What New Zealand really needs to tackle its productivity problem

13 November 2025

Business and economy, Sustainable impact, Business School, Centre for Innovation and Entrepreneurship

Rod McNaughton is professor of entrepreneurship and director of innovation and professional development. He was a contributor to the Spark report, Lifting Productivity.

New Zealand's productivity problem touches everyone. It determines how fast wages grow, how competitive our businesses are, and how much we can afford as a country. Everyone agrees it's holding us back, but no one seems to know how to fix it.

A new report from Spark New Zealand, Lifting Productivity: Moving New Zealand from Getting By to Getting Ahead, helps explain why. The report's survey of 397 business leaders found that two-thirds believe New Zealand has a productivity issue, yet three-quarters think their own firms are already more productive than their competitors.

This contradiction tells a story. We know there's a problem, but we tend to think it's someone else's fault: the government's, big business's, or "the system's".

In reality, productivity begins with the everyday choices made within firms. It's influenced by how we lead, how we invest and how we learn. When Spark asked me to contribute commentary for the report, I focused on that deeper issue.

The real barrier isn't technology, it's capability. How confident are we in using the tools we already have, and how prepared are our leaders to build productive, adaptive organisations? As I wrote in the report, "Productivity is a question of capability before capital, and of leadership before tools."

Technology doesn't improve productivity on its own; it only works when organisations know how to use it well, writes Rod McNaughton.

The report shows that 77 percent of the business leaders surveyed plan to invest in new technology over the next three years. Yet fewer than half currently use cloud systems, and only 29 percent are experimenting with artificial intelligence. The barriers, such as cost, lack of expertise and resistance to change, are familiar and persistent.

But these aren't really technical barriers. They're leadership ones. Technology doesn't improve productivity on its own; it only works when organisations know how to use it well. That means leaders who can align people, systems and strategy, not just buy software and hope for the best.

The most productive firms aren't necessarily those with the most cutting-edge tech, but those that use what they have with discipline and intent. They measure what matters. They invest in training. They view learning as an integral part of their job, not a one-time exercise.

Spark's case studies make that clear. Air New Zealand's private 5G network, Kiwibank's AI voicebots, and Halter's virtual fencing technology all delivered measurable gains, including faster processes, greater accuracy, and reduced waste. However, these successes relied on leaders who redesigned systems, supported staff through the change, and built confidence in new ways of working.

Without that leadership, technology investment risks becoming a sunk cost rather than a driver of growth.

If we want to move from getting by to getting ahead, we need to invest as much in how we lead, learn and scale as in the tools we buy.

New Zealand's economy is powered by small and medium-sized firms. They can be resourceful, innovative and determined, but too many get stuck in survival mode. They rely on personal relationships and intuition rather than data and systems. That might work when a business is small, but it limits the ability to grow.

We love the story of Kiwi ingenuity, the individual who builds something clever in a shed and makes it work. But in a world driven by scale, that story no longer ends well enough. Real productivity growth comes from what happens next: whether that innovation becomes a repeatable, teachable process that others can use.

That's where capability comes in. Scaling up takes management skill, systems thinking, and the confidence to lead through uncertainty. These skills don't come naturally to every founder or manager; they have to be developed.

Spark's report urges businesses to "reframe productivity as competitive advantage". I'd take that further: productivity is a learnable capability. When firms treat it that way, they stop seeing it as an abstract economic statistic and begin to see it as a practical, daily discipline.

This is where universities, training institutions and industry partnerships have a vital role. At Waipapa Taumata Rau, University of Auckland, we work with organisations that aim to enhance their leadership and innovation capabilities.

Through research, executive education, and the programmes run by our Centre for Innovation and Entrepreneurship, we help develop leaders and entrepreneurs who know how to adapt, scale and make technology serve strategy, not the other way around.

Spark will explore these themes further at its Accelerate Conference, bringing together leaders from business, government and academia. It's a timely conversation, because productivity isn't an abstract economic term; it's the foundation of our national well-being. It affects wages, public services, and the resilience of our economy in the face of global shocks.

Technology can accelerate progress, but it can't replace capability. The future of New Zealand's productivity will depend less on the sophistication of our software than on the sophistication of our leadership.

If we want to move from getting by to getting ahead, we need to invest as much in how we lead, learn and scale as in the tools we buy. Productivity begins not in a factory or a boardroom, but in the mindset of every leader willing to turn change into performance.

This article reflects the opinion of the author and not necessarily the views of Waipapa Taumata Rau University of Auckland.

It was first published by Stuff

Media contact:

Sophie Boladeras, media adviser M: 022 4600 388 E: [email protected]