How we think and behave, not how much resource we have limits the profit that we create and capture.
Productivity | Innovation & Culture | Intellectual Assets
The economics school argues that national differences in innovation are the result of industrial structure, societal wealth, research and development infrastructure, resource endowments, and country size. The sociological school argues that human dynamics and culture play a major role - "Creativity, innovation, and initiative are psychological processes." The two are often considered mutually exclusive. They are not. According to eNZyme intellect's research, it is how Kiwis think and behave rather than the resources at their disposal that determines business success. That does not diminish the importance of resources, but, with the right thinking, even under some resource constraint, success is still possible. And even in conditions of unlimited resources, success will be constrained in the absence of the right thinking. We would suggest that most iconic business successes have been achieved under conditions of resource constraint. It has been the cleverness of the thinking that has provided success.
Kiwis cling to lots of myths about innovation - They make us feel good … but they get in the road of clear thinking.
Three of the most damaging are …
- New Zealand is the most innovative country in the world. Who really knows because there is no single measure, but the UK, Australia, Canada and the USA share that same belief. About themselves! We are highly inventive... but that won't necessarily make us rich. Because being inventive is not the same as being innovative even though the two terms are often used interchangeably.
- Number 8 gauge wire mentality proves we're innovative. Actually it's really about resourcefulness and practicality. Our ability to go out into the workshop and knock up something useful out of makeshift resources for our own use. That used to be a nation defining competitive advantage. Now it's becoming a millstone around our necks.
- Everyone else is just like us. Thinks like us. Wants the same things. That leads us to substitute our own thinking of our customers and that makes them think we don't listen and we certainly aren't good at tailoring our products to the demands of people in our markets. It is a barrier to recognising our true opportunities and our value propositions.
"Software of the mind"
The mental models and "rules of thumb" that provide the framework for how people think, interpret and respond to the world around them, solve their collective problems and reconcile their dilemmas. Each person is a product of their life experiences and their national culture. One makes the different. The other makes them similar to their peers. National culture varies in important and powerful ways from one culture to another.
Unique K-Code© Kiwi culture makes us good at invention and not so good at creating value and profit...
National cultures can be ranked or classified and compared using empirically verifiable, largely independent "dimensions". There are statistically significant correlations between national culture and the initiation & implementation stages of innovation respectively. They are diametrically opposite!
NZ's dominant culture makes Kiwi strongly individualistic but at the same time egalitarian. The Tall Poppy Syndrome may be the egalitarianism keeping the individualism in check. Kiwis accord respect on the basis of achievement, especially practical achievement but not business success and wealth accumulation. We are universalist and tend to believe that there is one right or wrong for every situation (black or white) and that all people behave just like us. In the commercial context we have very low assertiveness but high action orientation (just get on with it!). We are loath to express emotion at work. We have a very short time horizon that is a barrier to taking the time to develop the trust that is the basis of collaboration and we place low value on time. We are high on affective autonomy and have low work centrality that means that we prefer the individual pursuit of pleasure and an exciting and varied life rather than co-operation and work. This doesn't mean that we don't work hard. We do. It does mean that we do not derive our sense of self from work and our prime source of motivation doesn't come from creating business success and making money.
Kiwi culture is unusual because all of the important dimensions strongly favour initiation at the expense of implementation...
Kiwi culture makes New Zealanders good at the initiation stage where we invent things and solve problems. It makes us weaker at the implementation stage where value is created and captured. That doesn't mean we can't create and capture value. It's just that collectively we don't do it enough - or at least we don't do it as much as people in the nations that we like to compare ourselves with do.
- We are strongly control centric – we don't like to rely upon other people for our success. That plays out in the capital structures that we adopt, and our reluctance to delegate, to collaborate and even to succession plan. We adopt capital structures that force us to be risk-averse and we compete amongst ourselves because we lack the trust needed for collaboration.
- We have a preference for transactional relationships and sell things while many trading partners seek solutions and long-term trust-based relationships. We resort too quickly to price instead of value and rules and contracts instead of trust, even though we dislike rules.
- The Tall Poppy Syndrome causes under-performance and a reluctance to be seen to excel (stand out from the crowd). We prefer generalists to specialists, breadth to depth, information to knowledge, simplicity to complexity and widely adopt do-it-yourself and make-and-use (versus make-and-sell) approaches including do-it-yourself management and design that all too often becomes make-do. In the UK the term Jack-of-all-trades was invariably accompanied by the qualifier but master of none and implied someone who wasn't much good at anything. In NZ it is a term of unqualified approval.
- The low assertiveness has many manifestations, the most significant being our weak negotiation skills and lack of confidence to launch products before we believe they are perfect, irrespective of what the customers think, trapping us in a pathology of serial initiation - in other words going back repeatedly to the lab or workshop to add more bells and whistles or refinements when we should get into the market and learn from our customers exactly what they think (which is almost certain to be different to us). Companies in many other countries plan early release and iterative development/ improvement in-market based upon their continuing R&D and customer feedback. This approach combined with our narrow capital structures delays market entry even though speed to market is increasingly a competitive necessity.
- We have a particularly negative attitude towards failure and combined with the tall poppy syndrome, low assertiveness and pursuit of harmony, Kiwis have a profound reluctance to give and receive feedback. That is a significant barrier to properly understanding customers and to organisational learning that is so essential to productivity at the implementation stage.
- The low work centrality and preference for pleasure and individual pursuits (outside of work) does not mean we don't work hard because we do. It does mean that work goals are in very strong competition with personal and recreational goals. As a result we satisfice or reach a threshold where we consider that we have enough wealth at a relatively low threshold (relative to other nations) and our motivation switches to other pursuits.
- Consequently we do not pursue personal satisfaction and respect (refer to Abraham Maslow's work on motivation) through work and wealth accumulation in the way many North and South American, European or Asian people do. We leave a lot of value on the table, often to be appropriated by other companies in other nations.
With the right thinking we can build new innovation, business and market engagement models for New Zealand and New Zealand businesses. This won’t happen spontaneously but it can, with the right thinking and leadership, be made to happen with neither disruption to the existing economy nor with outrageous public sector expenditure.
Click here to access a copy of eNZyme intellect's Tony Smale's MBA dissertation on this topic. eNZyme intellect has recently completed a significant piece of work on this subject for New Zealand Trade and Enterprise including strategies to play to our strengths. The work is due for release in late November 2009 and a link will be provided here as soon as the work is available for public release. Everyone else is just like us. Thinks like us. Wants the same things. That leads us to substitute our own thinking of our customers and that makes them think we don't listen and we certainly aren't good at tailoring our products to the demands of people in our markets. It is a barrier to recognising our true opportunities and our value propositions.