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Partnering to Deliver SME Growth: Developing HE as “Institutional Anchors” through Research-Led Business Support

Venue: University College London

Date: Monday 2nd September

Why are we here? Jonathan Lawson, Enterprise Fellow and Zuleika Bevan, Research Associate Centre for Enterprise, Manchester Metropolitan University The purpose of this second seminar within the ISBE SME Growth SIG series was to delve

deeper into the ways in which a research-led public-private partnership approach to SME

growth and performance can be fostered through UK HEIs.

Following on from the very successful first workshop (Researching Growth in SMEs:

Application and Impacts) held in Manchester earlier this year, this second workshop

provided insights to research being carried out on the growth and performance of UK SMEs,

and combined with successful examples of how public-private partnerships can develop and

deliver research-led, integrated and sustainable models of support for the business

community. This event could not come at a better time given the recent reports released by

Lord Young of the Conservative Government and the Association of Business Schools (ABS)

on how best to support small business growth at a local level.

During the workshop, following contributions from Professor Stephen Roper, Director of the

Enterprise Research Centre, and Daren Booth, Management & leadership Specialist for

Oxford Innovation, an example was be presented of a successful research-led enterprise

programme delivered within the South East of England that combines a multi-method and

longitudinal research process with direct business interventions. The workshop then

provided an opportunity for reflection as to how one might develop an integrated

national/international model for understanding and supporting SME growth and

performance, and a facilitated discussion on the way in which public-private partnerships

might develop to support such an approach.

SME Growth, the policy perspective. Darren Booth, Leadership and Management Specialist Oxford Innovation The day began with an Introduction to Growth Accelerator (GA) and in particular the pilot

project within the South East between Growth Accelerator and Kent Business School to

synergise government and HEI offerings. Darren explained that the purpose of GA was to

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provide a platform where ambitious businesses go to grow. A set of unique individualised

support which also assisted the businesses with their Leadership & Management

development in order to take them on a Growth Journey.

Darren then explained that GA relies on linking with many different providers but that this

had not typically been with the university sector. However, within the South East, joint

working with the Centre for Employment, competiveness and Growth, Kent Business School,

had allowed the development of a pilot project which does so. This pilot project built on

previous experience the individuals had built in the past with other support programmes in

allowing them to: Explore client focused synergies; examine KBS programme offers and

develop further programmes; Maintain individual brand identity and impartial

independence; Ensure workable solution for KBS & GA; and maintain solution based

dialogue.

Daren Explained that the pilot was not without its challenges which involved: how to select the right coaches; Providing both a training intervention and coaching solution; how to best meet client expectation; how to align processes; and how to understanding areas of overlap (Growth Mapper & The BIG Ten). But the end result was a successful relationship with the following outputs:

• 12 clients on an agreed growth journey

• Grants for skills development agreed at £55k

• Client own investment in skills development £71k

• Evolvement of KBS service offer/programme support

SME Growth, the academic perspective. Prof. Stephen Roper, Director of the Enterprise Research Centre Warwick Business School Prof Roper began the second session by informing participants that the purpose of ERC is to be an independent research centre which conducts policy relevant research on SME growth and development. ERC’s primary objective is to strength the provision and use of independent, relevant and robust research and evidence on small and medium enterprises (SMEs).

The work carried out so far within the centre is highlighting that previous SME growth research (including their own!) has serious limitations which limit its insights and value for policy and strategy formulation. Key issues identified are:

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• That it often fails to take into account the dynamic and endogenous nature of the growth process

• Often sees growth as an end point rather than a process (or capability?)

• Often considers growth as an a contextual process in isolation from the business environment

• Often sees growth as a firm level issue separate from the people leading and working in the business

Prof Roper went on to state that the ERC research programme is therefore designed to:

• reinstate the entrepreneur and the leadership team at the heart of the research agenda around growth

• To consider growth in context. How is business growth influenced and shaped by different aspects of the business and regulatory environment?

• Consider ‘growth’ as a dynamic (and potentially self-reinforcing) process and explore the factors which give firms growth capabilities

Another interesting fact presented concerned the past focus on high growth as opposed to sustainable growth. High growth SMEs make up a very small percentage of the SME community and although estimates are that high growth firms (c. 1 per cent of all firms) created 22 per cent of all jobs created in the UK in 2007-2010 (Anyadike-Danes et al. 2013) the evidence also suggests that the contribution of high-growth firms to UK job creation has declined markedly since 2005 and that high growth is episodic and rarely sustained. Thus raising questions concerning where initiatives on growth should be targeted. Secondly, there is also the question of what types of business support are most effective. Prof Roper reported that evidence collected by ERC suggests the value for sustained growth of intensive mentoring and developmental support.

ERC therefore put forward the following guidelines for supporting sustained growth:

• Transparency to enable self-selection: A strong element of self-selection is inevitable in the provision of support for fast growth. Enabling effective self-selection by firms into fast growth schemes requires a clear proposition from the scheme as well as a clear statement of required commitments. The proposition needs to be both ambitious and emotionally engaging, participating in the scheme needs to carry a certain cachet.

• Strong participant selection: A strong element of selectivity by the scheme itself is necessary in fast growth programmes as these programmes are typically intensive and often involve peer-group and shared-learning activities.

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• Valuing social benefits: Selectivity should include the notion of ‘national benefits’ as suggested by the example of Commercialisation Australia.

• Sustained engagement: Schemes to support sustained fast growth are likely to involve sustained engagement with a business over a period of years.

• Developing firm and their leaders - Supporting sustained fast growth is likely to require a holistic rather than thematic support model, with a dual focus on the development of the business and the capabilities of the entrepreneur.

• Partnership based - Measures to support sustained fast growth should be partnership based. Business schools might provide input on leading edge thinking, leadership development and the facilitation of peer-group or shared learning; other partners such as the banks, Chambers etc. might provide mentoring and other aspects of a support package.

• Regionally delivered - Delivery is likely to be regionally organised. A regional model has proved valuable in facilitating attendance by firms at scheme events and sessions and making face-to-face mentoring and peer-group sessions more feasible.

• Professor Roper explained that in achieving its objectives ERC were interested in developing opportunities for getting involved in:

• Events partnering

• Associates network and Updates

• Communities of interest

During September/October there would be a call for proposals for pump-priming funding for Communities of interest focussed on topics related to SME growth and development (up to £4,000 x 3) for:

• Research seminars, workshops, exploratory meetings

• Networking activity

A new model for SME Growth? Dr Mark Gilman, Director and Dr Simon Raby, Head of SME Partnerships Centre for Employment, Competitiveness & Growth, Kent Business School With: Toby Lindsay, Partner, Telos Partners Ltd The third session of the day was based around presenting a research led approach to engaging and assisting SME growth developed within the South East by the Centre for Employment, Competitiveness and Growth, Kent Business School. The Director of CECG, Mark Gilman, began by presenting a successful model for SME growth that had been developed within his centre at Kent Business School, University of Kent.

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Mark began by building upon the comments of Prof Roper in arguing that his centre had long recognised that SME competitiveness is a global issue which seemed to have no real solutions as to how to provide support. In the main most support that was available focuses on high growth which included only a small subset of firms (6%). Also, support tends to be product-focused; focused on physical capital; and largely neglecting the role/skills of key decision maker(s). In fact there was very little that addressed the dynamic, contextual nature of SMEs and their entrepreneurs or the fact that there are usually human and social processes involved.

In order to readdress these issues CECG had developed a research led programme - Promoting Sustainable Performance - in order to examine in detail the nature of SME performance and growth. Given the nature of SME growth this research has to be longitudinal and sustainable in order to promote long term growth. PSP is therefore a biannual research process involving:

• A rigorous on-going research process with 500+ SMEs every two years (PSP is now beginning its third set of research).

• A multidisciplinary and interdisciplinary team of academic researchers who work on creating the research model and examining its content. Therefore developing a much richer set of knowledge

• A steering committee of regional & national policy makers, advisory services & practitioners to advise on the model and the products and services designed

Below is an overview of the multilevel research process:

Subsequently PSP focuses on SME growth in a number of interrelated areas including:

• Markets & competition, growth patterns, organisational change, management & strategy, innovation, ICT, performance management &

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measurement, HRM, training, advice and networks, corporate social responsibility, supply chain...

Our research highlighted some fundamental issues about performance and growth. Not least is the fact that few entrepreneurs/owner-managers are achieving their aspirations for sustained growth & profitability. Why was this the case? A number of key factors accounted for this including: whilst such entrepreneurs were good with their product or service their skill set was mainly technically-based with very few overall management skills and capabilities; This often led to an overemphasis on product over process within their firms; Combined with this their purpose lacks definition & connection and their values, vision and strategy were, in the main, sadly missing; This was not helped by the fact that their main source(s) of advice are accountancy based; Leading to performance measurement being driven by such measurements rather than wider and deeper performance measurement. This also signified that performance is largely focused on the past rather than the present or the future.

The PSP research process is then central to a number of processes, relationships and outputs as highlighted in the diagram above. PSP has allowed us to develop key products and services to assist SMEs directly in their growth process. We translate this research into applicable, accessible concepts for SMEs under the BIG banner. BIG stands for Business Improvement & Growth. Details of all of the BIG products/services can be found at: http://www.kent.ac.uk/kbs/business/sme/bus-big.html but include The BIG Ten and The BIG Journey which will now be used as examples of the research and engagement application.

Example One - The BIG Ten

Our analysis revealed a common set of ten characteristics. Those SMEs that had achieved higher sustained levels of growth were found to be actively exploring and utilising a common set of characteristics. These characteristics were found to form a gestalt, an integrated whole (Mintzberg, 1998). That is not to say that those SMEs that had achieved

PSP

Academic publications

Policy reports & evaluation

Networks

Research training

Business training

Diagnostics

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sustained levels of growth performance within this research were found to place equal importance on each of these characteristics. Our research found that no single SME had every characteristic, but those that had attempted to utilise a wider set of characteristics and integrate them together had a greater chance of achieving sustained levels of growth. That successful high growth firms develop capabilities within the following areas:

• The Enthusiast: doing things right and adding value

• The Transformer: anticipating change and managing transition

• The Strategist: defining their vision and articulating their strategy

• The Delegator: defining structures, sharing info and responsibility

• The Innovator: generating ideas and continually innovating

• The Integrator: collaborating and partnering with their value chain

• The Calculator: making effective and informed decisions based on accurate data

• The Systemiser: developing and maximising the capacity of systems

• The Engager: involving, developing, motivating and rewarding others

• The Sponge: seeking opportunities for learning and exploiting knowledge

Example Two - The BIG Journey

The Business Improvement and Growth (BIG) Journey is an executive development programme for ambitious owner-managers who want to improve and grow their business.

Coaching intervention

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The BIG Journey equips entrepreneurs/leaders with a comprehensive understanding of the key characteristics of business success and provides an enabling environment allowing them to make the changes necessary for real performance improvement. We dare them to become bigger, better and stronger.

The programme works with the constraints of everyday business priorities through a set of six highly practical two-day modules bound together by in-company coaching support. This programme is an investment in their future potential and a start of a new journey: it is not a prescriptive training package. This programme is aimed at ambitious owner-managers, directors or those with a significant decision making or leadership role within private, public or not-for-profit firms with growth potential, and who have an inner desire to improve and grow their business. It focuses on the individual AND the business through:

• Thought leadership & world class research

• Practical concepts, tools & techniques

• Make a difference (MAD) challenges (working on the business)

• Peer-group networks which involve…

- Action learning

- Industry specific networks/support

• Personalised coaching support

Dr Gilman explained that CECG are now in a position where both the PSP research model and the BIG outputs have been tried and tested leading to a desire to share our learning and expand the PSP model.

• The research model – building upon the regional set up to produce national and international level…

- Comparative research

- Understanding cultural/institutional differences

• The business support model – Helping others to understand that the income raised from this can provide long term funding for the research process and that both together help to….

- Understanding what SMEs need, and...

- Supporting them to achieve it!

What are the options? How can we, together, take this forward?

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In Delivering BIG, CECG have developed a Partnership with Telos Partners. Toby Lindsay explained the benefits and challenges of the public/private sector mode of working together: The Benefits are drawing upon the independence of academia; building a more rigorous approach to the development and testing of IP; giving an ability to establish ourselves in a new market place; building reputation and brand; generating commercial revenue and developing long term partnerships. The challenges revolved around: universities having a research publication priority; leading to competing private-public agendas; resource constraints; and engaging with other local partners

Simon Raby completed the CECG input by highlighting the benefits of this holistic approach. He began by raising an important question concerning whether we should be looking at impact or value? Where impact may be an output, specific or shallow, separation, saves money/generates more, is quantifiable. Value on the other hand signifies a process, broad or deep, collaboration, usefulness & moral worth, qualify? The danger being that is we focus only on impact we are in danger of concentrating on the short term whereas concentrating on value allows a much more sustainable approach.

Simon explained that the approach taken by CECG enables an institution to raise its profile through: a deeper engagement with local communities of SMEs; being able to work with, and say something meaningful about, SMEs; through a multidisciplinary, multilevel, longitudinal research-led approach; adding value to the academic/student body through, relevant publications, new forms of income and projects/placements.

It builds upon a wider recognition of the need to build a (cumulative) research body on SME growth, collect qualitative data on SME growth and understand how change influences the growth of SMEs

Our approach supports the wider aims above by delivering an on-going programme of research, offering a deep understanding to SME growth, and providing insight to the changing nature of organisational forms.

Simon then presented evidence of what the programme had achieved to date in supporting the local economy:

• increasing employment on average by 13.6% ~ 111.5 new jobs

• increasing Gross Value Added (GVA) on average by 19.4%

Most of this has been achieved by the integrated approach of research that leads to understanding why SMEs operate as they do and added value comes through translating this research into accessible and applicable tools for SMEs. Most of what we do challenges business leaders to:

• think broadly, how the wider context impacts the way they operate

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• think critically, how to appraise and analyse situations

• think differently, how to challenge established patterns

• think responsively, how to take a proactive stance

The following quotes from participants highlight the direct vale created

• “In my anus horibulus it is quite extraordinary that I have such a degree of optimism and hope”

• “The programme has been a continued source of positivity in our lives, it has encouraged us to do the things we have wanted to do for years”

• “The programme has given me the tools and the energy to use them”

• “The concepts really impacted our thinking and helped us to have the right conversations with customers, suppliers and employees”

• “I felt in charge of my own process”

• “It helped us to refocus our roles and build confidence

• av. increase in sales of 18.8% ~ £2.8m through new sales/contracts

DR Raby ended by pointing out that If we had responded solely to the impact agenda over the past 6 years we would not be standing in front of the audience today presenting the value that we have generated.

Dr Gilman explained that CECG had already begun the expansion process within the UK, Eire and South East Asia but would like to explore the options for taking this forward. How can we, together, take this forward?

Participants were then invited to ask questions which fell into the following themes:

• Entrepreneurial growth – In particular participants were interested in what it means to the entrepreneur/leader especially given the earlier debate that SMEs are not the decision makers but rather the people within them.

• Policy and universities – Participants were interested in how government policy was interpreted by universities and how we could use an holistic model to be better able to influence the policy debate rather than just react to it.

• Internationalisation – Participants identified a need for SMEs to receive better information and advice regarding ways to become more international. They asked the team whether they had any advice to share on this. Dr Gilman explained that the number of organisations exporting goods and services was very low and therefore an expanded model might be better able to shed light on this important area.

• Finances – It was highlighted that there is huge demand from and for financial institutions to be better able to link with and support SMEs in the growth process.

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• Academic buy in – Participants raised the issue of how to get more academics to buy into the engagement agenda but also how to work together in a multi-disciplinary way.

Reflections on a new model for SME Growth and working together to support SME growth

Discussions before lunch were very energetic, interactive and though provoking. The interest in the model presented by CECG ran over schedule leaving the afternoon session to address the above

SR Group

1) • Importance of trust and how to build it with the SME community • Personality, ambassadors and partners • Big is not always best • Importance of having a range of products

2) • Local first, sharing of best practice • Research – national/international – this would support local • Opportunity should be built around a project or idea • Building from the bottom up • Lord Young way not the best approach • Understanding and purpose – SME growth/support/value • What is the vision? 2nd, 3rd, 4th stage to explore these issues • ISBE could play a facilitator role….but others as well •

TL Group

Not knowing what the others are doing?

Should be highlighting what we are already doing

Identify themes of what works. Should there be a higher level message

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Cumulative story and who to tell?

Doesn’t have to be the same but requires standardisation and quality process

GS indentification process

But funding problems

Also getting to know business schools and universities

What about loan scheme for this typoe of intervention

Purpose – IT means of communicating together.