic events and find new and exciting ones to keep drawing visitors back. If we don’t, Wellington risks becoming stagnant and losing its competitive edge. As the business community works against a recession, sponsorship dollars are drying up. This is a major risk to the events industry and wider community. Wellington’s events capital reputation contributes to the innovative and creative reputation we all enjoy and benefit from. It also helps us attract and retain good staff.

As well as the importance of events as tourism ‘products’, Wellington has long identified its need to increase its stock of commissionable product in order to maximise our trade relationships. Tremendous headway has been made, with Museum of New Zealand Te Papa Tongarewa and ZEALANDIA: The Karori Sanctuary Experience two examples of world class products in their field. But we need more. The harbour and film industry are two major opportunities for the development of further iconic Wellington tourism experiences.

The quantum leaps that Wellington city has made have been fuelled by bold infrastructural investment: Te Papa, Westpac Stadium, Oriental Bay Beach, and the regeneration of Courtenay Place to name a few. These big decisions are absolutely, positively what has moved Wellington to where it is today. Now we need to be looking for the next opportunity.

In our opinion, the following should be top priority:

1. Inner city campervan facility

This is critical not only for the Rugby World Cup in 2011, but as a long-term asset for our city’s accommodation bank. Globally we are seeing major change in the perception of Wellington, but we need to meet the needs of free independent travellers if we are to convert that awareness and interest into longer stays.

2. Purpose-built convention and events centre
A large conference facility continues to be a gap for our city; and many major acts skip the cultural capital due to our lack of appropriate indoor events centre. This has got to change.

3. Australian consumer campaign

We’ve won over New Zealanders, now it’s time to work on our neighbours. Wellington needs to be at front of mind of Australians planning a New Zealand holiday and we want to inspire them to see our city as a long weekend break in the way we view the likes of Sydney and Melbourne.

Whatever we do, it must be ‘Wellington-ised’. Whether it be an event, a new product, an infrastructural development, or a campaign; it must be creative, innovative and enforce our place as the country’s cultural capital.

• At the end of 2008, Positively Wellington Tourism released the Wellington Visitor Strategy 2015 which maps out how Wellington can get the world to recognise it as the ‘Best Little Capital in the World’ by 2015. Download a copy at www.WellingtonNZ.com/strategy

From the vantage point of an accountant, I’m often asked to respond to the ultimate question of online accounting software.  Opting for the right online accounting package has long been an important question, but never more so than in light of the challenging year ahead for many businesses.

Sure, it can be a lot of hassle converting from one system to another.  But, the fact is, if your current system doesn’t deliver, then you’ll continue to suffer until you make this necessary change.  But, what changes should be made when it comes to accounting software?  Answering that is like estimating the length of string.  A lot depends on what the software will be used for.

The market for accounting software can be split into three main groups.  There are the large business-solutions costing millions and requiring significant resources to implement and use.  For small to medium businesses there are a number of options.  Finally, there’s self-made or generic software – often spreadsheets that have been created, copied and modified.  This last category is risky to use, prone to errors and data loss, and I wouldn’t recommend it unless you have very simple and low-volume business.

Rather than going through the many software products on the market, one outstanding product called Xero – has the key factors to make it a great online accounting package and investment.

• Ease of use. Unless you feel comfortable deploying a line of software, you’ll dread every time you use it and never take advantage of the full functionality within the application.
• Intuitive features. Rather like a great street design in a town you’re new to, the best accounting system will easily guide you through the processes. Even more so when there’s good human backup, like online help — to assist when you’re unsure of finding your destination.  The back-up, moreover, needs to be prompt and reliable.
• Cash and accrual. This is accounting geek-speak, but it’s an important concept because, for most accounting reports, accrual — recording the sales and expenses when they are invoiced rather than when they are paid — is the basis.  For most business owners as the cliché says, cash is king; it’s what drives an operation.  So a system that delivers both cash and accrual reporting without manual intervention, benefits everyone involved!
• Links to bank transactions. Most transactions these days go straight into bank accounts. Automatic downloads from your bank into your accounting software are going to save you and your bookkeeper significant time and frustration.
• Links to tax returns. Ditto the above. After all, why re-enter or copy information when the accounting software can do it for you in respect of the tax returns? (Of course, this does not remove the requirement to review the information for accuracy and correct treatment.)
• Security concerns. Data security and identity theft are increasingly in the news for a reason. A system with strong security features is essential. The on-line banking security should be the benchmark.
• Cost vs value. Many people, alas, select software purely on cost.  This is important, but of greater importance is the value provided.
• Ability to clear errors or backup. Too often the biggest disaster for business is loss or corruption of the business’s financial records. The time and effort required to re-create the financial records is enormous.
• Ability to share information. I often get frustrated, as do clients, with having to take a copy of the system to complete year-end accounts and tax returns, while the business needs to keep using the software because the transactions keep going.  Obviously, a superior system needs to address this problem.
• Access: Mobile technology has lifted our expectations on access to … well, everything. Software that can be accessed remotely is useful for business with more than one location. The ability of multiple users to see the same information at the same time is very useful, especially in situations where you’re explaining the situation to an accountant, and when they would like to access the software and see the information the same as you.

Unlike Hitchhiker’s Guide to the Galaxy, accounting is not comical.  It can certainly become a horror story without the right tools.

Stephen Nicholas is CEO of Openside – www.openside.co.nz. For more information on Xero see – www xero.com

Whenever a new web-based something or a new gadget gets the blogosphere chattering, my first thought is “what’s just changed?” This is sparked not from fear, but from intense curiosity because whatever it is may just have altered the business or learning landscape forever.

If, like me, you’re a ‘baby boomer’, it’s easy to dismiss phenomena like Facebook as an irritation that distracts your kids or younger employees from more meaningful pursuits.  But if you think that, you’re missing the point and missing the boat.  These channels are the direct line into the hearts and minds of a large proportion of today’s customers and workforce, and the lion’s share of tomorrows.  Business success is increasingly going to depend on learning how to make them work for us. 

I’d pick that American President-elect Barrack Obama really gets this.  Or at least his strategists do.  Obama’s campaign leveraged a range of new media to perfection – Facebook, Twitter and text messaging to name some of the channels used – helping him interact with and motivate his supporters.  But most of all they were used to connect with younger voters in ways they understand.   Within days of his win a website was set up with a blog giving information about the transition process and seeking people’s thoughts and feedback.   A supporting YouTube channel includes videos of weekly presidential addresses and other events.  The upshot of all this digital flurry is that as he moves into the White House, President Obama will already have connected with a vast number of Americans in ways never thought possible even as recently as the last Presidential Election in 2004.

Words like ‘social media’ and ‘web 2.0′ are strewn around modern conversations like confetti in a churchyard after a wedding.  I, for one, find them exciting and challenging at the same time.  My professional role requires me to stay ahead of the changes and interpret how they will impact our working and learning lives.  The trouble is, for many of us boomers, this does not come naturally.  I watch the Gen Y’s in our office.  Theirs is a different response.  They ‘twitter’ and ‘yammer’ instinctively, and ‘blog bust’ organisations and people they believe to be unethical, because these media are the language of their generation. 

Take Twitter for example.  For most people, twittering is still something that is the exclusive preserve of small birds or adolescents.  But in the US, professional firms in their droves are cottoning on to its potential to put across their corporate messages.  And the epidemic is spreading – my younger staff are all ‘tweeting”and, silly though the surrounding terminology is, there are real benefits to be had for informed Twitterers who understand the power of the medium.

Twitter (www.twitter.com) is a free, web-based communications platform through which users can share information with others who have similar personal and professional interests.  Users communicate via text-based posts – ‘tweets’ – of up to 140 characters in length.   Twitter currently has more than 3 million users and the number is growing rapidly. 

From a company perspective, the benefits of these types of communications are two fold.   Firstly they are becoming a ‘must have’ information gathering and distribution system, providing a means of finding out what a very large number of people think about issues or products. They are also a great early warning system.  For example, the first rumblings of breaking news such as the recent Mumbai bombings were heard on Twitter, and the BBC and other news organisations use it to push news out quickly. 

For professionals such as lawyers and accountants, they are a great vehicle for receiving news updates about their area of practice and of contacting with potential clients or referral sources.  For financial advisers, Twitter offers an instant way of keeping investors in the know.  An announcement at an annual meeting could potentially wipe billions from the shareholder wealth and a well-timed ‘tweet’ could save large amounts of client money.

Any company that wishes to keep its clients informed should consider whether it is really necessary to send out a long media release if a 140 character message will do.  Of course, that requires significant effort to distil the message to its essence, but wouldn’t that be a good and time saving concept, and a godsend for the English language?

But the other thing it is important to understand about social media like Twitter, is that they are a new way of sharing knowledge.  If today’s connected employee doesn’t know how to do something, their social networks are likely to be where they go for answers rather than their manager.  After all, the network is only a few mouse clicks and several heartbeats away whereas the manager can often be a very elusive beast.

Equally, in the past when employees left they tended to carry off a proportion of your institutional knowledge.  Nowadays, if you understand the new forms of networking, not only do you not have to lose that, you can also tap into the knowledge of the communities that current and former staff belong too. When someone leaves a workplace, do everything you can to foster the concept of an Alumnus Association because your staff will and will run it via the likes of Twitter.  Cost to you?  An open and nurturing workplace. Value?  Priceless. 

For sure there are privacy and confidentiality issues, and new dynamics to consider in how to manage staff usage of new media.  But they are part of the modern lexicon and we need to get our heads round these issues if we are to remain relevant and attract and retain calibre staff. 

Anyone who doubts the extent of the communications revolution we’re going through should go back to  the impact of the printing press.  The information revolution ignited by Johaness Guttenberg’s 1450 invention, seen by Life Magazine as the greatest innovation in the last thousand years, fundamentally changed society’s power structure.  The publication of mass media it enabled has been attributed by many as being the catalyst for the Protestant Reformation, and ultimately for the move away from absolute monarchy to democratic models of government in western countries.  

I believe what we’re involved in is every bit as significant, we just don’t know how it will pan out because we’re in the middle of it.  Make no mistake all those bloggers out there are changing our world for better or worse.  ‘Googling’ is an accepted part of our vocabulary.  Facebook, Digg, Squiddoo, Wikipedia, Delicious, Bebo and their ilk are here to stay.  Virtual world’s like Second Life attract people in their millions for all sorts of reasons from commerce to downright escapism and, as pressure on physical resources internationally becomes acute, e-commerce, virtual solutions and mobile social software are going to play an increasingly important part in the business fabric and language of the future.  

Love them or hate them, they are a fact of life.  The names might come and go as fashion, as it does in so many other aspects of contemporary life, will play its part in which ones stay the distance, but the times they have a-changed.  We need to wise up to this fact or risk losing ground as business people and employers.

In any case, it’s clear the MoSoSo world has arrived and if it worked for the communication machine of the new leader of the Western World, then I guess it’s fair to say something has just changed.

Jill Wilson is Director CWA New Media, providers of specialist consultancy services to government and business.  For more information www.cwa.co.nz

See how far you get before the answer you give to each new question changes. If the answer changes you are out.The further down you can go the more money you will make. Few people get past question two, only the most street smart top guns get past question three and reap 80 per cent of their market’s rewards.
Ready?

If I were to ask you: “What makes your product better than the rest?” what would your answer be?
Can you answer that question quickly, clearly and compellingly? You can. Okay, let’s go a level deeper and see how you fare. What if I were to ask your newest salesperson: “What makes your product better?” What would their answer be? If you are still two from two here is the real test. What if I asked your most recent client: “What made their product better than all of the competition?” What would their answer be? How deep could you go before your advantages got lost in translation?

Unless all three answers are the same, confusion reigns supreme as to why someone would choose your fine products and services. Because confusion and lack of clarity in communicating your advantages means potential sales slipping down the bath plughole while you are pouring financial resources through the taps.

Here is another question. What ultimately happens if your client cannot quickly understand why they would choose you over your raft of competitors? Answer: You end up being a commodity, competing on price and relying on the relationship building skills of your salespeople (who will often leave you, taking your client list with them, for a few thousand dollars more than you pay, to work for your competitor down the road).
Having your UCA (unique client advantage) not just clearly communicated by all staff but heard, understood and revered by your clients is the most important job in business.

Want to know how to insert beliefs in people? Thought you might! First, let me tell you how beliefs get formed. You need to realise that a belief is nothing more than a feeling of certainty. They are not the truth or anything so strong.

How are beliefs built? Just like a table. Imagine you have a table top standing waist height in front of you. What is holding the table top up? Legs of course. What happens if you take the legs away – the table top collapses. Well, beliefs are just the same because we use reasons (subjective proof) to support our beliefs. What happens if enough of the evidence we use gets snapped in half like a weak leg on a table… the belief collapses faster than a Helen Clark limousine.

Here is the secret of top persuaders – to collapse a belief you do not attack the belief but the reasons or proof or legs holding the belief table up. “David Bain is guilty because reasons 1-2-3-4-5.” Then Joe Karam comes along and breaks each leg one by one until the case against David Bain collapses (or at least is wobbly enough to fall).

How does this apply in selling? With enough reasons (proof) you can sell belief in your product – the hardest game in town for the marketers and sales people.

Let me give you some examples. The soft drink market is very hard to break into because the drinkers are incredibly loyal. When Slice soft drink launched they claimed the taste was superior because it contains 10 per cent fruit juice. Just a little reason in the headline – the 10 per cent fruit juice – to justify why it tastes better than the average drink.

In a category that’s known for a frightening failure rate among new entrants, Slice grabbed 7 per cent of a $30 billion-a-year soft drink market. Nowadays that same market is probably worth more than $50 billion per year. That means that right out from that start, Slice created $2 billion a year in sales on the back of this one little proof element, 10 per cent fruit juice. Test it and see what difference it makes. Try taking the reason away, and what do you have? “Slice, a better-tasting soft drink.” Nothing there but a bland claim.
With the 10 per cent fruit juice, if you’re a soft drink aficionado, you think, maybe I’ll try it. There’s a good reason to.

Here are some more examples:
“25% Off Sale!” We’ve all seen 25 per cent off sales and, by and large, they slide off your mind like a slippery eel. But give it a reason why and look what happens. Imagine if you say instead: “25% Off Beds Due To Leaking From The Roof.” This ad was run and they sold beds so fast they had to go off and drip more water on beds so they could continue to claim more water damaged beds were available.

See what a difference that makes? If I’m going to buy a bed, I don’t care if the base had a minor wet patch on it last week. The reason why – the leaky roof – gives me a rationale to buy into it, a believable explanation of why I might really get 25 per cent off, rather than just another common-variety, totally unbelievable and unmotivating “Easter price sale.”

“Kleenex towels absorb 50 per cent morebecause they’re two layers thick.” “Well okay, I understand that,” you say to yourself. You are persuaded by the claim because it gives you its proof element, its reason why, right in the headline.

If your selling is underperforming, ask if you have armed yourself with the reasons why in each of these three areas:

• Compelling reason(s) why your product is superior to other solutions your prospects might choose, including doing nothing.
• Compelling reason(s) to believe that what you say is true.
• Compelling reason(s) to seize the opportunity today.

Then you must spend the rest of your business life making sure that your compelling reasons are exactly what your ideal clients is wanting and that he/she is crystal clear by repeating the message in every communication you ever make.

When you examine the most successful examples of salesmanship, you’ll almost always find these three reasons why in full force, which is why they are so profitable.

Richard Petrie, the False Prophet, Richard@mt2.co.nz

As the saying goes, first impressions last. Many employers baulk at hiring someone with highly visible tattoos, especially when the employee will have close customer contact. There is a common fear (whether justified or not) that visible tattoos will lower a customer’s estimation of the business, and in particular its professionalism. 

However, the popularity of tattoos is on the rise. Traditional tattooing such as Ta Moko has become more popular, and the tattoos sported by celebrities like David Beckham have contributed to the trend. Tattoos are becoming positively mainstream, both in New Zealand and abroad.

Ruling out candidates with tattoos, however, can land employers in hot water. Of course, tattoos are not a ground of unlawful discrimination under the Human Rights Act 1993. Therefore, employers may think they are on safe ground in rejecting a candidate with a tattoo. However, this may constitute indirect discrimination, because it could have the effect of discriminating against a racial group (if it can be established that they are more likely to have tattoos), or a religious group (for whom tattoos are sacred). 

For instance, Ta Moko, traditional Maori tattooing, is taonga to Maori, as moko contain ancestral or tribal messages specific to the wearer. Traditionally these tell the story of the wearer’s family, tribal affiliations and standing. The only employment case in New Zealand about tattoos involved a complaint to the Human Rights Commission by a woman with a facial moko. She had applied for a job at a tearoom in Sanson, but when the employer met with her, she was not offered the job. The complaint was settled before it was heard, and so there is still no employment decision in New Zealand on this point. 
In contrast, the United States has seen numerous discrimination cases brought against employers who have taken a stand on visible tattoos in the workplace. In EEOC v Red Robin Gourmet Burgers Inc the Court upheld a discrimination claim against an employer who refused to make an exception to its ‘no visible body art’ policy for an employee’s Kemetic religion (an ancient Egyptian faith). The employee’s religious beliefs made it a sin to conceal his tattoos, which contained religious inscriptions. 

Red Robin had a dress code prohibiting employees from having visible tattoos. They refused to make any exception to the policy to accommodate this particular employee. This error of judgement cost the company $150,000, and they were effectively forced to change their policies.

In New Zealand, the Human Rights Act states that where a religion requires a particular practice to be followed, employers must accommodate it providing it does not “unreasonably disrupt” the employer’s activities. In customer facing roles, employers may be justified in refusing to employ people who have visible tattoos, even linked to their race or religion. Also, employers do have a defence to indirect discrimination claims where good reason for the policy or practice can be established. The employer is likely to have “good reason” in relation to many customer facing roles. 

Employers should however be cautious when recruiting, particularly for roles that are not customer-facing. As the case from the US shows, simply assuming that it’s alright to reject a candidate with a tattoo, or dismiss an existing employee, is dangerous. The employer has to consider the issues more carefully than that, and in particular, find out whether the tattoo is linked to the employee’s religion or race. Otherwise, the employer may find itself up before the Employment Relations Authority or the Human Rights Commission.

Greg Cain and Amy Cunningham are lawyers with Minter Ellison Rudd Watts, www.minterellison.co.nz 

International markets represent an exciting growth opportunity for many New Zealand companies, and if done correctly, it can significantly increase the value of your company, but at the same time, the time and energy required can be a huge drain and distraction on any company. Fortunately these days, ‘going international’ is easier than it was even ten years ago, much of it thanks to the internet, and there are a number of simple and cheap things you can do to open your business up to the rest of the world.

Getting started

For most of us our first taste of ‘international work’ comes from enquiries via our websites (as does much of our local business) so of all the things you need to get right first, it’s your website. Two simple things you can do which make a big difference are to post photos of your staff along with a short bio (it helps outsiders know you’re real and your size), and get a blog going and update it several times a month (many prospective customers will look at your site for months before making contact, and it’s a good way of letting them know your alive and kicking still!). If you want to get tricky, you can get your website to automatically detect the location of your visitor, and serve up localised content to them. For example if you’re targeting US visitors, you can make your home page display case studies of other US clients of yours, your US phone number (which redirects to your mobile and wakes you and your partner in middle of the night – just remember keep a emergency supply of flowers ready to placate your partner the day after…), and a picture of the American flag for subtlety. In this content the first impression a US visitor will have is that you know the American market, which in their mind makes you a lot less risky to deal with. Once you’ve starting getting a steady stream of enquiries, you can be reasonably confident that there is demand for what you’ve got to offer,  the question then becomes, how do you grow and satisfy that demand without spending a fortune?

Choosing markets

In my experience, companies based in English speaking markets where our working days cross over, are the most likely to enquire directly from your website. This basically means the east coast of the US and Australian markets are where you’ll likely get most enquiries from. What this also means is you shouldn’t expect too many leads to come from European companies, even if you have a lot of visitors to your website from there.

Pricing

If we are to look at hourly rates, we’re probably the cheapest of the “first world” countries, which gives us significant cost advantages when competing in other “first world” markets. As a general rule of thumb, we’re about half the price of local North American and Western European companies, giving us the opportunity to both increase our rates, and undercut the local competition.

We are, however, perceived as being expensive when compared to many developing nations who are also competing for out-sourced work. However, hourly rates alone are a poor indication of cost effectiveness and more people are becoming aware of this.  A UK company I talked with recently who tried outsourcing some of their development work to China last year told of their experience “in the end they [the vendor] were about 15 per cent cheaper [than a local firm], however, given the amount of pain we experienced with the project, it just wasn’t worth it”. Most of the ‘pain’ they experienced was due to mismatched expectations. This wasn’t due to neglect or incompetence on the part of the vendor, but a more fundamental cultural difference in thinking. This is where brand New Zealand kicks in. Our way of thinking, and our upbringing is more similar to that of people in North American and Western European markets than our competitors in developing worlds, we’re better able to anticipate and understand what drives companies, and consequently are better placed to deliver solutions which actually work. Anecdotally we’re also a lot more pleasant to deal with as well. Of course, these sort price advantages only come in when you’re doing much of the project work back in New Zealand – if a team is required on the ground with your client, we lose many of these.

The one other key thing to remember when pricing work is that exchange rates are not fixed, and there is going to be a difference in what you expect to receive when you issue a quote, and what you receive when your bills are paid. You are not totally at the mercy of exchange rates, many banks offer products which offer you some form of protection from these fluctuations.

Communicating

Probably the biggest new hurdle you are going to have is around communication. Time zone differences mean there are only certain hours of the day which you can talk, and we’ve found that scheduling regular, re-occurring calls is a good way to keep everyone on the same page . Skype (a free internet based phone tool), is an indispensable tool for communication.  You can easily setup phone conferences with multiple people at multiple locations or better still use it for high definition video conferencing, enabling you to pickup on all the subtleties of expression which are lost in voice only calls.
A top of the line web cam and headset will set you back about $300 in total, which is about the cost of an hour at a conventional video conferencing studio, or about an hour in a plane to a meeting. It’s an investment you won’t regret.
One thing which no technology can help with however is our accents – many people in the US seem to have difficulty understanding us (though we can understand them perfectly thanks to a lifetime of American content on TV), the trick is to talk really slowly (we actually speak English quite fast as it is)… and send them a DVD of the Flight of the Concords to help them acclimatize.

Getting connected

If you’ve decided you’re ready to take on the world, you’ll be pleased to know you are not alone. The network to join when your ready to make your mark on the world is Made From New Zealand (www.madefromnewzealand.com). Sign up, and join other companies making their mark on the world.

Tim Copeland is one of the co-founders and the former CEO of SilverStripe (a Wellington based web development company) and former Chairman of Unlimited Potential (Wellington’s largest IT network).tim@silverstripe.com