As we all contemplate the year ahead and how we will fare as our beautiful country struggles to find a way out of recession, there is one big theme that is emerging for New Zealand: how to start lifting productivity so that we can protect our quality of life?
The government has made it clear that it cannot continue to finance the public sector in its current form. But it is also clear that the government doesn’t have all the answers - it can help stimulate the economy and invest in critical infrastructure but the overriding productivity issues can only be solved by the industries themselves - there is no silver bullet.
When considering the insights from the last Productivity Commission report, it is interesting to note that the reasons most Kiwis love New Zealand are also the reasons that New Zealand will struggle to deliver productivity growth and prosperity - we’re a small, under-populated and isolated nation with beautiful, fertile lands and we rely heavily on industries with low productivity growth.
In working with boards and exec teams in recent months, it feels like 2025 is going to be the year in which the productivity discussion becomes front and centre. Organisations are beginning to question how they can lift productivity both within their own organisation but also within their industry. As Richard Rumelt points out in his seminal book ‘Good Strategy, Bad Strategy’, this is a question of strategy.
“Strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. Leaders must identify the critical obstacles to forward progress and then develop a coherent approach to overcoming them.”
Leadership teams need to be making hard choices around how they’re going to respond to the productivity challenge - what decisions can they make that have the potential to drive a step change in productivity both for their organisation and for their industry - how do we do better.
One emerging and related theme that is also gathering momentum is New Zealand’s response to AI. Boards and exec teams are grappling with what AI will mean for their business and their industry but it’s important that this curiosity is managed as part of a structured strategy development process - AI should not be the goal, it is just a means to achieve strategic objectives. AI’s real power is in transformation - whether it’s streamlining decision-making, personalizing customer interactions, or optimizing supply chains. To tap into the transformative power of AI, organisations need a structured approach that aligns AI investments with long-term strategic priorities - organisations need to develop good strategy.
All of this sounds exciting. So when we think about 2025, we see it as the potential tipping point for New Zealand - the year that New Zealand woke up to its biggest challenge and started to make big choices around how to drive productivity growth, leverage AI and ensure that New Zealand remains one of the best places to live in our rapidly changing world.
We’re looking forward to sharing more thoughts as the year progresses on how we can support our clients on their strategy journeys in driving productivity growth and leveraging the potential of AI. Exciting times ahead!
