www.viewpoint.net.nz - NZ Transport, Aviation, Logistics & Supply Chain Blog

Linfox buys Provincials

Linfox as purchased Provincial Freightlines Ltd effective today. It hasn’t hit the general media as such.

While the sale of privately held companies to Aussie companies is inevitable I must admit I think it is a loss to New Zealand. It is further evidence that the Transport market is maturing in NZ, as the medium size companies either grow or are acquired.

Provincials had some really rocky years back in the 80’s and I remember well their merger with Heatons. In the last 10 years however they have developed a really strong brand.

Their silver trucks with simply the word “Provincial” on the curtains is a crisp, clean and very well recognised brand.  They have developed a strong customer focused niche business.

What will become of “Provincial”? Time will tell. They were the first customer of agóge and I appreciate their loyalty and continued support. I wish them all well in this transition.

The Google Story

Larry Page and Sergey Brin started Google as a research project while studying at Standford University. From there they have grow Google into a worldwide household name and one of the largest companies (by market value, not revenue or employees) in the world.

The Google story follows the incredible rise of the company, its culture of innovation and its “Don’t be evil” philosophy. The growth in the Google business is mind blowing, for me at least. Founded in 1998 here is their revenue growth

Google’s Revenue History

Year	Revenue (US$ in millions)
1999	$.2
2000	$19.1
2001	$86.4
2002	$440
2003	$1,466
2004	$3,189
2005	$6,139
2006	$10,604

Google is an only in America story. You simply couldn’t have build a company like this in New Zealand for 3 very clear reasons:

1. Our IT network simply wouldn’t be able to handle the volume and you would have to move off shore in your 1st or 2nd year.
2. We simply would have enough IT people available to be employed to build the system.
3. In the 2nd year they raised $25million (about NZ$48million at the time) in Venture Capital. You would not raise that sort of money in NZ.

All that said, it is a remarkable story and has some key lessons:

1. Keep your project teams to 3 – 5 people. Anything more slows down innovation.
2. They have a 20% rule to drive innovation. Their engineers spend 1 day a week working on any project or idea they like. If it is good enough it may get funded and launched as a product.
3. An awesome employee culture meant they employed people for less and stole people from other huge companies in their formative years. Without it they probably wouldn't have made it.

Book Summary

The Google Story
David A Vise

Genres             Google, Business
Pages               325
Readability       4 (1 = Easy, 5 = Hard)
Enjoyment        4 (1 = Never Read, 5 = Remarkable)

Finally, now that I have read the Google Story it makes me think it would be almost impossible to take on Google in their core brand (not that I was thinking about it). I still think some of the lessons of my previous post apply, but it fails to acknowledge just how intelligent the founders of Google are.

Transport companies get a 3% increase in costs

Some significant cost increases to the Trucking Industry in the last few days.

Firstly the long awaited increase in the Holidays Act from 3 weeks to 4 weeks. I was thinking about the implication of this to the industry. We currently have around 25,000 ‘Heavy’ Truck drivers. Each of them is now entitled to an additional 1 weeks leave. For an industry that it already short of drivers, it now needs around another 500 drivers just to cover the additional 125,000 days annual leave to be taken this year.

Don’t worry about finding an additional 500 drivers, it will be easy – Yeah Right

The second issue is the increase in Road User Charges with 48 hours notice. It is estimated that the 11% increase in RUC will increase operators costs by 1%. This is a significant amount of money that can not be recouped from customers instantly.

A 3% increase to transport companies costs from 1 April. Welcome to the new financial year guys. Sorry I don’t have any solutions apart from getting a new government.

Get your FREE PRIZE here

Free Prize Inside follows on the back of  'Purple Cow' and 'Unleashing the Ideavirus'. Seth Godin again does a great job of provoking a review of how we conduct our marketing and challenges us to create remarkable businesses. He introduces two new terms 'a Free Prize' and 'Egdecraft'

A free prize is an idea, an innovation or an add-on to your existing service that makes your product more remarkable. It is ideas that are so simple that they make people talk about your service, and this leads to an ideavirus.

Edgecraft is the craft of finding ideas that are innovative enough to take you to the edge and beyond. It acknowledges that to be noticed you need to be different, and to be different you need to be edgy in your industry.

Here are some quotes:

'If people aren't blown away, they won't talk about it. If they don' talk about it, it doesn't spread fast enough to help you grow.'

'Edgecraft is an iterative process that is much easier for an organization to embrace than brainstorming.

There are hundreds of available edges, things you can add to, subtract from or do to your product or service. Find an edge and go all the way to it. Going partway is time-consuming and expensive-and it doesn't work very well. Going all the way to the edge is the only way to jolt the user into noticing what you've done. If they notice you, they're one step closer to talking about you.

It's all marketing now. The organizations that win will be the ones that realize that all they do is create things worth talking about.'

Book Summary

Free Prize Inside
Seth Godin

Genres          Marketing, Management, Ideas
Pages            235
Readability    3 (1 = Easy, 5 = Hard)
Enjoyment    4 (1 = Never Read, 5 = Remarkable)

You can download "Unleashing the ideavirus' for free here. Or you can check out Free Prize Inside here. Oh and there is a Free Prize in Seth's Book as well. If you enjoy ideas and stretching your thinking, READ IT.

Setting up in Australia

Mainfreight today announced that they have conditionally sold Pan Orient Project Logistics business and its 75% interest in LEP (New Zealand and Australia) to global logistics company Agility Group for A$83 million. It is the last of the non core Owens businesses to be sold. The funds released from the sale will be used by Mainfreight to fund its ongoing international expansion.

With Mainfreight, Freightways and others slowly establishing significant off shore businesses I wonder what a successful strategy would be for more NZ companies to do the same?

The road to overseas subsidiaries it would seem is littered with more stories of failure than success. Air NZ and Ansett, Telecom and AAPT (yet to see the end of this movie) are examples of huge companies struggling to make it happen. How then is it possible for a NZ company to stem the tide of Aussie investment and head into their backyard? What are the key points to consider?

#1 It is harder than you think.
Summed up well by Josef Roberts who launched Red Bull in the two countries. "Don't rush overseas. Australia might have five times the population, but it also has five times the competition, and Kiwis aren't used to dealing with Australian bureaucracy. Roberts worked out a worst-case scenario, and then doubled the cost and doubled the time. "We were about right," he says. "It took three times as long and was three times as expensive." [From Idealog "Meet the man who gave Red Bull wings"]

#2 You need to avoid the Valley of Death
Rod Drury wrote about the Valley of Death "From New Zealand, once you have saturated the local market, you then have a massive transformational change to address another market. You may need to introduce capital, add new staff, learn foreign rules - the list goes on. For us to take almost our first step of expansion, to enter only our second market - we bet our businesses. I'm calling this - the Valley of Death."

#3 You need to take your time.
This would be the key lesson I have gleamed from companies like Mainfreight, Freightways or even Michael Hill who have set-up in Australia. They seem to make slow educated decisions about their growth into other countries. They take the time to understand the markets, people, culture and regulations and they take small incremental steps. They have done this well and don't bet the NZ business on it.

I don't have much first hand experience. Hopefully one day I will, but in the meantime I am interested in your thoughts.