Too busy to think? What can SMEs learn from big business?

By | September 27, 2012

I recently spoke at the Bradford Business Conference about whether SMEs could learn from their big business brothers.  I think they can – and here are the key themes for this.

Theme 1 – I’m simply too busy to think about strategic planning

 

Why? Because SMEs are more likely to be highly focused on today’s work, coping with crises and reacting to the competition.  But actually some structured thinking will help reduce the fire fighting. At Bradford University School of Management we demonstrate planning models to SME owners and they find them liberating rather than restricting.

A model I frequently teach is ServQual.  This is all about gap analysis – the difference between management expectation of customer needs and customers’ expectations, how this translates into perception and service delivery gaps. Using models to identify the gaps can make all the difference to customer (and therefore owner) satisfaction.

Theme 2 – Standardizing and sharing activity

Big businesses are big on documentation and the documentation is not just bureaucracy.  Information shared can be replicated across locations.  One of the problems with small businesses is that the key information stays with the owner – “we know our business”.  But what happens when the owner is taken ill or is away for a lengthy period?

Theme 3 – Structure

"Image courtesy of photostock/ FreeDigitalPhotos.net".

“Image courtesy of photostock/ FreeDigitalPhotos.net”.

Think about young children playing football – all of them chasing the ball. Compare this to an old football hero Bobby Moore, who rarely had players crowding him out and knew exactly what to do with the ball.  Too often SMEs have less defined roles (the football analogy), relatively poor feedback and resulting higher staff turnover. In big businesses team members know their roles, career path and receive formal feedback.

Theme 4 – Think succession

Big business boards constantly focus on succession, even if it’s years in the future. In SMEs the succession issue can be very different.  Too often the children of the manufacturing company owner might not want to follow a career in the business, preferring the lure of financial or legal services or even consultancy (I’ll comment on this in another blog!)  Or, the owner simply doesn’t want to give up.  But actually succession planning is really important.  Developing family teams can often be a really effective way through this – moving from the big businesses idea of long term management planning to a more localized division of responsibilities amongst different people in an owner’s family (not simply the eldest son).

Theme 5 – Delivering profit through lean

Lean - Courtesy of theleanmachineLarge businesses can outsource their process development to consultants.  Small businesses are unlikely to be able to afford consultants.  But there is an awful lot of help out there for small businesses.  Lean can lead to improved purchasing, reduced lead times, reduced inventory, reduced error rates, improved retention and improved profitability.  Just because you can’t afford a consultant doesn’t mean there isn’t a readymade solution waiting.

Theme 6 – Think about outsourcing

Just as large businesses outsource problems to consultants, so small businesses often need to understand that they can do so as well.  SMEs will often equate external advice as a cost not a benefit but then they find they have missed the opportunity.  Understanding the power of cost effective outsourcing is vital to small businesses if they want to remain competitive.

Theme 7 – Marketing goes beyond advertising

social media treeBig businesses have all sorts of marketing structures, help and support.  Small businesses often think that marketing is too expensive a way to bring in business.  But with social media there are all sorts of cost effective ways to improve the reach of the message.  Using a website or Facebook to highlight successes and awards.  Making a low cost video which can be uploaded on to Youtube.  Spending time just communicating with key customers.

And finally, theme 8 – Try and understand Generation Y

Big businesses are investing in just that.  Generation Y, or the Y? Generation.  The future workforce will have all sorts of different needs and aspirations.  Failure to understand and nurture this group will result in failure to leverage the best talent going forward.

So what do you do as a small business?  Think about some of these issues.  Set time aside to work on the business, not just in the business.  Don’t get angry about best business practices but think about how you can learn from them.  Listen to those around you in the company.  And finally, play around with the sorts of things I have been talking about.  There is no hard and fast rule. It’s just trying to find the best way of developing the business.

Big business can learn from SMEs too

But don’t get too down if you are an SME because big businesses can learn from you as well.  Here are five examples

1         SMEs practice customer focus whereas large businesses often just preach it.

2          Have fewer meetings.  There is a whole meetings industry in many large businesses.  Small businesses show you can get an awful lot done in a smaller amount of time.

3          Understand where true innovation comes from. It’s mainly from SMEs because of their flatter structures and closer links to the customers

4          Lead by example – the owner of an SME has to lead, deliver great service and demonstrate the right way in front of the customer.  The leaders of large organizations frequently never meet their customers.

5          Small businesses retain the monkey!  They have nowhere to hide.  If they have a problem they sort it out.  Large businesses too frequently pass on their problems to their next level of management and hope they’ll sort it out.

Well these are some of my personal views. If you belong to an S, M or L, who do you think has the most to learn – and who should they learn it from?!

About Julian Rawel

Julian Rawel is Director of Executive Education at the School of Management. He has previously held positions of Groups Sales and Marketing Director, Eurocamp plc and Marketing Director, Royal Armouries Museum. Julian has been a non executive director of travel industry bodies ABTA and AITO. He has a BA in Geography from Leicester University and an MSc in Tourism Management from Manchester Metropolitan University. Julian is a Fellow of the Chartered Institute of Marketing and a Chartered Marketer.

Specialties:  Consumer and business marketing, Branding, General management, Management development

6 thoughts on “Too busy to think? What can SMEs learn from big business?

  1. The 1875 Restaurant

    Great words of wisdom Julian. Good strategic thinking. Ultimately it is from small businesses that big players have emerged (Virgin – Richard Branson). I believe principles are always unchanging but business methods may change.

  2. Mustapha

    Good set of learning points!

    SMEs are often run by entrepreneurs who tend not to go for lengthy analyses, reports, etc. Having said that, they sometimes display implicit strategic thinking and decision making. For example, they tend to be good at scanning the environment and spotting opportunities; they also tend to leverage their strengths; etc all of these are actually strategic capabilities. The trick is getting them to share them, and dare I say document them.
    Your points above do help

  3. Tamsin Daniel

    No matter your size, all businesses can continue to learn – from the best in their sector, from other industries, by seeing what’s happening in other countries, and across different sizes of businesses. One thing I wouldn’t underestimate is the resource that may already be in your own company. Engaging others in the shaping of your strategy is a cornerstone to successful implementation, so I would add another theme:

    Think internally as well as externally
    Engage and share with employees across the business; they will have a take or a useful perspective, they will have great ideas, and, when empowered, they will have the energy and enthusiasm to put those ideas into practise.

  4. Patrick Spigt

    Servqual and lean will help the processes within the company.

    It will help companies to create time for strategy! Managers that do not have the time for strategy are not fit for the job and a high risk for sustainability.

  5. Julian Rawel

    Thanks everyone for your comments. I like the “think internally as well as externally” – there are pockets of excellence in every company. SME owners do not always look (or want to look). Yet within SMEs iis the opportunity for fast engagement and decision making – big company committees do not have get in the way!

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