Now more than ever, the market a SME, as well as any bigger company, deals with is a great influence and forces them to “manage their strategy”. Having a Strategy has become of paramount importance for any company that wants to survive and thrive, due to the shortened products lifetime linked to ongoing globalization, more complex consumers buying processes, the Internet, and the growing power of distribution. Other important elements to take into account are unstable trade scenarios, the need to be involved in digital technologies, difficulties in funding business growth.
Two kinds of SMEs move in this same landscape.
The first kind follows the limiting mental models of their entrepreneurs and teams, who “rest” on the best practice, let “mimicking behavior” lead their choices, and strategic decisions rely on established practices, believing that what worked in the past or for a competitor is always a sound model. An entrepreneur’s ambitions are limited and move following merely the short-termed “think and do” idea. Their refrain is: “we’ve always done it that way”. This is how a business can survive but not grow.
Another feature of this kind of entrepreneurs and of their relatives is the tendency of not challenging what they know (arrogance and conceit) about business prospects, and about the gap between a structured strategy and a strategy which has been put into practice. This inevitably leads a company internal structure to follow this model, in terms of human and financial resources, restraining the development of the business project. Strategies are analyzed and created unconsciously, mainly following the entrepreneur’s intuition. Decisions are often made to solve emerging issues, like an investment to make for a new plant or piece of equipment, to face a crisis.
This is when the business shows wanting or lacking financial resources to allocate for acquiring information and knowledge and limited skills in elaborating and interpreting internal and external data related to catching any opportunities, as well as a lacking employees training culture.
The last and most dangerous aspect of this kind of businesses is how sure the entrepreneur is of their activity. These beliefs are grounded by the short-term results, which lead an entrepreneur to be complacent and conservative preventing them from exploring new opportunities, new digital innovative paths, new processes or products/services and which, ultimately, lead to a declining business model.
The second kind of businesses is led by smart entrepreneurs and by teams working in harmony to turn their goals and choices into an actual placement and organizational structure as well as into determined economic-financial, competitive and social performances. This environment is especially open-minded toward “change” and likely to adapt strategic intention to changing context, deliberately producing such a gap that motivation and willingness to change are always at their peak levels inside the company. This kind of businesses promotes innovation in its structure, competitiveness in its market and the development of new opportunities.
When an entrepreneur can take advantage of high quality training it is a significant asset for them and their management team. This is a key element allowing any entrepreneur to challenge their beliefs and mental models, to develop the ability to learn from successes as well as from mistakes, and to be open to “change”.
The entrepreneur and team values, ambitions, and mental models, where strategic management works, are “the differences that make a difference”.
Most companies commit at 90-95% on operative and at 5-10% on tactical decisions (how a product/service can be made, which channels to use, how to develop a communication plan), but few regard “strategic decisions working on what they are and want to become and on how to effectively positioning in a market to differentiate and grow”.
In order to be successful, a business must reinforce its strategy development process, by defining a valuable positioning in its market niche. In order to gain and reinforce their competitive advantage, a business must know how to analyze their target audience, identify those factors critical for their success, and assert whether they have the internal skills and resources needed to lead the target audience.
To grow and differentiate, companies, Public Administrations, Freelancers need to develop Strategic Management skills, with a rational approach to take advantage – and not be a “slave” of – experience and intuition. They need a method to challenge the status quo through processes, organized methods and analytical tools, convinced that they have to pursue the right balance between innovation and strengthening.
And this is not a trivial challenge, if we take into account how much space operational management can take out of strategic “reflection”, to support the development of their skills and talents and to encourage better company mechanisms and processes, increasing their chance of success.
Change can be scary… but it often is the key to your success
Lacking Strategic Management skills in SMEs and freelancers are the result of two factors/players:
- Poor culture at the C-level of how to manage the company in a professional and structured way
- top consultancy companies not interested in fostering this kind of knowledge in a low budget target company.
We believe that both players need undergoing this “cultural change”: the first must bet on cultural and management innovation, the latter should learn how to experiment without being restrained by limiting ideas, trying new business models to catch any opportunities coming from them.
The risks faced by SMEs and Freelancers are in fact comparable or perhaps superior to those of large corporations, if they consider the proportions as well as investment in percentage terms on turnover The wrong decisions on investments in large companies produce profit reductions, while SMEs can declare closure.
This is why it is fundamental to teach the necessary Strategic Management skills to SMEs, Freelancers, Local Administrations, Schools and Universities so that they have an organized method and can plan for the medium/long term, because this is how they can produce financial value, human capital development, and, at a wider level, the development of a whole Country.
I dream of a world with more Vision and Awareness, yes, more Vision & Awareness on who you are and who you want to become (have a definite purpose and carry it all the way down). A world which promotes meritocracy and talent in every organization, fostering respect and ethnic diversity as well as of thought. Thinking for the common good and not selfishly. Business growth doesn’t rely merely on profit but, more importantly, on values.
Any entrepreneurs must build their business for a purpose, identifying their business values and identity in order to have a social impact. This is the only way a business can do its best, when everyone is motivated and aligned on a clear business goal.
Let’s make an example: a company is asked to build a cathedral. The business goal is having everyone, at any level, involved in the project and aligned on a common goal. The management team must involve, motivate and enhance every resource so that everyone can work with full motivation. Any worker, this motivated, won’t say “I am going to build a wall today” but “I am contributing to the most beautiful cathedral ever” waking up early every morning.
When you have the right strategic and change management tools you can change the course of events, people’s lives, a business path, a society, the world we live in… you just have to want it.
It all begins with a Vision…the first question you have to ask is why am I doing this and the second is Who I do it for…