New Zealand’s Productivity Problem

With the New Zealand government announcing a renewed focus on growth, the conversation about our country’s productivity challenges has been reignited. I decided to sit down (virtually!) with ChatGPT for a 30 minute interview. Yes, AI played the role of journalist—asking me insightful questions, even interrupting me mid-rant a few times, and then writing it up into an article (See below).

We explored everything from the over-reliance on the housing market to the challenges small businesses face with investment, technology adoption, and a risk-averse culture. It’s a deep dive into the systemic and cultural factors holding us back.

Unlocking New Zealand’s Productivity Potential: An Interview with Kieran Lee of N16 Consulting

In recent years, New Zealand has grappled with a persistent productivity challenge, one that limits the country’s ability to unlock its full economic potential. To gain insight into this issue, I sat down with Kieran Lee, founder of N16 Consulting, a management consultancy specialising in operational strategy and improvement. Drawing on his experience working with businesses across the country, Kieran shared thoughtful perspectives on what lies behind New Zealand’s productivity problem and what needs to change.

Q: Kieran, let’s start at a high level—what do you see as the root causes of New Zealand’s productivity challenges?

Kieran Lee: At a macro level, our reliance on the housing market as a driver of economic growth has been a significant issue. Over the past 20-plus years, much of our growth has come through property investment. It’s been an easy, low-risk choice for many, especially with factors like no capital gains tax and easy lending driving that behaviour. But the problem is that it doesn’t contribute to productivity—it diverts capital that could have been invested in businesses, technology, and innovation.

At a more business-specific level, the landscape in New Zealand is dominated by small-to-medium-sized enterprises (SMEs), which often lack access to the expertise and resources that larger businesses have. Many of these businesses don’t invest in the latest technologies or productivity-enhancing systems. Combine that with a cultural tendency toward risk aversion—what we call the “she’ll be right” mindset—and there’s a reluctance to make big changes or investments.

Q: Why do you think there’s such a reluctance among businesses to invest?

Kieran Lee: It’s complex, but there are a few key factors. First, there’s the fear of losing control. Many small business owners have built their companies themselves, so they’re reluctant to hand over any part of their operations to external advisors or new technologies. That ties into another issue, which is the DIY mindset. There’s a strong sense in New Zealand that, “We’ve come this far on our own; we can figure this out ourselves.”

Another factor is a lack of awareness. A lot of the businesses I work with aren’t fully aware of what’s possible with new technologies like AI or automation. When they do encounter tools like ChatGPT, for example, they’ll sometimes focus on the imperfections—pointing out what it gets wrong and dismissing the tool entirely, rather than seeing the huge potential it offers when used correctly.

Q: You mentioned a “she’ll be right” mindset earlier. How does that attitude affect productivity?

Kieran Lee: Paradoxically, I think it’s a conservative, risk-averse way of thinking that can hold businesses back. Rather than aiming for growth or innovation, many leaders are satisfied with maintaining the status quo. That’s especially true for SMEs that have grown to a point where they’re earning a good living. At that stage, leaders face a big decision: Do we push for more growth, or stay comfortable? Often, they’ll choose to stick with what’s safe.

This mindset can also lead to a lot of firefighting. Leaders spend their time solving immediate, day-to-day problems rather than stepping back to think strategically. That firefighting mode becomes their comfort zone—they feel useful there, but it limits their ability to focus on long-term planning or investment.

Q: How do you think businesses can break out of that cycle?

Kieran Lee: It starts with prioritisation—helping leaders identify what really matters for their business. Simple things, like understanding their key challenges and opportunities, can create the headspace they need to think beyond day-to-day survival.

Another key is collaboration. The way I work with clients is very much about co-designing solutions. It’s not about doing the work for them; it’s about empowering them. By upskilling leaders and their teams, and involving them in the process, they feel in control rather than overwhelmed by external advice or systems. That’s where coaching and mentoring relationships can be really impactful.

Q: What role do you see technology playing in improving productivity?

Kieran Lee: Technology is a massive enabler, especially with AI making advanced tools more accessible. But as I mentioned earlier, there’s a knowledge gap. Many leaders don’t understand how these tools can help, and there’s also a fear of disruption—what happens if this new system doesn’t work, or what if it’s too expensive?

Bridging that gap requires education, but also visibility. Success stories from other businesses—especially SMEs—are crucial for building confidence. Platforms like Regional Business Partners (RBP) do a great job connecting businesses to resources and sharing those stories, but there’s always room to expand their reach.

Q: Do you think the government has a role to play in addressing these challenges?

Kieran Lee: Definitely. The government could invest more in programs to help businesses adopt technology. It’s also about creating the right incentives. For example, if there were more tax advantages for businesses investing in productivity-enhancing systems, we might see a cultural shift toward taking those risks.

Q: What’s your takeaway message for businesses struggling with productivity?

Kieran Lee: Don’t be afraid to ask for help. Investing in expertise, whether that’s technology or external advisors, isn’t about losing control—it’s about building capability. And remember, you don’t have to do everything at once. Start small, focus on what will have the biggest impact, and build from there. Productivity isn’t a one-time fix; it’s a journey.

With insights like these, it’s clear that New Zealand’s productivity problem isn’t unsolvable—it’s a matter of shifting mindsets, taking calculated risks, and embracing the tools and expertise that can drive meaningful change. If Kieran Lee’s approach is anything to go by, the solution lies in empowering businesses to take that first step forward.