TEC: Goodbye to all that

I said goodbye today to the board and executive team of the Tertiary Education Commission, where I've been a non-executive board member since 10 June 2002, which must set some kind of latter-day record for government board tenure. I first became involved with New Zealand’s tertiary education system in the late 1990s as CEO of telecommunications manufacturer Deltec:

• Recruiting engineering graduates and post-grads from the University of Canterbury, and sponsoring research projects & internships;
• Working with Whitireia Polytechnic and WINZ on an innovative programme to give long-term unemployment beneficiaries the skills to work in our factory, where they could quickly earn substantially more than the minimum wage, let alone the dole;
• On the board of the Manufacturers Federation (now part of Business NZ) where I became a de facto spokesman on education reform.

In 1999, employers were very unhappy with the NZ tertiary education system. When the newly-elected government asked industry what needed to be fixed in tertiary education, I was one of those throwing rocks. In 2002, I was duly punished by being appointed to the TEC establishment board. I never imagined my sentence would last 11 years.

And it’s been a fascinating 11 years. On the negative side, I’ve hated the complexity, the voluminous board papers, and occasionally witnessing some venal or weak-kneed politics. On the positive side, we’ve grappled with some fascinating issues, I think we’ve made a positive difference for NZ, and I’ve been privileged to meet and work with many talented and committed people throughout the education system. There are too many to name, but I will single out one person for special mention. Throughout these 11 years, Dr Colin Webb has provided sterling service to New Zealand and the TEC, and he’s often (but not always) saved me from making a fool of myself.

I’ve worked with 6 CEOs (I include Colin in that number, he’s acted in the role so often), 6 chairs (7 if you count my short stint as acting chair), and 6 ministers of tertiary education (not to mention numerous associate ministers). I’m amazed that I’ve been tolerated for so long by ministers and chairs of all political stripes. As a promoter of radical change, only a few of of my big ideas made it through to policy, and then only slowly. But despite that, I’ll still be promoting them, if only from the sidelines. More on that another time.  For now, I have just 3 key messages:

• Firstly: politics, bureaucracy and compromise have in general only added complexity to the tertiary education policy and funding system. It needn't be that way. We can and must make things simpler.
• Secondly: the system (including TEC) is far too focused on education providers; not learners, employers and communities. We need to set the focus right.
• Finally: it's hard to drain the swamp when you’re up to your arse in alligators, but TEC has a very clear core purpose: to help New Zealand - our learners, our employers and our communities - obtain the tertiary education we need. All else is secondary.

Buying cheap versus buying results

Why do corporate (and especially government) buyers keep confusing cheapness with value? Time and again I’ve seen the best vendors lose on price because the buyer could “get it much cheaper elsewhere”. The classic example is professional services charged by the hour. Any good manager of people knows that you pay your better staff more because they are more than worth it to you. For example, a good IT designer/developer will work out many times cheaper in the long run. They understand the business need quicker, design quicker, design better, write code quicker, write better code with faster performance and fewer bugs, and their software is cheaper to maintain. That can equate to a 10-30 fold lifetime cost difference - the saving more than outweighing any hourly rate difference. And that’s before you factor in the risk of non-delivery - much lower with better suppliers.

But many corporate buyers persist in penny-wise, pound-foolish buying practices. I have interests in several firms who sell products and services to other businesses, and my attitude is clear. I put a lot of emphasis on getting the price/value/cost proposition right, but if I can’t persuade you of the value for our prices, I’ll walk away before discounting. I’m not in business to subsidise anyone else’s business.

As a board member, I often see proposals for approval brought forward by managers proudly telling me that they’ve got the lowest input costs. All too often, I send them away to redo the basis of purchase and decision. Get me the best price and the best people to deliver the best outcome, not just the lowest cost of the inputs. If it has to be input-based, hire the best you can (while avoiding bloated suppliers and being sensible on price). It may cost more theoretically on paper, but I’ve rarely seen it cost more in actuality. On the contrary, the lowest input cost approach usually blows out on time, cost, reliability and efficacy.

Managers and buying teams - take note: top executives and boards much prefer effectiveness over cheapness.  But that's not a reason to buy only from big-name suppliers.  A small agile supplier can often be an innovative, effective and low-cost option.

First posted 29 July 2009

In honour of Isambard Kingdom Brunel

Everyone needs a hero - not because your hero is perfect, but because he or she has some admirable qualities or achievements which can inspire you to greater things. My hero is Isambard Kingdom Brunel.

Born on 9 April 1806, Brunel was a 19th century engineer who built the Great Western Railway, the best railway of the times. He built the Great Western, the Great Britain and the Great Eastern - the largest and most advanced steamships of their time. He built great bridges and tunnels. He made things happen, and his works still stand today as examples of innovation, design, entrepreneurship and execution. In an extensive national poll accompanied by in-depth BBC TV documentaries in 2002, Brunel was voted the second greatest Briton of all time.

Brunel seems to have always been around in my early years. My parents’ families lived near the GWR in west London (the local pub was called the Great Western). I studied Computer Science at Brunel University in London. My early career in the UK was near the original terminus stations at either end of the GWR - Paddington, London and Temple Meads, Bristol - and Brunel’s constructions were everywhere.

Brunel’s life story is as fascinating as his work. The more I learnt about the man, the more I identified with his sense of ethics, his egalitarian elitism, his setting of grand goals (not just his works themselves, but why they were built) and his ability to achieve them.

Brunel translated his personal motto ‘En Avant’ as “Get Going’. Anyone who knows my leadership style knows that I want to get things going, get started, start delivering value.  And like Brunel, I have tried to apply a bigger vision.  Designing and operating a great business is akin to a great engineering project:

• an overarching purpose: what you offer the world, to whom (customers, shareholders, staff, communities, business partners), and why they'd want it;
• a clear, coherent, consistent and elegant design of how you will make and fulfil that offer - core principles, people, processes, products;
• doing what should be done to build that business (and not doing what shouldn't);
• thinking, planning and acting for greatness.

It follows that my private companies (Isambard Ltd and Isambard Investments Ltd) are named after Isambard Kingdom Brunel. I have a small, but growing, collection of Brunel books, pictures, DVDs and souvenirs. My car number plate is ISAMBD (which has most personalised-plate translators completely stumped). And I have a life-size banner image of the great little man hanging on my study wall. Top hat, 3-piece suit, cigar, and muddy boots - what an icon!

First published 9 April 2008