The Press, February 2010
Welcome to New Geekland. Technology exports lag only dairy and tourism, according to a study recently released by the Technology Investor Network (TIN) and Ernst and Young. By learning some marketing lessons from those other two sectors, maybe the geeks could overtake their counterparts.
The TIN report ranks New Zealand’s top 150 technology companies, and its 2009 analysis puts the sector’s exports at $5.1 billion. In the toughest trading year in recent memory, tech firms managed higher rates of growth and profitability than the average.
This figure puts technology considerably ahead of more fashionable export sectors like wine, or more traditional ones like meat. It suggests there is potential for New Zealand to shift our economic base to one more reliant on the intellect of our people rather the productivity of our land.
While we may be steadily becoming a land of Steve Jobs rather than Fred Daggs or AJ Hacketts, technology still has some way to go. Dairy produces around $8 billion and tourism $6 billion.
Those two industries do many things well, but there are a couple of respective marketing strengths that could be adapted to the technology world. Combining the innovation of our technologists with the deep distribution channels of our dairy industry and tourism’s powerful brand would transform our knowledge-based sector.
New Zealand tech companies are typically small (by world standards) and lack the reach, resource and capital to take their products to market. We often need to establish relationships with international players to succeed on a large scale. Navman, whose GPS navigation systems were given a worldwide distribution channel when bought by US company Brunswick, is an example.
Fonterra, and its predecessor the New Zealand Dairy Board, have an incredible global network through which to sell its product. From the time the UK joined the European community in 1973 and reduced our access, the government-run Dairy Board began building new markets.
By the 1980s they had subsidiaries in 19 countries, building to 80 by 1995 making it the world’s largest diary distribution network. Today Fonterra has a presence in 140 countries.
Fonterra has a huge network of distributors, but also partnerships with giant companies in key regions across the globe. Arla Foods in Europe, a joint venture with Nestle in North and South America, another with the Dairy Farmers of America, and a partnership with Clover Industries in Africa. We won’t mention Sanlu in China.
This channel for processing, packaging and selling product, as much as the hard work and smarts of our farmers, has contributed to the success of New Zealand dairy.
The internet does give all Kiwi companies, especially from the hi-tech field, an ability to promote and sell their products offshore. But a lot of products must still be sold with real partners in country who can promote, sell, implement and support.
What the dairy industry has learned, and is sometimes underestimated by the tech companies, is that the task of getting a product to market is complicated and requires a huge effort. It is at least as complex as developing the product in the first place, if not more.
The other piece of complexity is standing out from the crowd. As a tourism destination, New Zealand competes with hundreds of other countries, and we are further away and more expensive than many.
But we have been able to build a strongly differentiated position, or brand, in the minds of international travellers. The world renowned Anholt GMI Brand Index ranks us top 10 in nation brands.
It has been a success because Tourism New Zealand has told a simple story - “100% pure” - well, and it has been matched by the experience visitors enjoy.
Technology companies don’t always get this right. They get so far because they are passionate and knowledgeable about the technology, but that only works for part of the market. But continuing to market that way to larger and more profitable audiences is ineffective and usually results in them losing market share to more savvy competitors.
Of course dairy and tourism can also take something from their technology colleagues. The ability of our software, electronics, biotechnology and manufacturing entrepreneurs to innovate is astounding. They can combine technical competence with the courage and vision to take quite different approaches to their much larger and well funded international competitors.
Dairy and tourism’s biggest contrast with the technology sector is the national coordination behind those two industries. Fonterra represents the majority of the nation’s farmers, while Tourism New Zealand builds a profile that benefits all of our many tourism operators.
The same national cohesion is not yet apparent in the technology industry. New Zealand Trade and Enterprise is developing good initiatives like Focus on Health, which groups together health technology vendors to tackle the US market. The technology industry itself has various national groupings, but there is no concerted effort to tackle overseas markets together.
Maybe that’s what it will take to realise New Geekland.