Liam Butler interviews Hon Richard Prebble CBE, author of Out of the Red

24 November 2014

Liam Butler

Out of the Red $29.95 The untold story of NZ's biggest business turn around....

The Honorable Richard Prebble CBE served as a Member of Parliament longer than anyone else in New Zealand's history. He has been the Leader of the ACT Party and was a leading Minister in Lange/Douglas Labour Government. Richard qualified as a Barrister and Solicitor is a former Queen Street lawyer and now is a Company director and consultant.

Question One

In Out of the Red you share the story of how when you gave a speech on New Zealand's postal reforms to the international postal union, a meeting of the world's postal services at an International Conference The American postal regulator-the world's largest postal office stated that ‘Mr Prebble is the greatest postal reformer of the twentieth century'. How can we celebrate business success better in New Zealand?

I was asked by the International Postal Union, which is not a trade union but the international organization of the world's post offices to give a presentation about how we had reformed New Zealand Post.

The International Postal Union is one of the biggest and oldest international organizations. Everyone belongs. It sets the rules for how international post is paid for and delivered.

I was giving what I thought was an uncontroversial presentation. I said our Postal Service had been a mess, losing money, poor delivery, when you said "your cheques in the mail" it could be true and the cost of postage was increasing faster than inflation.

We had set the Post Office up as a company and appointed business people to the board. We had removed the post offices monopoly and anyone can set up a postal service. Many have including the lawyers who have their own document delivery service. Under the stimulus of competition Post had improve so 95 percent of standard mail posted anywhere in New Zealand was delivered the next day. We had found to our surprise the post office was profitable. New Zealand post had reduced the stamp for a standard letter by 25% which had resulted in more mail which meant more profit so Post was now paying a dividend. I suspect post has always been potentially profitable.

At this point a manager of the Netherland Post Office interrupted and said "These measures might work in a small country like New Zealand but would never work in the Netherlands where we have a rural population".

Stung by the rude interruption I replied. "This intervention may explain why some post cards I posted in Europe on my last trip have never arrived. Clearly you do not know where New Zealand is. The Netherlands could fit into New Zealand many times over. We have mountains higher than any in Europe. Our coast line is the forth largest in the world and you have no area we would regard as a rugged".

Then the French manager stood up and said

"Mr Chairman why are we listening to this presenter. I have been in the postal service and I know what he is saying is impossible. No postal service can run at a profit. This is all lies"

When you are a speaker and you are accused of lying there is nothing you can say because obviously you are lying. I could see no one believed me.

I was saved by the US Postal Regulator, the regulator of the world's last Post Office. He said.

"Mr. Chairman. I only came to this conference to hear Mr. Prebble. He is the greatest postal reformer of the 20th Century". These are the most important reforms since the invention of the penny post. He then reeled off statistics about New Zealand Post's performance, some of which were news to me.

People love to communicate. The internet means more parcel deliveries. I am deeply disappointed that New Zealand Post's performance has declined again. I wrote my book in part to show this does not have to be.

Question Two

Richard, you explain that if you want the respect of your employees make it clear that you are prepared to do the toughest jobs. What do you think is the toughest jobs ahead for the next Parliamentary term?

The toughest job in parliament in any term is to have the courage to tell it as it is. You can pick any area of government spending and it is unsustainable. Take health. Health spending has been rising faster than inflation for over a decade. Project out health spending and there comes a time in my life time when health spending will cost more than the total government budget. Of course that is not possible but there are powerful forces pushing up health spending. Our population is aging and the older we get the more demands we make on health. The health system may not be there when you are going to need it.

This would not matter so much if we were getting more for our health dollar but we are getting less. In every other sector of the economy productivity is going up. There are marvelous health inventions but productivity in our hospitals is going down. Only the cleaners - I am not making this up - are more productive but they are contracted out to the private sector.

Our health statistics are awful. The World Health Organization says for some illnesses we have third world levels of illness yet our spending per capita is one of the highest in the world. Other countries get more for less.

The country that regularly tops the World Health Organization for health outcomes is Singapore. Per capita they spend a third of what we do to have the world's best health service.

What does Singapore do? There is much more private sector, more health insurance and more personal responsibility. Now when have you heard an MP say any of those things? Less spend less on health and demand more. And then I could start on education but that is another story.

Question Three

Richard you explain that most managers manage by exception. They look for what is wrong. How can organisation check to see if its infrastructure is positive and initiatives are rewarded?

Modern parenting theory says the way to raise children is to wait until they are doing something you like, such as playing helpfully with younger sister and then praise. When they are doing something you do not like, ignore them.

Of course we all do the opposite and are always telling our kids "Do not tease Jane". When are sending a signal the way to get attention is to be naughty.

The latest management theory is the same. Most managers' mange by exception. They look for things that are wrong. It is much better to look for people who are doing things right and praise them. We all want praise. Being appreciated for what we do is more important than other rewards. Such praise has to be honest and genuine. A simple "well done" is often the recognition for something that has been well done.

Adults learn from experience. It is hard to do but letting people make mistakes and learn from it is often the most powerful. Then let people own their mistakes by saying "It is your mistake, you fix it".

Question Four

Richard, can you share the story that occurred in the 1980's of what ‘old Joe' found when New Zealand Posts new Board made an inventory of what they owned?

The new directors of the State Owned Enterprises were shocked to find that the government trading departments did not keep asset registers and did not know what they owned. They hired consultant with clip boards to make a record. In the post office they found a warehouse of half a million old black dial phones in case the dial phone makes a come back.

In one huge warehouse in Lower Hutt the consultant found a packing case the size of a room. "What is in here?" he asked.

"I do not know" said the foreman. "It was here when I started".

"Who is the oldest employee?" asked the consultant.

Old Joe was summoned who said that he had always wondered what was in the case.

To the horror of the employees the consultant took a crowbar and attacked the case to reveal a brand new 1936 petrol driven Bedford truck. They put petrol in the engine. Turned the crank handle and the engine started.

"If the tires were not flat we could have driven it to the dealer and asked for a refund".

Out of the Red $29.95 by Richard Prebble The untold story of NZ's biggest business turn around.... "That spring morning I walked into the Prime Minister's office still fairly green. I walked out the biggest businessman in New Zealand history - as chief executive of twenty billion dollars' worth of business (in todays terms about one hundred billion). I was in charge of the country's air, road and rail systems, it's national post office and phone company, half the country's forests, all the Landcorp farms, an insurance company, a bank, a computer company, all the nation's electricity generation and the national grid, air traffic control, a property company and a printing works"

Out of the Red is the untold story of one of the biggest business turn arounds ever: How changing the culture was the key to turning 21 government trading departments from huge losses to being profitable businesses. www.richardprebble.com has a couple of audio clips from Out of the Red.

ends

© Scoop Media