This new government is almost perfectly replicating the burn cycle of a startup business.
Like a tech startup, the popular notion is that it has two stages: a great idea and a spectacular payoff.
In reality, this government is behaving like a tech startup because there is an awful lot of work to do between these two points.
There are six distinct stages, each with specific needs in terms of growing internal competencies, building an adviser team, and creating a scalable infrastructure to support growth and get to the finish line. For a Labour-led government, that finish line is the next election, and the next, because their big ideas are such that they need three terms to see stuff actually altering society and New Zealand as a whole.
This has occurred in this government through the policy formation processes of its three coalition partners, and came to a conclusion at the election and coalition document, and first Speech from the Throne. Through the coalition document, the roles of the founding members were determined. There is no doubt from the polling that until these ideas start delivering, the competitor will continue to loom massive.
This is where the ideas take shape, and the initial cash burn amount is signalled. In this government, this was signalled very early through the mini-budget. But as with all early cash requirement announcements, it was out massively. The second part of this is what they are doing now: putting concepts out there, realising that it will take much, much longer to get a political payoff for the major concepts that they have underway (such as shifting New Zealand’s investments from housing to the productive sector, building rail lines, housing, altering child poverty, and lifting consumer spending with big sectoral pay increases). The PM has made the black and white commitment that there will be no exceeding the cash burn requirement through breaking their imposed debt rules.
Not all policies survive the first big burn, which is what we are going through.
There’s a central need for customer engagement. As a startup hybrid government with very little cabinet experience, they are slow to get to this. Thankfully the Prime Minister is the communications expert in Parliament right now; she’s back, and it’s showing. They’re a long way from the great “baby picture” phase of the first quarter, but they are getting out in the field as they should.
It’s yet to be determined whether all the hundreds of influencers on the 170+ committees – the “angel investors” spending their reputations into this cash burn period – are really getting the payoff they might be entitled to. Tactically it’s smart to engage so many because with so many professionals engaged from so many fields, the capacity to critique is decreased. It shows that many believe that this startup is real. They are all motivated to ensure that it hits its milestones.
But this government is deep in its burn cycle. It’s spending political and taxpayer capital all over the place, it’s amping up the marketing with sustained promises of what it will deliver in the years to come, and it’s working all the hours God has given it to get there. Lower-order management is due for a re-tool to keep the rest of the sales team hungry.
This government is a long, long way from generating much political cash.
In their second and third year, they’ve done their prototypes, tested their political markets, costed them, and are ready to roll out the policy ideas rapidly. It is now out of startup mode and promising mode, and in to the phase of being an assured real government. The customer base expands significantly, requiring additional customer relationship management tools. That means every single Minister rehearses before every media interview, there’s a team in the PM’s office who has full command across the media scape, and there is one comprehensive message calendar that the government is working to, and as much as possible they are setting the agenda within its market.
This is the time where teams change, such as the formation of the Ministry of Housing and Urban Development, and new PPP’s and UDA’s are formed. It’s also where accounting and banking needs become more technical, especially where selling your concepts across state or international boundaries as this government is. In the NZHerald this morning, Canadian pension fund CDPQ is ready to roll over procurement processes we are familiar with here and get into public consultation with NZTA on light rail even though they haven’t been awarded the job. In time we will see Cabinet and public servants change as the risks of scaling alter the experience needed to deal with this.
This government is not yet at scaling.
This government will have profitable growth when they sustain their popularity not on whether the Prime Minister is pregnant (or other irrelevant media story), but on whether citizens see that their policies really work, and that conviction is reinforced by within both MSM and digital media. That means it’s not just the occasional columnist; it’s when most product reviews come in and they are good.
The measure of profitable growth is whether this government gets re-elected. Which is kind of like a really big rights issue. The IPO was the first election.
And finally …
Yes, all things come to an end, and Labour governments are as bad at this as they are succession planning. In 2023 or 2026 they will lose because that’s just the way things are. But a really smart company has already invested all the political capital that they have been salting away by appointing friendly judges, friendly University Vice Chancellors, friendly Chiefs of Police and of the Defence Force, stacked the ACC and NZSuper and EQC Boards, tilted NZ On Air and TVNZ with their people. In some cases, they are rewards for Cabinet Ministers who could conceivably come back. You need them all there, because you know your children are going to want to launch their own – and they will need their own Angel Investors ready to vent a little of their own personal capital into that new burn, that new government.
In the meantime, this is the burn cycle.