SME Innovation, Growth, and Leadership Research: The MCIL programme is part-funded through the European Regional Development Fund (ERDF) as part of the England 2014 to 2020 European Structural and Investment Funds (ESIF) Growth Programme
Mercia Centre for Innovation Leadership – how are we doing so far?
An evaluation of the first cohort of the Mercia Centre for Innovation Leadership has provided some important feedback as to the value of the programme for SME Business Owners. The full report is available on request. Please email email@example.com
Overall, SME business owners find the MCIL programme has helped them to improve in key business areas, the majority in strategy development (78%) and product/service sales (78%).
The majority of SME owners reported that their business was growing prior to MCIL, consistent with a cohort who had chosen to join a programme focused on growth and innovation. Of these, 49% subsequently reported that their businesses had increased their growth rate during the 6 month programme, 56% reported that their business was continuing to grow at the same rate, and 6% (one participant) reported that their business was growing more slowly than when joining the cohort. The additionality of the project on growth outcomes at this early stage is therefore restricted to the 49% who said their business was growing faster than before joining the project.
While the data from Cohort One is small (n=18), early indications are that the MCIL programme has delivered tangible business, personal, and learning outcomes for the majority of the cohort, primarily through a strategy of collective learning (Wang & Chugh, 2014). Consistent with other entrepreneurship education programmes (Garavan & O’Cinneide, 1994), the need for a balance of learning strategies
SME business owner-managers value the multi-faceted nature of the MCIL programme, which allows them to practice a variety of learning styles.
In particular, MCIL participants valued:
Building networks to assist with sharing best practice
Implementing practical tools to assist with growth
Developing the capacity for strategic thinking
The more reflective participants commented on the importance of spending time away from their business, and also of the use of networks to drive sales. EU and UK policy has highlighted the importance of networks in export-related growth (European Commission, 2015; House of Commons Library, 2014). Many participants, in both micro and medium-sized businesses, reported an improvement in confidence. The social nature of the programme was therefore an important factor in their learning.
Subsequent cohorts will benefit from the lessons learned detailed in this report. Watch this space for more updates from the MCIL programme.
Today’s blog post is by David Lowe, Entrepreneur in Residence at the MCIL programme. David talks to us about the MCIL programme, how it helps entrepreneurs and shares his many years of insights from working with business leaders.
What is your role on the MCIL project?
I’m one of four and soon to be five Entrepreneurs in Residence for Keele’s Mercia Centre for Innovation Leadership. We co-develop and deliver high quality programme content, alongside the academics from the Keele Management School. We share practical insights to ensure the content of the programme is suitable for practical implementation. We also coach business leaders on the programme on a one-to-one basis to help them grow and develop their businesses.
What skills do you bring to your role?
Strategy is my personal forte, and as a coach/consultant I have successfully assisted a large number of SME’s over the last 14 years to both grow and to innovate. I’m a problem solver by nature, and I’m fortunate enough to have a talent for the assimilation of wide ranging information; either adding strategic value or simply applying my knowledge towards helping to solve the more practical day to day challenges. My colleagues have complementary skills sets: Will Pritchard is experienced in working with start-ups; Carolyn Roberts is a product innovation expert; David Townson is expert in product design. This means that there is a lot of synergy as well as a lot of energy across the team.
Why do you enjoy your job?
I get a real kick out of helping businesses to solve their strategic problems and to drive innovation. We challenge all of our participants positively, try to ask the right questions, and we help wherever we can with new approaches.I absolutely love what I do.
What is the single worst thing that a business owner can do?
I’d say that the single biggest bad habit that business leaders get drawn into, is where they are doing so much working in their business that they don’t spend nearly enough time and effort working on their business. Indeed, for me, working with business leaders, no matter what the theme or the headline task, it nearly always means actually getting them doing something tangible as opposed to just saying they do it.
Why is innovation important for a business owner?
I also try very hard to get them to buy into the fact that there is very solid evidence of a strong relationship between innovation, growth and profitability: innovative companies do genuinely tend to have higher profit levels for example. Putting it simply…
Innovation = Good
No innovation = Bad
When helping leaders to see innovation as part of their thriving and surviving, I always do my best to ensure that they understand that ‘doing it’ is what actually matters!
Why should an SME owner join the MCIL programme?
Whether working with me or one of my colleagues, we offer energy, enthusiasm, focus, and commitment to making a real difference. We can help businesses get to where they are going much more effectively than they may otherwise have done without us.We are just entering the final phase of delivery for the very first cohort of MCIL, and its plain for all to see that all the business leaders on the programme have benefited as individuals, and that their businesses are all the better for the experience too!
What has been the most exciting MCIL programme achievement?
Beyond the immediate theme of innovation, what’s got me most excited personally is that the companies we are working with are creating jobs! In fact, they are creating significantly more jobs than we’d originally envisaged. This very tangible ripple of new employment that we are helping to drive will have positive associated benefits for the Stoke and Staffordshire area for years to come. This makes me even more proud in terms of being involved in the delivery of this leadership programme.
To set David’s insights into context, try the reading list below.
Keele University and the University of Staffordshire are collaborating on the City of Culture bid for Stoke-on-Trent in 2021. I was invited to attend a workshop last week to discuss how we can support the bid.
Colleagues were present from a diverse range of academic backgrounds: criminology, social care, history, human geography, business studies, and sociology. We had a lively discussion on how our varied backgrounds could work together. We agreed on the importance of including people from a wide range of backgrounds who live in Stoke to contribute ideas as to what we could research, to get involved as researchers, and to define what was important about the City of Culture bid to them.
As a business studies academic, I was particularly interested in what the potential impact would be on SMEs in Stoke-on-Trent. Stoke is the largest town in the Stoke and Staffordshire LEP region. SMEs in this region urgently need support with innovation. Innovation is seen by policy-makers as being crucial, not only for the SME’s themselves, but also for creating high quality jobs and driving economic growth in their region (Department for Business Energy and Industrial Strategy, 2017).
However, the Stoke and Staffordshire region appears to be doing less well than others. The 2015 Community Innovation Survey found that across the government, higher education, and non-profit sectors, the Stoke and Staffordshire region has a particularly low expenditure on R&D. R&D expenditure is a crucial precursor for innovation. Business enterprise expenditures on R&D is particularly low in the region: Stoke and Staffordshire’s businesses spent only £155 million on R&D compared to neighbouring Cheshire and Warrington’s £1,035 million. The same report finds that Stoke and Staffordshire also has the 4th lowest percentage of businesses engaged in product or process innovation: only 18% as compared to South-East Midlands (the highest) at 34%.
There is clearly a need for Stoke and Staffordshire to improve the innovation activities of SMEs in the region. The MCIL Project (of which this blog forms a part) is a leadership development programme designed to improve the innovation activities of Stoke and Staffordshire’s SMEs.
While Stoke bid is clear that quality jobs and economic growth are reasonable expectations, to what extent can a City of Culture bid encourage innovation?
SME businesses in Liverpool and the sub-region were positive about both the change in the perceptions of Liverpool but also about a positive impact on their turnover.
Employment in the creative industries showed a major increase, mostly in contractual, rather than permanent positions.
Retail tourism employment in Liverpool showed above average rises during 2008, but could have been due to other factors, such as a major new retail shopping development.and improved infrastructure.
While increased innovation funding for SMEs may not be an outcome of the City of Culture, there is some evidence that shows that improved “quality of place” has a positive impact on innovation activities. Increased pride in the city, as well as improved cultural facilities and infrastructure, was an outcome of the City of Culture activities in Liverpool. There is some hope therefore that the City of Culture bid in Stoke could indirectly increase innovation activity in Stoke’s SMEs.
Department for Business Energy and Industrial Strategy. (2017). Building Our Industrial Strategy. London: Department for Business, Energy and Industrial Strategy.
The MCIL August 2017 leadership session was all about sales. The two-day session for SME leaders emphasized the importance of ambition and culture in achieving better sales. Luckily, Alun Rogers, co-founder and director of Risual was on hand to explain how he achieved better sales through a focus on managed growth.
Risual are a Staffordshire based company who provide IT consulting, managed services, and technology to clients globally. Their sales figures continue to be impressive: they achieved a 40.6% increase in sales in 2015, and a 41.4% increase in 2016, based on their latest submission to Companies House. Risual are clearly a high-growth firm.
Alun ascribed their sales success to a number of growth-oriented attitudes:
Being Ambitious: “We wanted to do something and to take it as far as we can”
Alun and his friend Richard Proud set up Risual in 2005 based on a mixture of credit card loans and faith. While ambitious entrepreneurs no longer need to turn to credit cards to source funding (a previous blog post describes the variety of funding sources available: from government grants , to business loans to equity funding), sheer hard work in the early days crucial. Early research into firm growth described the passion of firm owners:
“Small businessmen frequently tend to identify themselves with their firm and to view it as their life’s work, as a constructive creation to which they can point with pride.” Edith Penrose “The Theory of the Growth of the Firm”, 1955.
Illustrating this dedication to their firm, Alun and Richard virtually lived in the business for the first 18 months. They worked 16 hours a day, 7 days a week to pay back their debt and build up client goodwill.
Their determination and effort is typical of the “Introductory” stage of the firm below.
The lifecycle theory of the firm argues that sales increase as the firm grows over time. As Risual moved into the second year of their business, they moved into the “Growth” stage. This required them to invest their cash reserves into recruiting more staff.
Focus on Growth: “If you are the product, you don’t scale”
During the next few years, Risual would meet the OECD definition of a high growth business: “a firm of 10 or more employees that grows either its employees or turnover by an average of more than 20 per cent per year for three consecutive years.” It is important to note that there have been cautions against using this definition (Daunfeldt, Johansson, & Halvarsson, 2015), particularly as firms grow in different ways. Growth can be organic (as in the case of Risual, which grew through sales) or through acquisition (where a company buys another company and instantly adds jobs and turnover to its balance sheet).
Alun and Richard were looking for organic growth and quickly realised that they needed to recruit more staff in order to grow their business. This was a wise decision. SMEs who recruit more staff than they immediately require (as Alun and Richard did) are said to have “slack resources” (George, 2005). The slack resources argument suggests that additional staff or funds provide a cushion that allows firms to respond quickly to new orders or to initiate a change in strategic direction. SMEs with slack resources have been found to grow more quickly than those without (Moreno & Casillas, 2007). Risual now have over 100 employees and are focussed on sales growth and product diversification.
“Stop doing what you love to start doing what you love.”
Over time, Alun realised that he had to focus less on technical innovations (which he loves) to set up processes and structures for the business. In time, this would mean that the business would run itself and he could re-focus on working with technology. One example of how a new process helped manageable growth was in the area of recruitment. Risual use the SWAN formula for staff recruitment which was originally developed by the American Management Association (Thompson & Tracy, 2011). The acronym stands for: Smart, Works Hard, Ambitious, and Nice. Alun explained how he applied these 4 characteristics to Risual:
“Smart” people have the right skills for their job.Jim Collins describes the importance of smar people in his business classic, Good to Great, where he wrote about “getting the right people in the right seats on the bus.” (Collins, 2001).
People who “work hard” are essential for growing SMEs. People who are unaccustomed to hard work do not fit with Risual’s culture of doing what it takes to succeed and dedication to the job.
3. “Ambitious” staff should clearly demonstrate why they want the job.Risual only promote from within. This means that staff do not have to compete with external candidates for a promotion. But staff do have to be self-motivated to provide the leadership that Risual required as a growing company.
4. “Nice.” Risual’s culture is positive, supportive of others and unconventional. Risual’s values have been crucial to building long-standing relationships with their customers and energizing their workforce. For an example of Risual’s unconventional approach to corporate life, enjoy their “Zombie Employee of the Year” video below:
Risual are now firmly in the “Maturity” stage: confident, with a solid revenue stream from consulting and managed services that funds the innovations developed by their technology division. Their growth ambitions required hard work, long hours, and structured management processes. They have never lost sight of their values, and have embedded their culture into all aspects of their business.
Collins, J. (2001). Good to Great: Why Some Companies Make the Leap…And Others Don’t. New York: Random House. https://doi.org/0712676090
Daunfeldt, S.-O., Johansson, D., & Halvarsson, D. (2015). Using the eurostat-OECD definition of high-growth firms: a cautionary note. Journal of Entrepreneurship and Public Policy, 4(1), 50–56. https://doi.org/10.1108/JEPP-05-2013-0020
Moreno, A. M., & Casillas, J. C. (2007). High-growth SMEs versus non-high-growth SMEs: a discriminant analysis. Entrepreneurship & Regional Development, 19(1), 69–88. https://doi.org/10.1080/08985620601002162
Thompson, M., & Tracy, B. (2011). Now, Build a Great Business. New York: AMACOM.
Grant Leboff is back! This time with a short video about how today’s short attention spans have transformed marketing. Grant explains how the classic “purchase funnel”, which describes how customers decide to buy a product, no longer works.
The image below shows the classic “purchase funnel” with a wide opening. SMEs fcus on raising awareness over a wide audience, then help “funnel” customers towards a purchase decision. The problem is that large numbers of potential customers are required for this model to work.
In his video, Grant argues that the classic purchase funnel is outdated. This is because social media has drastically shortened our attention spans. SMEs can no longer rely on capturing the attention of large numbers of potential customers. Instead, SMEs should work on building long-term relationships with individuals who will recommend their products to friends and family. Check out the short video below where Grant recommends a purchase model for the digital era.
Today’s guest blogger is Grant Leboff who delivered an inspiring two-day workshop for our SME participants on sales. In this short and accessible vlog, Grant talks about how SMEs can harness social media to connect directly to their customers. Social media connects people individually. This means that sales is no longer about a company taking out a mass market advert. Instead, SMEs should focus on building individual relationships with their customers. Customers are no longer interested in a brand, more in what their friends and family think of a product.
Professor Kelemen delivered an astonishingly creative session for our Mercia Centre for Innovation Leadership participants: 22 owners of innovative, growth-oriented firms from the Staffordshire area. Sue Moffat, the Director of the New Vic Borderlines, co-delivered the workshop with the professionalism expected of an experienced theatre director.
The theme of the workshop was Leadership in a Liquid Modern World: specifically, how SME owners could work with their teams to create an imaginative vision for their organisation.
The CASIC method, entitles Cultural Animation, uses playful, experiential exercises to create connections between participants, allowing them to step outside their day job as SME leaders.
In the image above, a group of SME owners created a beehive to illustrate the nature of a busy firm, where all the staff had an important role in creating value. The collaborative and hard-working nature of the firm could easily be understood through the analogy of the beehive.
Participants quickly learned that, despite the seriousness of the leadership themes, the creative nature of the exercises helped them see problems in a new way.
In other exercises, participants were asked to dramatise their leadership style: the image is the prelude to a group “high five” from one of the SME leaders, who has a participative and supportive leadership style:
The CASIC method was a powerful learning methodology: participants felt invigorated, challenged, but also much closer to each other as a result. Leadership programmes such as MCIL often show that improved networks are one of the most long-lasting outcomes. CASIC has certainly played an important role in helping participants learn to trust and work with each other, through creative play.