Why export companies need strong & internationally experienced boards

If you’re a director sitting on the Board of a New Zealand company right now, what should be your main focus?

Most people would understand if the immediate survival of the business were paramount, as we all battle the impact of Covid-19, but it is also important to be thinking about growth, and the new, long-term opportunities. The inherent tension between these two mindsets is well highlighted in a new report on governance, issued by the Productivity Commission.

The report is based on interviews with 22 current directors in New Zealand, and one of these directors highlights a key issue: “A board that is overly focused on its monitoring role, or on financial performance, may lean against entrepreneurial spirit, stifle investment in R&D and encourage managerial myopia”.

New Zealand is a trading nation. The economic health of our team of five million is dependent on how well we do internationally, and that urgency to look for the next export opportunity is even more critical now, to help pay for the costs of the pandemic over the long term. We can’t get out of this by selling to ourselves.

As the chief executive of New Zealand Trade & Enterprise, the government agency charged with helping our export community, I was pleased to see the many references in this report to the need for an international focus.

We agree that there could be more professional directors on New Zealand boards who have international experience. If you’re a chief executive, or one of the senior managers of an export business, you need directors who know how tough it is to succeed internationally, who have their own scar tissue and can support you when you inevitably make your own mistakes.

But there is one thing I disagree with in this governance report. It’s the suggestion that New Zealand companies are still hampered by the BBB mentality – that once you get the “Boat, Bach and BMW”, you stop being ambitious for your business.

I spend a lot of my time visiting exporters all over New Zealand, and we work directly with thousands of export companies to help them succeed. From this experience we don’t see a systemic lack of ambition.

On the contrary, we are more often than not inspired by the vision these companies have to take on the world, and dominate a niche from the edge of the South Pacific. What we do see, however, are the constraints of growing companies, from a small domestic market, to international markets which are a long way away, even more so now that borders are closed all over the world.

To mitigate this, one of the key services that NZTE provides is access to an international network of ‘Beachhead Advisors’, private-sector experts (both in NZ and in-market) who offer perspective and insights to help export companies shape the direction of their business.

Our Beachheads Chair, Michael Moynahan, describes the importance of governance this way. When you are driving at night, you know you have to put on your lights, so you can see ahead. But if you put on the high beam, you are able to see beyond the medium range and further into the distance, so that you can avoid bumps and plan for where you are headed.

One of our own directors, Wayne Norrie, says the role of a Board is to help businesspeople deal with that fundamental paradox, that “you don’t know what you don’t know”.

Ensuring your Board has a range of experiences, skills and, most importantly, the courage to welcome diverse ideas is crucial to helping the business see beyond its immediate challenges. It is vital that the Board brings this ‘outside in’ perspective.

I’m not intending to be dismissive of our current crop of directors. On the contrary, we have a lot to thank them for, as they provide their wisdom and their conviction for the good of their companies and their country.

But the Productivity Commission report is right to point out that our boards are fundamentally important for growth, and we need them to have a growth mindset. This is not to ask them to take uncalculated or misplaced risk, but rather to hunt those long-term opportunities.

One of the unexpected consequences of Covid-19 may help in this. As the Director-General of Health Dr Ashley Bloomfield said on September 21, more than 50,000 people have returned to New Zealand since late March. Among them will be many with valuable overseas business experience, providing an unexpected boost to our human capital.
I believe we can embrace this opportunity – from new employees or entrepreneurs right through to new directors – to grow more companies for the good of NZ.

*Peter Chrisp is the Chief Executive of New Zealand Trade & Enterprise.