UK: IM Sounding Board - Best practice is for SMEs too.

UK: IM Sounding Board - Best practice is for SMEs too. - There is no denying that, especially compared to its European counterparts, the UK economy is currently enjoying an enviable growth rate. That said, however, we should not be resting on our collect

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Last Updated: 31 Aug 2010

There is no denying that, especially compared to its European counterparts, the UK economy is currently enjoying an enviable growth rate. That said, however, we should not be resting on our collective laurels - Britain's international competitiveness offers markedly less cause for celebration and there is, to put it mildly, considerable room for improvement.

To address this shortfall, it is essential that the adoption of best practice and the drive for business excellence be actively promoted and spread throughout the business community. And, while this is a prescription that is of equal relevance to all businesses, across all sectors and of all sizes, it is of perhaps greater significance to the smaller companies.

When we refer to and reiterate the need to begin benchmarking and learning from the best, it is not really the likes of BT or Shell we're talking to: big business has the resources to go over its activities with a fine tooth comb and, even if it has not yet done so, will at least have a good idea of what it should be doing to achieve excellence.

With small and medium-sized enterprises (SMEs) this may not necessarily be the case: a company with a staff of 20 or so may (unsurprisingly) be simply too busy with the day-to-day running to concern itself with benchmarking or best practice; it may well see these as luxuries beyond its reach. This is understandable but it should not, and indeed does not need to be, the case.

The importance of achieving competitive advantage regardless of size cannot be emphasised enough. Being good in certain areas is no longer enough. Huge savings in one area become rather academic if they are outweighed by wastage in another. Companies must take an holistic approach to excellence, which means they must not be insular and inward-looking. Rather, in order to build on their strengths and address their weakness, British firms will have to look to their competitors, look to firms in other sectors, look abroad and even look to the public sector. Leave no stone unturned, because there may be excellence underneath it.

The most successful companies are those that are led by enthusiastic, motivational champions of change who can unlock the full potential of their employees, know their customers, innovate and exceed (rather than nearly meet) their customers' expectations. These are companies which compete on not just price, but on quality - competing on costs alone leads to the sweatshop, rather than a strong, value-added economy.

But for SMEs, taking on the culture of best practice can appear a daunting prospect. The Department of Trade and Industry recognises this through its Management Best Practice Directorate and is responsible for spreading the word through a series of three support schemes, each of which addresses a particular aspect of best practice and is designed specifically to be accessible to SMEs. These services are Connect for Better Business, the United Kingdom Benchmarking Index (UKBI) and Inside UK Enterprise (IUKE).

The first of these is designed to give an interactive introduction to best practice through a series of CD-Roms which cover benchmarking, customer focus, electronic networking, finance, leadership, markets, people, products and processes, and exporting.

The second, the UKBI, is a computer-based system that allows companies to measure their performance against others in 80 areas of finance, business excellence and management. Benchmarking has long been seen as something which only the big boys can afford. The UKBI brings it within the reach of SMEs.

The third initiative, IUKE, exists to offer business people the opportunity to experience best practice at first hand through visits to exemplar companies. In Staffordshire the TEC complements the initiative by providing themed seminars and focused best practice visits. Many of the host companies have adopted the business excellence approach as a fundamental part of their strategy.

The potential waiting to be unlocked in Britain's SMEs is huge. Comparisons with SMEs abroad (the German Mittelstand, for instance) are increasingly important: a couple of decades ago, smallish firms probably wouldn't really have needed to pay too much attention to the standards their continental or Far Eastern counterparts adopted - they sold most of their products within the UK.

Nowadays even the smallest business must at least be aware that its customers will quickly turn to foreign firms if they are able to offer products which are cheaper, better - or both.

Fortunately, the signs are that SMEs are more aware than ever of what is expected of them on the international stage. It is not yet correct to talk of a British Mittelstand, but a recent Coopers & Lybrand survey of middle-market firms with a turnover of between £5 million and £200 million showed that while making inroads into the major EU markets, these firms have also been increasing their annual sales and profits by more than 10% and 20% respectively on an annual basis. At the same time they have enjoyed strongly rising employment and capital investment.

Ensuring that there is a culture of excellence among SMEs is itself an investment in the long-term vitality of the economy. To be fair, for businesses just starting on the road to excellence, it can be rather difficult to quantify the precise impact of a given course of action or particular initiative. But an initial intangibility of results is no reason for companies not to adopt best practice. Even by taking the first tentative steps companies are laying firm foundations on which to build real competitive advantage. Competitive excellence cannot be achieved overnight but every business which begins taking best practice on board brings us closer to the overall goal of maintaining strong economic growth - and bolstering Britain's position in a fiercely competitive global marketplace.

In a number of ways, British business is in a better position than it has been for some time. However, rather than simply sit back and enjoy what we have achieved so far, we must look on it as an opportunity to build further. And this applies to every company whether it has 20 employees or 20,000. It is too good an opportunity to waste.

Richard Ward

Chief executive, Staffordshire Training and Enterprise Council and Companion of the IM

A couple of decades ago, smallish firms probably wouldn't really have needed to pay too much attention to the standards their continental or Far Eastern counterparts adopted - they sold most of their products within the UK. Nowadays even the smallest business must at least be aware that its customers will quickly turn to foreign firms if they offer products which are cheaper, better - or both'.

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