As I posted last week, the value of the goods New Zealand exports to China grew by a factor of about 10 between 2001 and 2014, thanks largely to the free trade agreement NZ and China signed in 2008. In our report The Auckland-China Relationship: Rhetoric, Reality and Opportunity, we looked at how service exports had done, too. We couldn't make a year-on-year comparison because of the way Statistics NZ releases the data, but it's clear that the services we sell China didn't boom nearly as much. They increased by only about 40% in real terms between 2006 and 2013. Nonetheless, the chart below shows two pieces of very good news for NZ.

 Value of NZ's service exports to China, 2001 and 2013, expressed in 2014 dollars.

Value of NZ's service exports to China, 2001 and 2013, expressed in 2014 dollars.

The first story there is the one you know from the press: the number of Chinese tourists visiting New Zealand has gone through the roof in the past ten years. 371,552 came here from Mainland China on tourist visas last year, according to Statistics NZ, and more of them are "free and independent travellers" (setting their own itinerary, rather than travelling in groups) than ever before.

But there's another story there, too. It's the rise of business and financial services, which grew from a scratch beginning to $84 m in 2013. You won't find the business and financial services sector touted anywhere as an area of economic opportunity for New Zealand. In fact, the MFAT-NZTE China Strategy doesn't even mention it. But it's good news for New Zealand. And it's great news for Auckland. Auckland is home to the bulk of our business and financial services, and to the majority of our Mandarin speakers, and it's perfectly placed to capitalise on this digital export business.

AuthorNicola Rowe

I've been reading the New Zealand Initiative's report, The New New Zealanders: Why Migrants Make Good Kiwis. The discussion of whether NZ's culture is being "diluted" (from p. 24) put me in mind of a finding from The Auckland-China Relationship: Rhetoric, Reality and Opportunity, a report I wrote for the Committee for Auckland that was published last September. We explored a number of anti-Chinese perceptions, including the fear that Chinese are "taking over" suburbs. Turns out, it's not true - Chinese make up the same proportion as Indians in the most highly-concentrated suburbs for their respective ethnicities, and the highest non-Pakeha density you'll find in Auckland actually comes from Pacific Islanders, who are twice as concentrated as either their Chinese or Indian counterparts. Not that you ever hear anything about that from the anti-China crowd!

 (Picture from: Nicola Rowe, "The Auckland-China Relationship: Rhetoric, Reality and Opportunity." Committee for Auckland, 2016.)

(Picture from: Nicola Rowe, "The Auckland-China Relationship: Rhetoric, Reality and Opportunity." Committee for Auckland, 2016.)

AuthorNicola Rowe

At Stuff, Mike Joy (Massey University) and George Preddey (ex-DSIR) reckon New Zealand's point of difference in global product markets is being clean, green and 100% Pure. That's true of tourism. For products, though, I reckon they're dead wrong.

'New Zealand's point of difference in differentiating its products in world markets centres on its natural environment.  Its "clean and green/100% Pure" image is promoted as a global brand. Without this brand, New Zealand has little to command market status and an attractive international identity.' – Mike Joy and George Preddey, Orthodox economics conceals real costs of agriculture, Stuff, 28 October 2016.

Fact is, we've succeeded on world markets because we've been able to pump out commodities. Not because we're clean or green. Here's a look at our dairy exports for 2015. Last year, wholemilk and whole milk powder made up four fifths of our dairy exports, and contributed 9.8 billion dollars to NZ's GDP. Those are commodities, with as little value added as you can get. Being perceived as clean and green had nothing to do with it.

 NZ dairy exports, Jan-Dec 2015 (2015 NZD)

NZ dairy exports, Jan-Dec 2015 (2015 NZD)


Should NZ, Inc. try to brand export products using the "100% Pure" theme that's worked so well in tourism? It's worth noting that not even the New Zealand Story (the government-sponsored national branding and export support programme kicked off by Tourism New Zealand, NZTE and Education New Zealand) has gone with that. I can't see how it could be a good idea. But that's another question for another post.

AuthorNicola Rowe

The Royal Australian and New Zealand College of Obstetricians and Gynaecologists (RANZCOG) is losing a tomato fight on social media right now, and it’s mesmerising – in a <headdesk>  kind of way – to watch.

The Australian newspaper reported this weekend that RANZCOG’S Victorian and Tasmanian branch was planning to hold a debate at its scientific meeting next month on the topic, ““Membership ­before maternity leave: should every registrar have a Mirena?” (Mirena is a brand of IUD; registrars are doctors training to be specialists.)

The internet was there immediately. On Twitter, the Australian medical bloggers @ketaminh, @dr_ashwitt, @drnikkistamp and @DrEricLevi, whose followers add to almost 20,000, began marvelling collectively. Initially at how anyone could think trainees’ reproductive rights were a suitable topic for a 40-minute debate, but very quickly, and in some amazement, at how RANZCOG was flubbing its own response. I have every sympathy for RANZCOG’s president, Professor Michael Permezel. It can’t be fun when your new year slithers in with a mess you’re not responsible for (RANZCOG won’t have chosen, or vetted, the conference agenda of a regional branch). Professor Permezel described the topic to The Australian newspaper as “in bad taste;” the Australian reports that RANZCOG is, in the President’s view, “the most progressive of the specialisation colleges.”  But defending yourself to a reporter isn’t effective if you’re simultaneously being hung out to dry on Twitter. If RANZCOG wants to take control of the message, it needs to turn to the medium where the debate’s taking

How did RANZCOG respond on social media? As Eric Levi points out in a long, thoughtful blog post on the dangers of not being on social media, badly. One of the rules of internet branding is to stake out an online presence to prevent anyone else defining you. But the College’s Facebook page was merged over the weekend with its Wikipedia entry. (Not smart, guys: anyone can edit you.) And the Twitter accounts @RANZCOG and @PermezelMichael were claimed, not by the College or its president, but by satirists seizing the moment. Generously, the @RANZCOG account was then given to the College, but it doesn’t appear to have made much use of it: in the last 20 hours, @RANZCOG has tweeted, rather obliquely, to say that it “supports the reproductive choices of all women, including its trainees.” And it’s tweeted about the importance of vitamins and minerals in pregnancy, and about maternal mental health. The College’s webpage is unchanged.

Honestly, it’s not difficult. Here are five suggestions.

  1. Go where the story is. (It’s not in The Australian. It’s online.)
  2. Stay with the story. (I wouldn’t like to spend the first weekend of my New Year dodging grenades, either, but you can’t check out of the narrative by telling The Australian you’ll call the Tasmanians on Monday to find out what’s going on).
  3. Respond in 140 characters or less. (I hope this means distancing yourself from whoever wrote the conference agenda, but, whatever the message, get it out there. Concisely.)
  4. Stay on message. (Less about vitamins, post-Caesarean section driving and maternal mental health, at least for now.)
  5. Engage. One tweet saying, “This sounds extraordinary – I’ll look into it” would go a long way. 

As it is, though, the story is evolving, and I think it’s got away from you.

AuthorNicola Rowe

Four weeks ago, I listened to a genetics lecturer tell a medical school class that 23andMe, a much-heralded biotech startup established to provide people with an interpretation of their own genetic information, had been largely shut down. “Which is good,” she added with satisfaction, “because people shouldn’t be able to get their genetic information without counselling and support.” But now 23andMe is back – mostly.

23andMe collects raw data through a saliva test kit. The FDA, citing concern about the potential consequences of erroneous test results, ruled two years ago that they couldn’t market that kit as a way to obtain information on genes or traits. Since then, you’ve still been able to access your raw test results as strings of SNPs, but you've had to do any interpreting yourself: the site has mainly offered information about ancestry. Still, 23andMe seems to be doing just fine: a month ago, in October, it raised $US 115 m in Series E financing, and, starting this month, it's making health information available to US customers again.

I'm not denying that the lecturer who advocated counselling before disclosure had a point. I'm a customer of 23andMe, and I remember clicking to see which variant of the APOE gene I had. The E4 allele is associated with a much higher risk of Alzheimer’s, and, though the disease doesn't run in my family, I was mildly curious. I clicked. Are you sure? the website asked me.  And my mild curiosity spiked briefly into terror.  But I chose to click again. Whatever you would have decided, wouldn't you at least have wanted the choice?

My parents wrote my genetic code, and I'm glad 23andMe is returning so I can read it. I don't think using 23 and me to read what's written by your genes is really any different from using a mirror to see your face. Both experiences can freak you out. Both experiences can send you to the doctor. But, fundamentally, both experiences are about seeing who you are. There was something perverse about taking that away.

AuthorNicola Rowe

Why is drug development in CNS so damnably difficult? This topic exasperates me, and I'm not the only one. Just noticed this article from 2013. To the author's reason's, I'd add: animal models predict results in humans more poorly in CNS than in, say, anti-infectives. And side effects show more scatter as you move through Phases I, II and III and work with ever-larger populations in trials, so your risk loading is much higher as you move towards approval.

AuthorNicola Rowe

I always knew I was a free rider, and, to tell you the truth, I never quite shook the squirm. See, I’ve read Slate all over the place. In the UK. In Switzerland, for years. And in Germany – it was one of the sites I tried to load, I think, when someone I was working with said, bemused, “An aeroplane’s just flown into the World Trade Centre.” I imagined a Cessna, and typed into the browser bar, to check. And couldn’t raise it. Huh. Or Salon. Or Slate. What’s with that?

Of course, my loyalty doesn’t matter to Slate.  The magazine can’t monetise me, for all that I’ve followed it from the beginning. That was in 1996, when it was still part of Microsoft, and still chasing Salon, before its first attempt at charging for content, and before ornery contrarianism replaced The Elements of Style.

But, to be honest? I know what was in it for me. I was improbably addicted to Slate’s Dear Prudence advice column. There was nothing in it for Prudence, though: Slate’s US-based advertisers want US-based customers. All the far-flung among us do is rack up bandwidth, which is undoubtedly why Slate has just introduced a paywall: $US 5 a month.

There are only two reasons to do anything in business, said someone who should know: to increase revenue or to lower costs. So there are either enough of us here in the Slate diaspora to be driving bandwidth costs, or to be worth considering as a subscription revenue pool. Or both – but I hope it isn’t both. Fudged thinking gives a kludged strategy.


AuthorNicola Rowe

I know why I want multinational corporations to set up  shop in New Zealand. But what's in it for them? The Economist nails part of it: New Zealand is a first-world country that’s a very long way from anywhere else. The message? Screw up here, and you'll get away with it; succeed here, and you can roll out elsewhere, fast.

“If you mess up and burn that market, it’s not that big of a deal,” says David Stewart of Fade, a photo-sharing firm.

It’s not just about products. I've seen quite a bit of business model innovation in New Zealand. Sometimes, it's because they have to scramble like mad to make margin; sometimes, it's because everyone here knows everyone else, and things move so much more quickly. We don't pitch that advantage as often as we should. I'd love to be able to say, "Come here. We’re quick; we’re adaptable. If you're going to do business differently, give it a spin here." 

AuthorNicola Rowe

"A strategy that is not implemented is merely a good idea," said Bruce Henderson. Implementation without strategy, though, is like a nightmare you can't wake up from.

Generally speaking, there are only a few ways to make money on the Internet. There are e-commerce companies and marketplaces — think Amazon, eBay and Uber — that profit from transactions occurring on their platforms. Hardware companies, like Apple or Fitbit, profit from gadgets. For everyone else, though, it more or less comes down to advertising.

In the New York Times, Nicholas Carlson looks at What Happened When Marissa Mayer Tried to Be Steve Jobs. His conclusion?

It’s unlikely that her personal turnaround plan included shrinking a $30 billion company into a $5 billion one, all to combine it with a $3 billion company and realize $1 billion in cost-savings. But it’s also unclear what, if any, other options she has.
AuthorNicola Rowe

So, you have to write a feasibility study! Don't panic, and for goodness' sake don't Google it, or you'll end up thinking you need a degree in statistics before you begin. It's as straightforward a task as they come.

I've written a short six-step guide to doing a feasibility study. Download it here! If it's useful, feel free to circulate it.

If I can improve it, please tell me how. If I can get it to a point where it's really helpful, I'll turn it into a proper e-book, and I'll follow it up with another on how to do a business case, which is a feasibility study's older, bigger sister.

AuthorNicola Rowe

"You’re from New Zealand? I’ve been there - it’s so beautiful.” It took me years to hear this as an insult.

Yep, an insult. Let's flip it: “You’re from Germany? I’ve been there - it’s so beautiful. The chalk cliffs of Rügen! The undulating Sauerland! The Mecklenburg Lakes, the...” Stop, already. You sound like you're missing a cog. No one goes to Germany to see lakes or the Sauerland. Ask anyone who's been there what they saw, and they'll mention a string of attractions: Marburg’s cobbled streets, Bavarian castles, and the way Heidelberg nestles around the river Neckar. The half-timbered houses that sweep north, changing in pattern from village to village; the Rococo acid trip offered by the Wies church near Steingarden; Berlin’s Museum Island, and, of course, the Oktoberfest.

What do all these things have in common? They were created - none of them would exist without human intervention. But, in the Rough Guide’s top-ten collection of things to see here, the only entries created by human hand are the Taieri Gorge Railway and the Otago Rail Trail - both of which are beaten out, in the ranking, by tree ferns.

Attractions aside, what is Germany known for? (Don't mention the....) The Germans are niche specialists: manufacturers, not just of machines, but of the machines that make other machines. We know them for high technology: semiconductors, precision engineering, and cars; before that, chemicals. (Those three groups make up 42% of Germany’s exports by value; primary products, listed by the Federal Statistics Office, fall under “other”.) These are high-knowledge industries, and high margin. Whereas seven out of every ten of our export dollars come from primary products, in Germany, that figure flips: fewer than one out of every ten euros earned from exports comes from primary products.

But the 100% Pure rep pushes tourism and our primary food exports more than anything else, and that’s a problem: as the Productivity Commission has said, tourism has low productivity, meaning that we use a lot of time and effort, and don’t get a lot back for it, and the same goes for agriculture and fisheries. However, both industries absorb a lot of people - about 190K of us for agriculture, forestry and fishing (.xls), according to Stats NZ, and another 170 K in tourism. That's about one in six of us working in a minimally productive field.

On the other hand, electricity and gas are very productive, as is mining, which contributes sixteen times as much per hour paid to GDP as accommodation and retail, one of the pillars on which tourism rests. Less controversial industries are productive too: media, telecommunications and financial services also have above-average productivity. It's probably not a coincidence that those are IT-heavy industries: if you live on the edge of the world, IT is one thing that helps make distance vanish.

So do we really want to identify, to ourselves and to the world, as 100% pure? Or should we admit that there may be even more value in what we create than in what we show our tourists, or what we reap and ship abroad? If we could adulterate that purity a little, mixing in a little application and ingenuity, we'd have a really intoxicating - a really productive - combination. Let's be a bastard blend. Purity will only get in our way.

AuthorNicola Rowe

New Zealand’s cities have a hard row to hoe. Most of their revenue comes from rates, a tax on land, and unlike, say, the Swiss cantons, there are very few financial levers that Dunedin can deploy to persuade business to create jobs there rather than in Christchurch, 360-odd kilometres up the road.

If you can’t compete on revenue, you have to compete on everything else. So you’d think that New Zealand’s cities would be bending themselves into pretzels to distinguish themselves from each other. Is that the case? I looked at the vision each of our main centres has given itself.

Screen Shot 2014-03-09 at 9.25.18 pm.png

Dunedin’s vision is fairly clear. It wants (unsurprisingly, given its current makeup) to be a knowledge centre, and it also wants to be a business mecca, probably for the creative industries. You can see what it might try to attract, and, crucially, what it might say no to.

But looking at the rest, are you much the wiser?

Wellington could absolutely, positively distinguish itself, though it doesn't. Staying with our Swiss example, you can easily build a brand around being an arts and culture capital (think Wellington to Switzerland’s Basle), just as you can around being a commercial centre (think Auckland to Switzerland’s Zurich).

Auckland wants to become what the Germans call an eierlegende Wollmilchsau - an egg-laying woolly milk-pig, a beast that is everything to everyone, and so risks becoming nothing special to anyone. Competitively, the message to business is, We do everything: don’t bother looking anywhere else. And that’s fine, as long as no one does look further - but it doesn’t say much about what Auckland’s especially good at if they do.

Christchurch’s vision is universally applicable for the opposite reason: it’s so anodyne that it could apply to every decade from the 1850s - and perhaps especially the 1850s - on. Ironically, its message (“we’re safe and predictable”) runs counter to the one thing that’s recently put Christchurch on the map: the series of earthquakes that created opportunity through crisis.

Do our cities really understand that they need to compete with each other? .

AuthorNicola Rowe

A few weeks ago, I argued here that mergers were immoral: so few of them create value, and it’s so hard to predict which ones will, that I don’t think you can justify the risk they pose to shareholder value, or, more importantly, the anguish they put employees through.

Now, though, Myoung Cha and Theresa Lorriman have published an article in the McKinsey Quarterly that looks at the notoriously merger-happy pharma industry, arguing that there, at least, “megamergers have created significant value for shareholders.”

Let’s unpick that. The authors write that the median excess return was 5% above the pharma industry index. (In other industries, they helpfully add, megamergers create negligible value at best.) Since their pharma figure is a median number, it means that half the deals created less than 5% in excess value.

The authors don’t say how many created no value, or destroyed value, though they do say that ‘consolidation deals’ have positive total shareholder return (TSR) at the three-year mark, but that TSR turns negative after five years. In a consolidation deal, two companies overlap considerably (for example, each may have a neuropathic pain research programme at opposite ends of the country), and one swallows another. The acquirer then does one of several things to increase profit, most of which involve firing people: “accelerating revenue, improving the cost of goods sold, reducing overhead, promoting R&D rationalisation and consolidation, or improving working capital.” By contrast, a growth-oriented merger is one where a new company is created, or new markets are explored.

Where does that leave us? I’d argued that the unpredictability of mergers, and the pain they cause, meant you couldn’t justify the bet.

McKinsey tells us that half of all pharma mergers do create at least 5% excess value for shareholders, but that the proportion of those that are consolidation deals (and McKinsey doesn’t tell us what proportion that was) have negative TSR in 5 years. In my book, those are still unconscionable: no one profits, and the acquired company is plucked to the bones (McKinsey says an acquired company contributes just 10% of new-product revenue at the five-year mark, versus 24% for the minority company in a growth merger).

What if you’re planning a growth merger? You still face a conundrum, and McKinsey hasn’t given us enough data to tell us how well the dice are loaded. You have an x% chance - let’s call it a 50% chance - of generating an additional 5% in TSR, relative to your industry’s index. Is half a shot at shareholder payback worth the human cost to staff? That’s something CEOs - and shareholders - need to decide for themselves.


Disclosure: I worked on several pharma cases (though none related to mergers) as a consultant at The Boston Consulting Group (BCG). BCG is McKinsey's principal competitor.


AuthorNicola Rowe

The Matrix

This month, PHARMAC, New Zealand's medicine's funding agency, released a discussion document as part of a review of its decision criteria. In the document, you'll find something purporting to be a proposed decision-making matrix:

Screen Shot 2014-02-24 at 6.40.13 am.png

Got that? Didn't think so. With the best will in the world, this isn't a matrix. A decision matrix gives you a value for the intersection of two criteria, and - crucially  - it generally helps you make a decision. This doesn't do either of those things, though it does line the relevant factors up in a rectangle.

Let's remix the matrix

If we look at the diagram, we really see that Pharmac is showing us two sorts of criteria. One is how well a proposed treatment meets patient need. The other is cost. And each of these can be high - a good match to patient need, and a high cost - or low.

Screen Shot 2014-02-24 at 7.02.27 am.png

Now, we can sort the factors on the original diagram into our cost/benefit matrix:

Screen Shot 2014-02-24 at 6.50.36 am.png

This gives us a good idea of how PHARMAC might frame its decision-making for any given case:

Screen Shot 2014-02-24 at 6.52.19 am.png

You could go a step further, weighting the factors and grading each funding proposal against them. That would probably introduce pseudoaccuracy into a process that's intended to have a little wiggle room. But remixing the matrix this way frames the beginning of your deliberations: it gives you a place to start. You can then go through the various factors in detail, determine the ultimate point on the matrix - and reach your final funding decision.

AuthorNicola Rowe

It shouldn’t surprise us that everyone involved in healthcare – the Medical Council, Medsafe, Pharmac, the DHBs, pharma companies (and of course the poor old patients themselves) says they want the same thing: better outcomes for patients. Or should it?

Let’s think about the goals that some of these players have: Pharmac is one of the health system’s main cost-control points. Medsafe focuses on safety and efficacy. Patients really do want better health outcomes, while pharma companies – well! We’ll get to them. Though these goals may overlap, they’re not identical, and they don’t line up neatly to show an overarching, uniform interest in better patient outcomes.

We should be open about these interests, and we should recognise that they complement each other. Overall, New Zealand needs a system in which the pursuit of many complementary self-interests gives the best overall outcome possible. We don’t achieve that by persuading players to modify their own self-interest, but by regulating the framework within which each self-interest is pursued.

What does this mean in practice? Think of pharmaceutical companies, for example: notoriously, they pursue profit. But they are market creatures in a market economy, and to criticise them for seeking shareholder returns is like criticising a jaguar for being a carnivore: in the ecosystem in which they live, they cannot be other than they are.

The implication? If you want pharma companies to lower medication prices, the answer is not to appeal to them to be less rapacious, or more compassionate. The answer is to modify the framework within which they pursue their goal – by introducing fixed-reference pricing, or (as Pharmac has done so successfully that it has driven most of the larger companies offshore) by bundling an entire country’s purchasing power, and using that as a bargaining lever).

Claiming that everyone’s overarching goal is better outcomes for patients is woolly-headed. It leads to ineffectual exhortations, to misdirected energy, and to an inability to see, clear-eyed, where the true levers for change really are.

AuthorNicola Rowe

The Greens want to ban it. Labour tried to. And it's illegal everywhere in the developed world, except the United States. Yet DTCA - the direct-to-consumer advertising of pharmaceutical drugs - is, I argued in a paper (5 MB, pdf) presented at the NZ Bioethics Conference on Friday, here to stay.

The debate over DTCA has sputtered away for more than a decade: since 2000, JAMA and the Lancet's journals have published about one article a year on the topic, and the New Zealand Medical Journal is at the lower end of that range. The argument usually seesaws in a yes-but pattern - this aspect is bad! - Yes, but aspect this is good!.

In fact, though, none of the three main arguments against DTCA really hold water. It's a waste of time to refute them.

DTCA raises costs for Pharmac? Not that anyone's ever shown . The theory is this: if you raise disease awareness through DTCA, you'll get a flow-on effect as more people present to their doctor, more diagnoses are made, and, in the end, more prescriptions are written. And you could prove that - if you were a pharma company: to carry out the factor analysis necessary to disaggregate the effect of drug reps, journal ads, samples and DTCA, you'd need to know how much was invested in each, and where. Pharma companies do have that data, but you don't. (Then why do they bother advertising? Because, once one of them starts, everyone else has to pile on in if they want to maintain market share. But a fight for share isn't a fight to grow the market.) In fact, the weak effect of advertising to many people - who may not see an ad, and who may not decide to act on it - has anything like the power of a rep visiting a doctor. Restrict that - as Switzerland did - and pharma companies would really be in trouble.

TCA hurts people because it leads to unnecessary, harmful prescribing? Good luck with that one before the Health Practitioners' Disciplinary tribunal. It's hard to resist repeated requests, and people may be more likely to stick to a medication regimen if they've had a hand in choosing the brand. But arguing that a request leads to prescription and must therefore be pre-empted by legislation ignores the gatekeeper role of GPs, and is an abdication of professional responsibility. Remember, people make specific requests all the time - for benzodiazepines, for example. For opiates. For methylphenidate. Part of the GP’s job is not to give it to them. The FDA - no slouch when it comes to imposing restrictions - concluded many years ago that, despite "years of print DTC advertising, no rigorous evidence has been presented to demonstrate that DTC advertising has had any of the hypothesised ill effects"

... and so we should amend the constitution to ban it. Except that we probably can’t. S. 14 of the NZ Bill of Rights Act 1990 protects freedom of expression, and s.29 applies it to corporations. True, you can restrict it, but only as far as you can reasonably justify "in a free and democratic society.” And DTCA is already regulated - by the Medicines Act (which tells you what you have to include in your ads), by the Medicines Regulations (which tells you what you must leave out) and by the Advertising Standards Authority’s Therapeutic Products Code (which elaborates further). In light of the existing regulation, it’s difficult to see that abrogating a constitutional right because of potential but unproven harm, or because patients make GPs’ jobs harder by making a nuisance of themselves with product requests, is really going to fly.

AuthorNicola Rowe
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Why track your non-billable time?

If you provide professional services, you’ll probably have a revenue target to hit at the end of the year using your billable time. So much for this year’s revenue. But today’s non-billable time is tomorrow’s future revenue, and it’s the source, not just of more work, but of better work than the stuff you currently do. There are three reasons to track how you spend it: (1) so you’re putting it in the right places, (2) so you can free up time by finding activities to dump or delegate, and (3) so you know when you’ve done enough. And it's easy to do. From the plethora of free, cross-platform services available, I picked Toggl, which is quick, gorgeous and has great reports.

1. Spend time on the right things

Former Harvard Business School Professor David Maister, certainly the world's expert on professional services, points out in one of his excellent podcasts that, if you’re trying to increase revenue, there are four things you can spend time on: growing relationships with existing clients, spending time on prospects, catering to someone who is aware of a need, and, finally, catering to someone who is not aware of a need. (This last, he says, is “the act of a desperate man or a desperate woman who doesn’t get how the world works.")

What’s odd is this: professionals almost always agree that growing relationships with existing clients is the easiest way to win business - and not just more business, but better business. Yet, when you ask them how they spend their marketing time, you'll find that most of it is directed at future clients - or, rather, potential future clients. This means  brochures directed at non-specific targets, a website put up “because everyone has one,” and awkward networking events no one really enjoys, yet feels obliged to attend.

If you know how much of your non-billable time goes where, you’ll be able to sit down at the end of the year and ask yourself two things: first, was the amount and quality of business I won from each type of activity proportional to the time (and stress) I put in? And, secondly: if I’d entirely done away with the low-yield stuff, and put the time into growing existing client relationships or playing with my kids, would I be better off?

2. Find activities to dump or delegate

I belong to a business peer supervision group that recommended, a year ago, that I keep a detailed calendar of a single week. The results staggered me: the minutes spent here and there changing flights and bookings, rescheduling meetings and batting away minutiae didn’t just add up, they cast a long shadow over my week. Once you work out where your non-billable time goes, you can go through your log ruthlessly and ask whether anyone else could have done any of it - an assistant, virtual or not - or whether it would have mattered if you’d dumped it entirely.

3. Know when you’ve done enough

When you plan your year (and you do plan your year, right?), you’ll have a revenue target in mind, and you’ll have an idea of what you need to do to sustain your business and to improve it for the following year. You might be wrong about it, but you’ll have an idea, and one of the reasons to formalise and track it is so that you can calibrate your expectations, and direct your efforts where they have most impact. But you need to know, too, when you’ve done enough: budget out your non-billable time at the beginning of the year, and then, when you’ve met budget, stop. One of the nicest surprises about tracking your non-billable time is that, because you know how much you’ve done, that uneasy feeling of never having done enough evaporates, and you have more time for sunshine.

AuthorNicola Rowe