What does the Deloitte Fast 50 tell us about Kiwi businesses? A lot. And nothing much.
The Deloitte Fast 50 is the business equivalent of a 100-metre sprint: the fastest to grow the top line wins!
Now we know that the top line is (comparatively speaking) the easiest line to breach. Profitability, sustainability, durability – these longer-term attributes make business more like a marathon. But the Fast 50 can still reveal insights about our emerging high performers. And heck, wouldn’t you rather watch Usain Bolt?
Picking through the data, I can find two surprises and one recurring disappointment.
Surprise one: it’s the model, stupid. With such explosive growth you’d think Powershop had invented a category-busting technology like an iPad. In fact, as Idealogwrote many moons ago Powershop’s innovation is nothing more than a website that records your meter reading. The genius is in the business model – getting people to buy power rather than join a utility.
Other top rankers – 2degrees, Xero, Hue, 2Talk, SpecSavers – have changed the way that business is done. Matt McKendry, the Deloitte partner behind the Fast 50, says Kiwi innovators fall in love with products, a nod perhaps to our heritage as backyard inventors.
“But these companies have asked how can the same product or service be delivered in a better, smarter, more efficient way. It’s still just phones or accounting or hair colour – but the way that it’s delivered is disruptive.”
The point is reinforced by the growth data. The business models which delivered the highest growth were subscriptions and rentals – product sales came a distant third.
Surprise two: openness and growth are friends. Speaking of innovation, the fast growers have a distinct profile compared to most other Kiwi businesses. A 2009 survey called Innovation in New Zealand found 74 percent of businesses source their best ideas from staff and just 15 percent from external networks, such as customers, partners and universities. The Fast 50 companies do the opposite: 74 percent collaborate with external providers on innovation. Some 14 percent worked directly with universities compared to just three percent of the rest of us.
It’s easy to dismiss this as an example of the high-tech industry at work. But only a fifth of the Fast 50 are tech companies. It appears that fast growers are also collaborators.
And now for the disappointment: few exporters appear in the list. Perhaps it’s a reflection of how hard export markets have been hit in recent years. A similar trend is evident in the tech sector’s TIN100 report, where export growth was horribly flat, this year and last.
It’s easy to blame the offshore markets but the data says otherwise. When asked “what would it take to start exporting?” a whopping 36 percent said “a change in strategy”; another 29 percent said “getting a partner on the ground” and 23 percent said “a client must request it”.
In other words, 88 percent aren’t exporting and have no intention to export. McKendry makes the point that growth can still come from the domestic market. But this highlights one of the great missed opportunities for New Zealand business: if you can make it work here with just 4.2 million people, imagine how it might work in Australia or Indonesia or California or ... well, you get the idea.
Don’t agree? Consider this: if you remove the top three performers, which have unusually large growth figures and which distort the domestic performance, the exporters in the group massively outperform the domestic companies. These companies, when placed offshore, are high achievers. We simply don’t have enough of them!
In that sense the Fast 50 tells us nothing new. The Fast 50 companies are immensely clever and more ambitious than most others in New Zealand.
And yet the majority don’t even aspire to going to Aussie, let alone Shanghai. Gosh we’re a timid lot.