Bryan Gaynor shone the light on a very important problem today—that many large firms in New Zealand simply are not growing in line with the growth of the economy. In other words, they are going backwards. Gaynor's analysis is insightful: to lose ground when the flow is good suggests that something is amiss. This raises several important follow-on questions: 
  • What have the boards of these firms been doing over the last few years?
  • Why have the boards not held the Chief Executive accountable for performance?
  • Who is actually in control and who is driving strategy? (It's unlikely to be the board, from what I can see.)
  • What changes are required to get these firms, and the economic contribution they make, back on track?

While the issues before each firm will be unique, there are some constants:
  • The board is responsible for business performance.
  • The board needs to ensure that an appropriate corporate strategy is in place
  • The budget is not the strategy, it is a measure of progress.
  • The basis of performance should be achievement of strategy, not achievement of budgets.

Hopefully, the boards of these firms will take stock, ask some quite tough questions, and make appropriate adjustments to get back on track. High company performance has many positive flow-on benefits beyond shareholder wealth, and these need to be realised if at all possible.