The Modern Māori Business Environment

On 24 September 2018 I delivered the following speech as a keynote presentation at the 2018 Māori Legal, Business, and Governance Forum in Wellington.

Tēnā Koutou katoa.  He mihi nui ke Te Whare Waka, ki te mana whenua. Tēnā koutou, tēnā koutou, tena koutou katoa. Ko wai au? Ko Te Ātiawa, Ngāti Māhanga, Ngā Māhanga a Tairi oku Iwi.  No Taranaki ahau. Ko Joshua Hitchcock toku ingoa.

Kia ora and good morning.  The evolution of the modern Māori business environment.  That is the topic for my korero today.  What is the role that Māori are playing in supporting the economy in a post-settlement environment, how Māori organisations are integrating Tikanga Māori with, potentially conflicting, business interests; and how can we better utilise profit as a collective objective to grow the capabilities of our people as well as our finances. 

These are important questions to answer and I cannot promise that I have all the answers.  It is an ongoing conversation that I have been a part of for 15 years, and one that is likely to shape the remainder of my professional career.  My mission this morning is to outline some of the key trends that I am seeing in the Māori economy and to set a challenge to those of you here today to take back to your trusts, incorporations, and Iwi: the world has changed, and we need to change with it or all the hard-won gains of the previous generations will be lost. 

The good news is that the change is in our favour.  The world is catching up to a way of operating that Māori have been living for 1,000 years in Aotearoa.  We have what they want.  We have the tools, the resources, the people, and the tikanga, to thrive in the modern world.  The challenge is whether we have the ability and the foresight to adapt and to take advantage of these global trends and opportunities.  

Contents

  1.  Introduction
  2. Combining Tikanga Māori with Business – The Kono Story
  3. The Māori Economy and Opportunities for Growth
  4. Case Study – Te Tira Toi Whakangao
  5. Conclusion

Introduction

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This is my manga.  Taranaki.  It probably needs no introduction.  I was born in Stratford in 1985 to a Māori mother and Pākehā father, both from Taranaki, who had met at teachers college in Palmerston North in the 1970s. 

My grandfather, James Pihama, worked his entire life in the Waitara freezing works while my grandmother Colleen raised 10 children and a collection of other tamariki from the neighbourhood.  Waitara in the 50s and 60s was a tough place, but it is perhaps incredible to people of my generation that a family could raise 10 children on a single income. It was steady work, and my Grandfather was a proud man who strived to create a better future for his whānau. 

Growing up, my mother and her siblings were a constant source of inspiration.  Most went to University, to become teachers, academics, or engineers.  There was never any question that I wouldn’t go to university.  It was the pathway to a better future for our whānau. 

My Hitchcock whānau were dairy farmers.  Arriving in New Zealand in the 1880s, we first settled in Nelson, then moved to central Taranaki.  I grow up on a dairy farm that had been owned by my paternal grandparents, Valerie and Colin, since the 1950s.  We farmed that land for 50 years and it was only after we had sold it, and I had learned about the brutal history of the British invasion into Taranaki while at University, did I realise that we were living on land confiscated from one of our Iwi neighbours in Taranaki.

I walk in two worlds.  Te Ao Māori, where our whānau experienced the brutality of the Crown and Te Ao Pākeha, where our family benefited from the imposition of that brutality.  This conflict between my two worlds carries through into my current work.  As a customer manager working with Māori organisations at New Zealand Trade and Enterprise I must confront, on a daily basis, the challenge of being Māori and working for the Crown.  But what I have learned over the past year in this role is that there is always going to be internal conflicts to resolve. 

One of the questions posed in this korero today is how Māori can successfully integrate tikanga maori with business interests.  These conflicts are not unique to Māori.  Businesses around the world are grappling with the contest between maximising profit and being good corporate citizens.  From sweatshops in South East Asia, suicide nets in Chinese factories responsible for the majority of the worlds mobile phone and electronics manufacturing, Apple being forced to pay 13 billion euro in back taxes to Ireland, Nike taking a stand in the USA culture wars by backing Colin Kaepernick with their “believe in something, even if it costs you everything” campaign, and Pepsi and Kendall Jenner being forced to issue a hasty apology for appropriating the #BlackLivesMatter movement.  As I said, the world is catching up to our way of life. 

I started working down the road from here at the law firm of Chen Palmer, before returning to Auckland to work with various hapū groups on their claims before the Waitangi Tribunal.  After the stage 1 hearings of the Ngāpuhi inquiry wrapped up I took a job at Deloitte in their Māori business advisory team.  This led to an opportunity first as a secondment, then full-time, into Te Rūnanga o Ngāti Awa where I managed the financial and commercial operations of the Iwi. 

Two years in London managing a tech startup followed before I returned home to New Zealand last December to take up my current role with New Zealand Trade and Enterprise.  Over the past 9 months I’ve spoken to over 100 Māori owned businesses and organisations about their exporting activities and aspirations for the long-term prosperity of their whānau, hapū, and Iwi.  Many of the insights I will share with you this morning come from those conversations. 

Combining Tikanga Māori with Business – The Kono Story

So how do we successfully incorporate tikanga Māori with business interests?  There are few better examples than the Wakatu Incorporation and their Kono food and beverage operation.

Love for the land.  Respect for the sea.  Kono are a great exemplar for Māori land based organisations.  Established 30 years ago, operations have grown year on year with the company exceeding $100m in annual revenues, employing over 400 staff and exporting their products to 25 plus countries.  For Kono, their values are front and centre of the business and are a driving force behind their operations and the inspiration for the development of a 500 year strategy – Te Pae Tawhiti – which has four guiding principles:

  1.  To ensure the retention, preservation, and knowledge of culturally significant land;
  2. To create, source, and provide products and services of high value and quality that society wants, in a sustainable and ethical way;
  3. To create a world community of people who believe in and promote our products and services; and
  4. To be the best indigenous food and beverage business in the world.

Being authentically ourselves in the business environment provides a strong selling point in international markets.  Marketing is big business, and the ability to tell a story can be a massive contributor to increased sales and economic wealth.  Think of any successful company and they have built their brand, and consequently their value, on the stories they tell.  Apple has built a brand that inspires loyalty and record sales year on year.  Closer to home, and Xero are making waves with their “making accounting beautiful” tagline and their efforts to portray what has traditionally been seen as a boring industry, appear fun and innovative.  Marlborough Wine is renowned the world over and Zespri has built a very successful brand internationally. 

The clean, green, 100% pure New Zealand marketing angle is no longer sufficient in a world where dozens of countries can make the same claim.  We are no different from Iceland, Switzerland, Chile, Norway, or Sweden to name just a few countries who can trade-off the same breathtaking images as we do.  What is unique, what makes New Zealand stand out is our Māori culture, our way of doing things, and our deep and enduring connection to the land.  This is a powerful story when told in the right way.

Incorporating Tikanga Māori into commercial businesses is not overly complicated.  Tikanga is a practice.  By writing it into your strategic vision and by making it part of your daily practice, the relentless focus on doing the right thing will, at the end of the day, result in a thriving business operation. 

The values Kono speak about – sustainability, traceability, quality food products; are all massively important values that are driving consumer behaviour around the world.  This is particularly true in many Asian countries following the food safety scandals of recent years.  Kono not only has visibility of the entire supply chain from source to plate, but it can control the vast majority of that supply chain through its vertically integrated operations.  This alone is a valuable opportunity for Māori to continue to develop and I will return to this point later on in my presentation.  T

he real value is the overlay of our traditional values onto this supply chain.  These values align with consumer trends.  Kaitiakitanga aligns with the growing concern for sustainability in both emerging and developing markets; Rangatiratanga aligns with the value consumers place in high value, premium products that are provide the highest possible level of food safety.  Hihiko, another guiding principle, the idea of doing things better, doing better things is at the core of the modern movement towards corporate social responsibility and the new era of modern corporations which are seen not just as profit-making machines but as forces of good in a globalised world.  

The Māori Economy and Opportunities for Growth

The Māori economy, as we know, is experiencing a period of strong growth.  Our collective asset base continues to grow, with last estimates placing it at around $50 billion; although this is predominately invested into the primary and tourism industries.  Māori are a young population, with an average age of around 24, which means that the majority of Māori are what we would call digital natives.  People who have grown up in this new, hyper connected, world of social media, 24/7 connectivity, and exponential growth opportunities in new and emerging industries. 

As a result new models of engagement in the corporate world are emerging, and I am going to talk about some of these.  At the same time, Māori are demanding more from our organisations and institutions than just profit.  The settlement process has been progressing for 25 years now, and there are whole generations who have grown up with the korero around how do we best manage our settlement assets to ensure the aspirations of iwi members are met.  Because, at the end of the day, a strong balance sheet is worthless if you do not do anything useful with it.   What is the point of a large balance sheet of our people continue to be left behind.  If you do not use it to provide for a more prosperous future for your members and beneficiaries. 

The traditional investment model should be thrown out.  There is a massive wave of disruption heading towards our core industries and unless we start investing in our people, in building capabilities throughout our organisations, and in our future – in new and emerging industries and technologies; then the triple threat of synthetic meat and dairy products; automation; and climate change will wipe out the hard-earned gains of the past 25 years.  And these are not some distant threats, they are here now.  The controversy several months ago around the launch of the Impossible Burger – the synthetic meat burger – on Air New Zealand is a sign of things to come.  As a nation heavily invested in primary production, we cannot afford to put our heads in the sand.  As Māori, we are especially exposed to these industries and as the world evolves, so too do we need to adapt and change with it.

The conversations I am having around the country around developing Māori business are predominately focused on expanding our activity in the primary sector, honey, and hemp (or medical cannabis).  It is encouraging to hear talk of diversification away from a primary focus into more value add products but there are still challenges with this approach.  

Forestry, farming, and primary production are all the tools of the 20th century.  They have provided a small economic base for Māori but as  we discussed just now, their futures are far from certain.  Storms early this year on the East Coast have highlighted the dangers of conventional logging and the environmental impact that forestry has on our environment.  High value processing in the forestry sector has been uneconomic for so long that we have lost both the capability and competitive advantage in this industry, reducing land and forestry owners to commodity exports with economic returns flowing only ever 30 years.   

Farming will come under increased scrutiny now that we have a cross-party consensus on the need for a Carbon Zero society and the rise and rise of alternative proteins and synthetic milks and meat products have the potential to disrupt the entire dairy and beef industry in New Zealand.  Climate change is also affecting the crops we can grow as the warmer humid air moves further south every summer. 

Honey, especially Mānuka, is capturing a high premium in the international markets but with over 200 New Zealand brands exporting to the world, shelf space is becoming harder and harder to secure.  Hemp and medical cannabis holds large potential, but massive risk – dozens of groups across the country are racing to be first to market in an industry which is still illegal.

Meanwhile, the world has changed.  Millennials, soon to be the most dominant generation the world has ever known, are seeking a different life from our parents and grandparents.  Jobs are temporary – partly by design, and partly by choice; travel is a way of life, not an occasional experience; and the trend towards on-demand and online via mobile applications is only going to intensify. 

We are the generation who aspire to buy sustainable products and spend our money on experiences rather than the cheap, disposable products that filled our childhood homes.  We are building technology companies.  Building online lives.  Expecting more and more convenience alongside higher and higher quality.  We want to tear down walls, and remove borders.  And yet, we are still be told that primary production and forestry is our future.  1930s thinking is alive and well in policy discussions around the future of Aotearoa New Zealand.  

So how do we achieve this? We need to be talking collaboration, developing new technology and creating tech companies, and changing our investment approach.  

A) Collaboration

Let’s start with collaboration.  The overall capital base of Maori organisations is large, but with the exception of the handful of billion dollar outfits (Ngāi Tahu, Waikato-Tainui, Ngāti Whātua Ōrakei for example), the capital is widely distributed across hundreds of iwi and land trusts and incorporations.  Take, for instance, my home province of Taranaki.  The eight Iwi and the Parininihia Ki Waitotara Incorporation hold individually anywhere between $10m and $200m, but as a collective control over $500m worth of assets.  This is a powerful asset base when deployed collectively. 

Iwi, land trusts, and businesses are starting to collaborate to explore domestic and international opportunities.  We are too small to take on the world individually.  It is only when we come together, work together, and share our resources and talent, that we can build and grow our economic wealth. 

Collaboration allows for the creation of scale and for the integration of supply chains, both of which are necessary in order to grow a business.  We cannot do it on our own.  The honey industry is the perfect example where everyone is trying to create their own brands, their own little vertically integrated honey business.  Which is fine if you want to make $2-$3 million a year selling honey in a jar.  But that is not where the opportunity is.  The properties that make Mānuka, and our other native species, so valuable makes them idea ingredients not solely as food products but also as pharmaceutical products. 

Collaboration allows us to create higher value products.  Recent examples in the dairy industry – Miraka and Kawerau Dairy – prove the model works.  Nuku ki te Puku is a group of Māori for producers who have come together to respond to the grown diabetes epidemic in China and parts of South East Asia.  By combining their respective expertise in food production, research, and international sales; they aim to build a lasting business.  The Miro berry collective is doing something similar to create scale in the blueberry market. 

Recently, New Zealand Trade & Enterprise has worked with a group of Māori wine makers to support the development of the Tuku Collective and a group of food and beverage companies to create the Hui Māori Collective with the aim of working together in international markets.

B) Developing New Technology and Creating Tech Companies

However, what I see as the largest opportunity for Māori economic development is in developing Māori tech businesses.  The 2018 High Tech Awards in Christchurch highlighted the potential of Māori tech business – with a large number of winners being Māori owned businesses. 

Technology is currently our 3rd largest export earner and Māori play only a very small role in this.  We currently lack the ecosystem and the capital funding to drive innovation and grow Māori tech companies.  Our Iwi have a large role to play in this but many are far too conservative to realise the opportunity.  We have to start taking a chance on our rangatahi who have the tools and drive to create a better future.  Māori have always been entrepreneurs but for far too long we have produced and exported low value, high quantity exports.  

In May, New Zealand Trade and Enterprise, in conjunction with Datacom and Microsoft; organise and ran the first Māori Hackathon.  We invite 8 Māori owned exporting companies to Gisborne to take part and to pitch a problem that would revolutionise their business.  Over the course of 48 hours, over 200 people combined their energies and insights to develop, test, and pitch new solutions to these problems. 

The impact has been ground breaking.  Multiple new technologies have been created and dozens of new jobs have been relocated out of Auckland and into Gisborne as a result of this initiative.  The ultimate winner was not a tech company, but none other that Ngāti Porou Seafoods who took a problem that needed solving in their international operations, and worked with the team to create a tech-based solution to that problem.  This is why it is not just about creating new technology companies but also about developing new technology. 

Innovation in all industries is what creates value and drives increasing returns to owners.  Yet, for a multitude of reasons, Māori are not engaged in either developing new technology or creating technology companies.  This needs to change.  Our Tamariki and Rangatahi need it to change.  It is the world they inhabit, but it is not currently the world we are leaving behind for them.

C) Changing our Investment Approach

Meanwhile, new approaches to investment are emerging.  The rise of collaborative business ventures have resulted in a corresponding increase in collaborative investment approaches.  The Limited Partnership regime, implemented as a means of allowing the better administration of investment funds for high net worths, has been employed intelligently by Māori collectives to manage risk across a collaborative investment and to allow organisations new to the game to come along for the ride without over-exposing them to a level of risk they are not yet prepared to deal with. 

Over the past year, with the support of the New Zealand Superannuation Fund, a collective of Māori have invested over $115m into Te Pūia Tāpapa – a direct invest fund designed by Māori to allow for a larger investment play that each individual organisation would have been unlikely to achieve operating individually.  Work is also underway to develop a Māori Angel Network to provide capital for investing into early stage companies with the potential to grow rapidly but without the capital available to them to achieve this,

All investment carries risk.  This is the truth of investing and one of the reasons why our Māori organisations may appear overly conservative in their investment approach.  Some have been burned before with risky investments.  Everyone else has heard these stories and no one wants to be the next Māori organisation to grace the covers of the Herald of Dom Post.  However, a well-balanced portfolio, properly communicated to members and beneficiaries, reduces the likelihood of large-scale investment losses. 

The issue has never been about investing in higher-risk opportunities, it has been speculating large sums of money on pet projects that individual Directors are connected with, or personally invested in – both from a capital and emotional standpoint.  A well-balanced portfolio, supported by a clear investment strategy, and with guidelines in place around the most appropriate asset allocation for the organisation will provide ample opportunity to set aside a small portion of the overall asset base – no more than 5-10% – for investment in higher return – higher risk opportunities. 

To be clear, I am not advocating taking that 5-10% and investing in one opportunity.  No venture fund operates in this manner.  Spread the investments around and you also spread the risk.  There is a well documented, highly effective, model of investing in higher growth – higher risk opportunities but the key, as with any investment portfolio, is diversification.  

4. Case Study – Te Tira Toi Whakangao

Finally, I want to briefly speak about a programme that has been developed over the past 18 months to create an interconnect tech ecosystem for Māori which aims to drive entrepreneurs through a series of existing programmes and opportunities from the very genesis of an idea through to an IPO and beyond. 

Te Tira Toi Whakangao is the first real attempt at taking a collective approach to building an industry within the Māori economy and its foundations are in the three areas set out above: It is collaborative, it is about driving the creation of new technologies and new technology companies, and it challenges the current investment approach of Māori organisations. 

Te Tira Toi Whakangao is built on collaboration, it is built on understanding the mega trends that are changing the world and working to address them, and it is built to increase our collective capability not just in starting up and growing businesses but in understanding the investment proposition that drives the new and emerging industries around the world.  It is an inclusive model that is about more than just making money. 

It is an approach that seeks to reach as many tamariki and rangatahi as possible and provide a pathway for them; to provide opportunities to grow their skills.  It is an integrated system that aims to create a pipeline from idea to IPO ; and taking a tuakana-teina approach, it is a model whereby our current Māori tech entrepreneurs want to give back their time, their insights, and their knowledge to the next generation.  

Te Tira Toi Whakangao is a business model built on three key pillars: Inspiring the next generation of entrepreneurs to create a pipeline of ideas and companies; Navigating those entrepreneurs and companies through the often times confusing and complex start-up world and the range of support programmes and initiatives available; and Nurturing those same entrepreneurs and companies to develop, grow, and scale through the support of soft capital – the guidance of successful Māori tech entrepreneurs and tech hubs around the country, in every region and main centre; and through hard capital – introductions and support to raise capital and make sales in both the domestic and international environment. 

The model is working for the current generation of Māori tech companies, and it represents an exciting opportunity to go to the next level and support the creation of a thriving Māori tech sector in Aotearoa – New Zealand.

5. Conclusion

I want to close this morning with this thought. As Māori we need to aspire to a higher level of business activity.  We need to aspire to an economy that not just meets the national average.  We need to aspire to a level above the average.  Our aspirations for Māori have to be about more than closing the gaps with Pākehā.  The most recent Māori unemployment figures continues to show a massive gap between the Pākehā and Māori unemployment rates.  We need different thinking from that which created this situation.  It is not about trees, or roads, or mainstreaming social services, or more trades training. 

We need a higher vision for Māori, and for Aotearoa.  We should be investing in jobs.  Investing in improved social conditions.  Investing in improved environmental conditions.  Investing in entrepreneurs.  And investing in collaborations.  The 21st Century holds unlimited potential for Māori business.  We are uniquely placed both in terms of our capital resources, our unique story, and our innovation capabilities to develop and grow international businesses from Aotearoa. 

When we collaborate, innovate, and take those products to the world with our unique story as tangata whenua, we can create more economic wealth for our society, and use that as a force for change in our communities.  That is definitely something worth aspiring to.

No reira, tēnā koutou, tēnā koutou, tēnā koutou katoa.

 

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