Liddell treasures

By Vincent Heeringa, March 18, 2007 @ 11 pm

Rugby-mad patriot Chris Liddell occupied a Kiwi business hot seat as chief executive of Carter Holt Harvey, but he was just getting started. In 2003 he became chief financial officer at Tennessee-based behemoth International Paper, overseeing US$25 billion in annual revenue, and then in 2005 was plucked for the CFO position at Microsoft. Liddell is no bean-counter though: he’s passionate about the emerging opportunities for creative Kiwis. But is he just another misty-eyed expat?

Idealog March/April 2007, page 28. Illustration by Adrian Clapperton

You say New Zealand could become the ‘Land of the Long White Tail’, meaning we should exploit the part of the sales curve that belongs to niche markets (as in Chris Anderson’s book, The Long Tail). That’s fine for Amazon, but what does it mean for us, given our traditional strengths are less high-tech and more high country?

I’ll start with the creative side and then work back to the primary industries. We create great documentaries in this country yet the whole video and video search world is really just in its infancy. Our willingness to go online and seek high-quality video content is going to explode in the next few years. Something like only ten percent of films actually make it to a theatre and New Zealand’s ability to create low-cost films, either entertainment or documentaries, is phenomenal.

You mean content in general, including music, stories, texts, learning material?

Yes. Music’s the next one. MySpace has thrown a lot of non-traditional bands into the arena and given them a distribution mechanism that they didn’t have before. Not many New Zealand bands are ever likely to go platinum. But their ability to sell 100 copies of their tracks, or 1,000 or whatever, I think has never been better. The point is with the long tail, you don’t have to sell millions to be a success.

On that slightly harder asset side of things is New Zealand fashion. There are some great brands out there and the ability to distribute relatively low volumes of highly creative product, whether it’s fashion or New Zealand-branded product, Kiwiana, has never been higher in the long tail. And it doesn’t have to be produced here, but certainly the IP and profits retained here.

On the primary produce side, take wine: I’m amazed that when I go into restaurants in the US, just about every one now has a New Zealand wine. In the four years I’ve been out of the country, half the time I can’t recognise the label. So there’s a huge number of vineyards out there that I assume are ten or 20 acres, or whatever the smallest productive unit is, that don’t have the ability to go on the shelves of Wal-Mart but can actually sell globally.

The difficulty often hasn’t been around our ingenuity, which seems to be part of our DNA, it’s around commercialisation. What are the roadblocks?

I think it’s a whole combination of things—although I don’t pretend to have all the answers, especially living outside the country now. First, there is a lack of aspiration. It’s hard for New Zealanders to imagine building a $10 million company, let alone a $100 million or a billion-dollar company. Where I now work that is a normal expectation. Here there’s a lack of belief that it can actually be done. Second, it’s been hard from New Zealand to scale from niche or domestic player to be truly multinational. So most businesses have stayed domestic and those that have tried to expand to Australia, say, have often struggled. But now there is the long tail. I can’t emphasise this enough! YouTube, which sold for US$1.65 billion, could have been built and run from New Zealand, no question.

It’s not just technology that can scale. We’re seeing the emergence of what I’ve called the ‘mini-multinational’ like, say, Pumpkin Patch. It’s truly global but very distributed—it doesn’t have offices in every country and doesn’t need to own large manufacturing plants. A lot of its business is in IP, such as design, and obviously in the distribution network and relationships. The one problem I see that doesn’t seem to have an easy solution is the cluster effect. We haven’t created clusters of expertise here.

You were a key driver behind the two Knowledge Wave conferences in 2001 and 2002. There seemed to be a lot of enthusiasm at the time to create a smarter economy—a creative economy no less!—but what’s your feeling now? Has the wave dissipated?

We’ve obviously done a lot of things right. One significant shift I’ve noticed is that the private sector has taken the task to heart a lot more. There’s much less talk about economic transformation being a government-only job. Having said that, I don’t see any significant public sector reforms or initiatives in the crucial areas of infrastructure, people development and trade development. We need to invest in physical infrastructure, such as roads, ports and telco networks, and in people. We’re still weak in the number of graduates we produce in science and technology, for example.

And the support for organisations such as New Zealand Trade and Enterprise is too small. Overall, I get the sense that we are fearful of investing in ourselves and our abilities as a country. New Zealand has a lot to offer the world. What’s holding us back?