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Time to think big

If this country wants to prosper it has to think big.

No, I'm not talking about the ambitious and highly risky "think big" concept of the Rob Muldoon era, I'm talking about big profit margins.

The announcement yesterday by Rakon that it would be moving more of its manufacturing to China, at the cost of 60 local jobs, shows that we're too focused on trying to produce products that compete in highly price-sensitive markets. That's a mug's game.

Instead of following this race to the bottom, NZ would be much better advised to take a look at the comparison between Apple and Amazon.

Amazon is selling its Kindle Fire at near-cost price, hoping it will make its profits from the purchases made by its users from the Amazon store.

Apple on the other hand, has a massive profit margin attached to its iPad devices -- even though its users also spend-up large at Apple's cyberstore.

And guess which is the more popular device?

That's right -- it's the more expensive, higher profit iPad.

While Google and Amazon duke it out for the prize of lowest profit margin and cheapest retail price, Apple is sitting back and smugly enjoying its undisputed position as the company spinning the most profit from its hardware.

Surely, this is what NZ ought to be doing as well.

It's great to have companies like Rakon in their earning export receipts (until such time as they're bought out buy the Chinese in the way that F&P has been) but we need work smarter and build some brands that earn huge margins -- margins that are large enough to keep NZers on the payroll and in useful employment.

The only time that manufacturing becomes viable in a country like NZ is when you can build a very significant profit margin into whatever you're making here. The only way to do that is to either build a strong brand with massive loyalty, or have a vise-like grip on the intellectual property around which the product is based.

One requires very smart marketing -- which we *can* do -- just look at the brand 42below for instance. It's just vodka -- but cunning marketing has turned it into a powerful brand which many people will select ahead of cheaper, less well branded equivalents.

The other requires that we develop some exclusive and valuable intellectual property -- but that requires an investment in R&D and a commitment not to sell out at the first offer.

I wonder whether, as a nation, we ought to look at how we can incentivise companies to become NZ's Apple. How do we help companies establish the type of powerful branding that allows a premium to be associated with its products; how we can assist those with good ideas to turn them into intellectual property that can be leveraged to extract high profits from the products we may wish to manufacture here and export to the world.

The problem is that this all requires vision and testicular fortitude -- the two things that are so sorely missing within the halls of parliament.

You can criticise Muldoon for his many failings and ultimately for his follies -- but he must be admired because at least he was "giving it a go".

Might it be time for NZ to elect a new Muldoon-like leader?

Is it time to hand the reigns over to someone who is prepared to take control of this nation's future -- rather than leaving it to drift with the tide and blow in the winds of external influence and the self-interest of politicians?

The more I think about it, the more I believe that it's not about parties, it's not about manifestos -- it's about choosing a strong leader with vision and courage.

Compare Apple's fortunes during the period Steve Jobs was at the helm and when Jobs was not and you'll see what I mean.

As Jobs' influence wanes, I fear a little for Apple -- because it *was* Steve Jobs and, without his powerful leadership and courage, it may have already peaked.

Unfortunately, I don't see any of the leadership and courage we need in any of the current political leaders in NZ. Key becomes more of an embarrassment every day (with his insults, gaffes and disingenuous loss of memory) -- and the other parties also failing to offer anyone who grabs the hearts and minds of Kiwis to an extent needed to fully realise the potential of this nation.

What do readers think? Is it time for some Muldoonism? Is it time to "think big"?

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