Kaikoura Whale Watch is recognised as one of New Zealand's most distinctive and successful tourism ventures. It provides tourists with close up experiences of sperm whales gathering and feeding off the Kaikoura coast.
Whale Watch was formed in 1987. After being turned away by mainstream banks, local Ngāti Kuri pledged their meagre assets to secure a commercial loan from an indigenous peoples' bank. The Whale Watching operation proved successful and a second vessel was bought in 1989.
To expand, local Ngati Kuri then went to their tribal authority, the Ngai Tahu Māori Trust Board, with a proposition to borrow money. The board agreed and also bought a major shareholding in the expanding company. Whale Watch is now entirely funded by cashflow. Whale Watch is still growing steadily. In 1995 the company shared the Whale Watch experience with 40,000 people, 90% of whom were from outside New Zealand.
Whale Watch has been responsible for a huge increase in visitor numbers to Kaikoura. In 1987, 3400 people visited Kaikoura. By 1995 this had increased to 88,000. The company's operation has stimulated investment in new accommodation, restaurants, and other sea-based tourist ventures in Kaikoura. Predictions are for further rapid growth for Whale Watch and the township over the next five years. Whale Watch is now the single largest employer in Kaikoura. In peak season the company employs up to 70 people directly and supports many extended families (See http://www.whalewatch.co.nz).
Wally Stone is the chairman of Kaikoura Whale Watch. He was a founding director and in 1993 took over as CEO. Wally has extensive experience in economic development, including experience with the Department of Labour, Community Economic Development and Internal Affairs. He was formerly a national manager for community owned companies and small town economic development and worked in economic development for ten years. He has served on a large number of boards and organisations.
Wally is also chairman of Tourism New Zealand, and Kaikoura Investments Ltd. He sits on the board of other companies including Mainpower New Zealand, Coffee Culture, and Clifford Bay Marine farms. He also advises a number of not-for-profit organisation and other committees.
Kaikoura Whale Watch is a private company owned by Ngai Tahu Holdings Ltd and the Kaikoura Charitable Trust. As such its activities are governed by the Companies Act 1993. Whale Watch owns four registered subsidiaries, all of which are private companies in their own right and follow the model of the parent company.
The company structure is a standard business structure which enables Whale Watch to carry out its activities. This is a standard business structure and well known by the business community. Wally notes that the company structure was the most practical vehicle for Whale Watch to adopt. It has used this structure since 1988.
The core purpose of Whale Watch is to be a successful business and use that success to empower both the shareholders and stakeholders. Whale Watch strives to be the best and most successful business it can.
Wally notes that there are restrictions on almost any industry or business in New Zealand and although Whale Watch has some unique regulatory conditions, the majority are the same as any other tourism business including general compliance issues, marine regulations, and Department of Conservation relationships.
Whale Watch's key stakeholder relationships are identified as shareholders, consumers, the wider tourism industry, strategic partners, their business partners' shareholders, and Team Whale Watch itself. Wally notes that a key stakeholder is "anyone who has decision-making influence over our operating environment". He says that this is a long list.
Whale Watch Kaikoura's board is made up of five directors, a number that currently suits the company well.
In terms of board make up the company examines a number of factors to select a good multidisciplinary team. Wally notes that certain skills and behaviours are taken as givens such as an understanding of core purpose as well as the basic core expertise necessary to hit goals.
The company's shareholders have the ultimate power to appoint and remove board members. The company therefore ensures shareholders are aware of the strategic direction in order to constantly assess whether it has the skills to achieve the business goals.
Legally, the majority shareholder gets three seats on the board with the minor partner receiving the remaining two. However, in reality the board make up has been decided through a consensus of both partners. Wally believes this approach is healthier. Although the constitution has guidelines for appointment processes Wally likens these to the "rules for a divorce" He notes, "We like to operate at a higher level than that by being smart."
Wally also believes Whale Watch does not find it hard to attract quality people for its board of directors, but notes this was not always the case. The company constantly seeks expertise in operations and prospective directors must understand the shareholders' values, possess strategic capability and have technical expertise.
Whale Watch has "been in the game a long time". It has used this experience to build up internal skills and expertise. In terms of developing its leadership the organisation watches what happens in the market and examines its business partners. Wally notes the business is "constantly on the look out for good people" and that "in business you get a sense for the top performers." Whale Watch uses this "sense" to invest inhouse by identifying potential leaders and "creating stretch" to demonstrate ability. However, this process is performance driven and the opposite can arise. Wally notes that the "key thing is you can't purchase excellence, you can only reward it. You are really looking at rewarding people who deliver results."
The company's shareholders have the ultimate power to appoint and remove directors at any time. The organisation holds an annual general meeting where shareholders are able to measure performance on the year's targets and get a sense of the direction and goals for the coming 12 months. Shareholders can also request special meetings and have the right to express their views as they see fit.
Although this is significant, shareholders have no rights to interfere with the day-to-day operations or management. Board members are the same. Management is accountable to the board on a monthly basis and the board of directors is accountable to the shareholders through the AGM.
Wally notes that although the shareholders are able to measure performance at AGMs, this measurement is a historical view of performance and overall operational view. The true health of the organisation is measured in terms of its positioning to take advantage of future opportunities, financial position, the quality of its people, and the quality of its analysis and decision making. He notes the organisation should grow each year in its own capability. This will enable it to do "bigger and brighter projects".
In terms of ideal leadership, Wally is clear that a leader must be visionary, a long-term planner and possess entrepreneurship. He notes that the current business focus on governance and management portrays it as risk averse and designed to minimise and protect the asset.
Wally believes growth requires entrepreneurship. The skills required in the management of financial operations and legal compliance are all givens but he notes there is an X-factor. An effective director must be able to lead and contribute to a team and demonstrate this from the top. They must understand and be able to motivate management. They must possess the ability to paint a picture of the future and enable people to grab that vision and realise it.
Additionally they must be clear communicators, able to keep messages simple and precise. They also need to know their own strengths and weaknesses. These are all important elements.
Wally believes that the governance style depends on the strategic direction the board is taking. Are they protecting or growing the asset? Depending on the particular thrust of the organisation it should surround its board with the appropriate people. Wally notes that "governance these days seems to be more about protection rather than innovative growth."
He also believes a fear of failure is holding back Māori organisations but is adamant that "if your motivation to succeed is greater than the fear of failure, you have a greater chance of being successful" and, "if we were afraid of failure we wouldn't have started." Wally explains that "governance appears to be bogged down with measuring performance. This is backward looking - any organisation that wants success must look forward."
The tourism market is extremely competitive and very volatile. World events such as the September 11 bombings, and SARS can have a big impact. However, Wally notes that most New Zealand industries experience volatility. He believes the difference is how you manage it. Whale Watch treats competition and volatility as a normal part of business. Wally notes, "You need to be smart about how you do this". The company's business is dependent upon the leisure dollar and understands there is a huge amount of choice for international visitors. However Wally believes the more you understand the market the more you can mitigate risks and turn them into opportunities and profit.
A key factor in this process is to have the right mindset and Whale Watch adopts a "negatives into positives" approach to compliance and regulations. Wally notes that compliance must become treated as a natural part of business and built into how the company operates. Matters such as compliance issues are built into best practice guidelines to inspire best practice. This in turn is used to motivate and inspire staff so compliance becomes a non-issue.
By being positive, entrepreneurial, creative and innovative, Whale Watch treats barriers as opportunities. The company applies quality analysis and smarter planning which leads to smarter decisions which must be actioned. Wally says it is "all about attitudes."
He believes strategic planning is one of the strengths of the organisation and notes that the ability to set a vision is a key factor in this. He believes the vision must be owned by everyone and must be allowed to infiltrate their business partners in order to leverage off them. It must be simple and clear. Strategic planning must employ quality analysis of market information where the consumer is king.
Whale Watch seeks to make the vision a living culture of the organisation. Wally notes it cannot be an academic exercise and it must make sense for the people to own and buy into because people do things they believe in. "If you line up all the levels, you are more likely to go forward together. Success comes from making others around you successful."
The Whale Watch board and management meet regularly and Wally believes this environment is important. Management are living the day to day activities and can use the board to critique or validate the company direction or implementation. Wally says "when you have this right the process becomes very powerful." Directors must add value and can sap enthusiasm if they micromanage. Wally notes that "when everyone has a shared vision meetings become dynamic and add quality to the business. It can make it exciting but these dynamics are rare."
Any potential conflict is resolved by adherence to clear principles and values. Wally notes that "when difficult decisions arise we go back to this - without fail these give clarity and a way forward."
Because shareholders have the ultimate power to remove or appoint directors they are comfortable enough not to interfere with workaday operations. According to Wally, "Good leadership is about going forward and you need a solid base of business skills and compliance management, but business involves defining a future based on analysis, planning, expertise and the ability to motivate and inspire." These are all issues of leadership. Wally believes the risk management and protection style of governance does not create the scene to drive business forward.
At this point in time Whale Watch is satisfied with its internal structures and processes. The company constantly reviews its processes as a standard part of the business culture.
Wally believes New Zealand's population "cannot sustain half the things we have" and notes that any regulatory changes should focus on improving the business environment. Regulations are designed to create a business environment and this environment must instil a sense of motivation to succeed and foster entrepreneurship. Government has a role in creating the environment.
He notes that some organisations tend to lose focus in regards to government and treat it as a key driver, but notes, "The moment you become reliant on a third party, such as government, you have failed to identify that as a risk."
In terms of government capacity building Wally believes government should invest "where it will get the best returns". This will be achieved by backing winners. "Our organisation promotes the best. Those with passion, desire and the will to succeed. We don't set up people to fail. Central government should do the same and apply the resources to get the best return. We must deliver results that justify the resources - this should be the same for government."
Government does have a role to play and a key question is where to put resources. He believes government intent is good but the effect is often lost and policy can fall over due to things getting complicated. The good intent gets watered down in terms of implementation and he notes that by appeasing everyone government helps no-one. Wally believes we could achieve improved practical results by identifying future leaders, investing in them and getting them into organisations to shape them for the future.
Wally believes a Māori organisation is successful when it is seen by its peers to add value to the industry. "When the entire industry looks at you as a leader then as Māori we are achieving the ultimate."
Wally notes that success enables Whale Watch to be more Māori focused. "As a business we have a unique ownership structure and philosophy and we are able to give effect to these values and culture because we are successful - we are empowered to make decisions. Success enables the company to reflect its values and this is empowering."
He continues, "We can do what we want - when we want to - the things we want to do reflect who we are. We are a company owned by Māori and proud of it. We are not owing to anyone and have control over ourselves spiritually, and economically. We can make decisions without seeking permission from anyone else." This has been achieved in part through "empowering our own people with a vision of the future."
Whale Watch constantly strives to be the best it can. Wally says, "I don't think we can ever say we've arrived or reached our full potential - we just work harder, smarter and continue to chip away."
Last modified: 31/05/2011
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