Out-of-the-box thinking for SME sector

Small and medium-sized enterprises need to innovate and make a strategic plan for growth if they are to survive, the Euro SME 2013 conference was told last week.

Meeting at Dublin Castle were hundreds of entrepreneurs, policymakers and SME support organisations from the private and the public sector, voicing their ideas on how to improve the EU eco-system for innovative enterprises.

Under the auspices of Ireland's Presidency of the EU Council and organised by Enterprise Ireland, the Department of Jobs, Enterprise and Innovation and the European Commission, the conference looked at what it takes to be a thriving entrepreneur in the 21st century and how small companies can compete effectively in an increasingly globalised world.

"Companies need to innovate or die," says Anne-Lise Kjaer, a leading futurist and director of Kjaer Global whose focus is on facilitating a new understanding of tomorrow's society, business and people.

“If the challenge is to create clarity out of complexity, then that means getting to know – and identify with – the people of tomorrow. Only then can you understand what they will want from you,” she says.

Kjaer works with some of the world's leading companies including Accenture, Ageing Well Network, 02 Telefonica, Nielsen, Ikea, Toyota, Nokia, McKinsey and Co and PwC. Her company prepares businesses for the future by identifying key societal trends using quantitative and qualitative data as well as value-based research.

A core tool is the Kjaer Global Trend Atlas, a trends filter used to determine the emergent scientific, social, emotional and spiritual drivers that impact everyday life.

“We help companies navigate the future with our trend atlas and inspire people to take a strategic approach to the future by orientating themselves on the trend map and asking themselves what are the big trends or structural drivers they need to be aware of,” says Kjaer.

She devised what she describes as the “4 P model” business platform which she says can be applied to any company. “The 4 P model business platform is about considering people, planet, having a purpose and ethos to match and then the profit will follow.

“Once you consider people and planet as part of that drive and you have a purpose, you will feed into your environment rather than feed off it and create social capital.” Companies such as Whole Foods and Patagonia in the US are examples of this new thinking, she says.

“I hear a lot of people say they’re going to wait the crisis out but this is the new norm. The paradigm shift has happened and things aren’t going back to normal. I agree with my maternal grandfather when he says the best thing about the good old days is that they ain’t coming back!

Radically different
"Right now in the 21st century we have to think of 'we economics' rather than 'me economics' which was very much the 20th- century model. That was all about ownership and real estate – everything was about owning. When you look at the business model in the 21st century it's about sharing and a collaborative approach, because it makes more business sense."

Kjaer cites General Electric in the US as an example of a big company which went from being a "me company" to a "we company". Kjaer says that by 2020, 50 per cent of the global workforce will be millennials who will set new rules and new demands about what 21st-century companies should offer and will want to work for companies which have adapted to this paradigm shift.

She points to growing distrust of big business and current economic instability as factors that will lead to radically different and disruptive business models.

Kjaer says access to finance isn’t the major issue facing SMEs. “You need to have your finances right but if you don’t have a purpose, you don’t have a story that sells your company, then people won’t want to work for you. If you’re not in it for the people and planet and you’re polluting and not being considerate, then I don’t think your lifespan will be long as a business.

“You have to create profit but it is essential to factor in the other three P’s. What’s our purpose, how can we get the best people and how can we protect the environment.

“It’s not an idealistic thing, as a Scandinavian I’m very practical. If your company has no story to tell and you only think about profit – it’s crass.”

Kjaer says Scandinavian companies have come round to this way of thinking but that some companies are experiencing inertia and stuck in a 20th-century mindset. “Some of the bigger businesses are like the Titanic, they know they’re heading for the iceberg but won’t steer in another direction.”

She says everything will evolve around a technology platform in the future. “SMEs need to realise if they don’t have a technology platform they will be left behind. If you have a product or service social media and the internet is where you transmit that message.

“The paradigm shift has happened and we need new tools to adjust to that new reality. It’s not going to happen overnight but a willingness to change and adapt is vital to ensure the viability of SMEs in the future.”

Keary Crawford is chief operating officer of the Growth Strategy Company based in Washington DC. As co-founder of the company, she has a strong track record of successfully building and transforming organisations in order to support accelerated growth and shareholder value creation. She is also co author of GrowthThinking: Building the New Growth Enterprise.

Entrepreneurial spirit
Crawford says enterprises can no longer use generic strategic management frameworks that use "an evolutionary inside out approach". In the 21st century companies need to be disruptive and consider how they can redefine their customer, market, company, offering, competition and business model. The six points derive from Silicon Valley culture and can be applied to any enterprise.

Crawford echoes Kjaer that finance is not the major barrier for SMEs. “The common myths and misconceptions around business growth are that finance creates growth or companies can some how buy growth.”

She says companies need to rediscover their roots and entrepreneurial spirit in order to become more flexible and open to change and innovation.

“It goes back to the innateness of start- ups and businesses being entrepreneurial. When people think of small businesses they think of start-ups – two guys in hoodies in a garage – but what they don’t realise most of our bigger companies started as one or two people and were entrepreneurial.”

She cites Ryanair as an example of this. "It was started by two guys, they developed a market that wasn't being served and made a great success out of it."

Crawford says that regardless of location or size, businesses must have a path for growth, explaining the points of the dedicated growth strategy, customer, competition, market, business model and offering,

Consistent framework
"You need to define who your customer is what are their unarticulated needs, that they're not aware they have yet and ask how best to serve that. You need to ask how you can realign your competition to make them completely irrelevant and ask what you are willing to do that they won't."

She insists the strategy works. “There was never a consistent way in which companies approached growth and there was no best practice. This all came about from a two-year research project that looked at Fortune 500 companies globally.”

Crawford says the companies that have adapted this strategy are high profile and her clients are confidential for competitive advantage reasons but include software companies.

“The beauty of a growth strategy and consistent framework is that it can be applied to all companies and it works. You go to a company and they ask you to help them grow but you ask them what their growth strategy is and they either look at you with a blank face because they don’t have on or it’s all over the place.

“Stale or mature SMEs don’t know how to get out of the hole they are in want to get their energy back. If they look at the growth strategy framework they will at least be able to ask themselves some questions they weren’t thinking about before. The framework provides the right questions to ask and issues to address to help get them back on track.”