Boards at the productivity frontier: turning policy into performance
Governance is the lever that turns LTIB ambition into firm-level productivity. Here’s how directors can make it real.
The Ministry of Business, Innovation and Employment (MBIE) and Ministry of Foreign Affairs and Trade (MFAT) have released their draft Long-term Insights Briefing (LTIB): New Zealand’s productivity in a changing world. The Institute of Directors (IoD) welcomes the focus on accelerating high-productivity activities and international integration. However, our submission highlights a missing ingredient: governance. Directors are where policy ambition meets real-world investment, innovation and scaling. For the LTIB to deliver, governance must be named and used as a cross-cutting lever.
Why governance matters for productivity
Boards are the mechanism through which productivity ambitions become firm-level reality. Good governance as outlined in The Four Pillars of Governance Best Practice can help determine:
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- How clearly organisational purpose and long-term direction are set and tested
- Whether culture supports innovation, inclusion, and responsible risk-taking
- How management is held to account for delivering productivity-enhancing outcomes:
Governance Essentials: Holding to Account - How well compliance, risk, and international obligations are overseen
When boards perform well across these pillars of governance best practice, firms are more likely to invest in productive assets, adopt technology (including artificial intelligence), develop people and pursue higher-value international opportunities.
What directors can do now
Boards need not wait for the direction being outlined in the draft LTIB. There are opportunities now that boards can help set the direction on that will help their businesses list productivity, including:
1. Name productivity in your purpose and strategy
Boards should regularly test purpose and strategy against productivity-relevant outcomes: disciplined capital allocation, export intensity, development of higher-value activities (including AI-enabled products and services) and workforce capability. International evidence shows that management and governance quality is strongly associated with superior productivity and profitability.
2. Build culture for adoption
A culture that encourages experimentation, continuous improvement and responsible risk-taking is the bedrock of adoption. This includes adoption of technology, new business models and international opportunities. Diverse perspectives matter, including Māori governance capability. The Māori economy is growing rapidly, offering opportunities for higher-value, more inclusive growth.
3. Measure what matters
Directors need clear signals. A concise dashboard can sharpen accountability: return on capital vs. cost of capital, export intensity, revenue share from newer products/services, investment in innovation and people, and AI/data governance maturity.
4. Design compliance for scale
As New Zealand deepens trans-Tasman and regional integration, directors should treat standards alignment, data and cyber resilience and supply-chain due diligence as enablers of scale. The Australia–New Zealand Single Economic Market (SEM) that the Government continues to work on is intended that to reduce regulatory frictions and accelerates market entry and boards can be well-placed to support management in recognising these opportunities as they are created.
5. Tell the boardroom story
The IoD has suggested that the draft LTIB’s sector case studies would benefit from adding “board actions that mattered” including how changes in risk appetite, capability investment and partnerships turned policy into productivity outcomes. Sharing these stories helps other directors see how governance choices make policy levers effective. The IoD is increasingly doing this through profiles of directors and boards, and how they have tackled the Top 5 issues for each year.
Conclusion
If the LTIB names governance as a deliberate lever, and boards respond with purposeful action, New Zealand can lift productivity while building a more internationally connected, resilient, and inclusive economy. Directors and boards are central to that mission.