What is the single biggest mistake an SME owner can make?

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.

davidlowe photo
David Lowe

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.

Further Reading

Working in the Business, not On the Business Geri Stengel for Forbes, June 2012

Dynamic Delegation: Shared, Hierarchical, and Deindividualized Leadership in Extreme Action Teams Klein K., Zieghart, J., Knight A., Zhao Y. (2006), Administrative Science Quarterly, vol: 51 (4) pp: 590-621

 

 

Leadership in a Liquid Modern World

We are now in the the second of our six month leadership development programme. This month we covered the theme of leadership. Our guest speaker, Professor Monika Kostera Professor Monika Kostera, delivered a fascinating lecture on the challenges of leadership in a changing world.

Monika holds a number of visiting professorships and is an accomplished writer and speaker. Her research  themes include imagination and organizing, disalienation of work, organizational ethnography and organizational archetypes.

Monika opened her lecture by describing the transformation of society from the “solid modernity” of the 1960s to 1980s. In those optimistic years, we believed that technology would improve lives to the point where we didn’t have to work, that science would answer all the questions that religion could not, and that equality for all was on the horizon. Remember the malleable, friendly “maintenance drones” in the 1972 film, Silent Running?  They did all the hard work, so that humans could spend their time doing useful work.

Huey Dewey Louie Silent Running
Huey, Dewey, and Louis as examples of helpful robots that would make our lives easier

 

However, the last twenty years have been characterised by “liquid modernity”, namely the growing realisation that technology created as many problems as it solved, a loss of religious faith, and an increase in inequalities. Zygmunt Bauman (1925-2017)  is the brilliant sociologist and philosopher who introduced the concept of liquid modernity . Monika explained that liquid modernity has caused our current state of psychological instability. Whereas before we thought that we were walking to a future utopia, we are now increasingly unable to predict the future. Just look at Brexit, Trump, and the recent UK general election for examples of how difficult it is to predict what will happen next.

Furthermore, the refusal to use history as a template for learning from our mistakes leaders to discontinuity. Monika discussed constantly changing fashions in the field of business studies. For example, the  balanced scorecard  is still an excellent tool for strategic leadership, yet it has fallen out of fashion.

Finally, the loss of religious faith in many societies has created a hyper-rationality, whereby linear thinking and logic are prioritised over mystery and uncertainty.

So what does this mean for leadership in a liquid modern world?

Monika argued that leadership requires storytelling and imagination. Telling a compelling, uplifting story about their organisation helps to reassure insecure staff. Given the high failure rate of many businesses, staff may not otherwise believe their organisation has a concrete future. Leaders can exercise their imagination collaboratively, to build and strengthen teams. Creating a shared story for an organisation can be done together with staff. The ability to think creatively also helps leaders to avoid simple solutions to complex problems.

This is where archetypes come in: the leader as adventurer, for example: Odysseus who bravely led his men through various dangers in a long and epic journey

330px-Arnold_Böcklin_-_Odysseus_and_Polyphemus
Odysseus protects his men from Polyphemus

Further reading was suggested: Gareth Morgan’s Images of Organization“Images of Organization” as a way to understand how archetypes and metaphors can be used by leaders to describe their organisations.

Monika’s most recent book, Management in a Liquid Modern World, is a more detailed examination of the themes of how managers can survive in a society where alienation and confusion are rife.

Our participants were stimulated by Monika’s lecture, particularly by her wider perspective and sociological theory. One attendee said “This is the benefit of coming to a leadership course run by a University. Where else could we hear someone like this speak?”

Monika used one of Albert Einstein’s quotes to emphasise the importance of imagination in leadership: “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”

Driven by strategy, or just driven?

This guest post is written by Phil Johnson, who reflects here on his workshop on strategy development.

Ask any SME head what they’re most short of, and the response will almost certainly be ‘time!’.  Time to think, time to plan, time to do all those things that just have to be done now!  All too often these are therefore dealt with in reverse order, (if, indeed, the first two are dealt with at all).

 

At the recent MCIL ‘Creating the Conditions for Innovation to Flourish’ event, Professor Kurt Allman and I attempted to show delegates how time spent on the first two can save time later, give direction to the business and help to chart a path through all those ‘important, non-urgent’ issues which are so often neglected.

 

As academics, we of course believe that the theory works (‘there’s nothing more practical than a good theory’), but we were not in the business of simply duplicating textbooks.  Rather, we wanted to focus attention on some key questions: where is the company going? Where do we want to get to?  How will we conduct ourselves on the way?  What makes us different?  If you are not clear, how can you expect your team to get behind you?  If they are not clear, what message are your customers getting, and why should they buy from you?

 

The aim of the day was to provide some precious space to consider such questions, to gain familiarity with some key tools and – more than anything – to encourage delegates to reflect on their personal practice as business leaders and on the impact of that practice on those around them.

 

At the heart of the day was a wall chart provided to each delegate on which they were encouraged to stick post-it notes with their thoughts on their own organisation, from Vision and Mission statements at the top, to implementation and monitoring at the bottom with – of course – a feedback loop.  Having been profoundly sceptical about the value of Mission statements throughout my nearly thirty years in business, my decade in teaching has taught me the importance of starting in the right place, with a clear(ish!) idea of where you want to get to.  The problem, in my experience, is that the vast majority of such statements are bland, vague, ‘please everybody’ wish-lists with little or no relevance to staff or customers and are therefore (at best) ignored.

 

In a world where resources are always at a premium, what we demonstrated on the day was that a clear Vision and Mission can help to motivate staff and to focus activity, with direct consequences for efficiency and making a real difference.  And let’s be clear, this does not simply mean ambitious turnover targets:  making the boss rich is unlikely to inspire your staff, whereas humbling your biggest competitor or (genuinely!) making a difference to your customers might just do it.

 

Within this bigger picture we presented a range of tools and approaches NOT offered as ‘one size fits all’ solutions, as is in my personal experience so often the case with too much management ‘training’, but as prompts to the reflective approach I mentioned earlier, and frameworks to help delegates organise their thoughts and begin to see the wood for the trees.  Despite what is so often taught, analytical models will never provide answers – that is simply not what they are designed to do.  What they will do when used properly is help to establish priorities, provide a structured basis for the all-important next steps, and – crucially – give you  the confidence that nothing fundamental has been missed.

 

Having established what the business is for and where it is going, the rest of the programme will build on these foundations to develop the idea of innovation with a better idea of what that innovation is for.  What is the use of an off-the-wall idea, if it has no relevance in your market (unless you’re into full-on diversification, but how many SMEs have the resources for that)?  Thinking differently in a focussed environment feels like a more realistic proposition, whether in products/services or processes.

 

Feedback on the day was both encouraging and gratifying.  The comment which most caught my attention being ‘the day gave me a lot to think about in an area I thought I knew well.’  There’s little more satisfying for a teacher than that.

Following Your Vision

This is the excerpt for your very first post.

This post describes the first workshop on vision and strategy: creating a vision is essential for developing a strategy.  The strategy then becomes a roadmap for enabling innovation and growth. The session was delivered by Professor Kurt Allman and Phil Johnson from Keele Management School.  Both academics are experienced in developing strategy with SMEs and drew on their personal experience to lend authenticity to  this inaugural workshop.

The workshop focussed on how to engage in innovation through a strategic lens. Despite importance of innovation for business growth, the majority of SMEs in the United Kingdom are not planning to innovate. This surprising result is evidenced by the Small Business Survey, 2015 which found that only 48% of SMEs were planning to introduce new products and services in the next 3 years.  While 48% is a small increase from 2014, where only 42% SMEs were planning to innovate, it is worrying that the majority of SMEs are not planning to innovate.  The use of structure and planning results in better innovation: failing to plan means planning to fail (Slater, Mohr, & Sengupta, 2014). Also worrying is that a recent research report from the ONS found that that smaller businesses in the UK are less likely to engage in structured planning (Office for National Statistics, 2017).

So, given that innovation has long been linked to firm growth (Schumpeter, 1934) and that structured planning helps innovation, what tools are available to help an SME owner to develop a structure for growth and innovation.

Kurt and Phil introduced a simple strategy model based on the influential work of Michael Porter (1980). This model aligns a business along the axes of competitive advantage (“cheap and cheerful” or “high quality”) and competitive scope (as broad a base of customers as possible or being highly selective about which customers to target).

Strategy Model

Adapted from Competitive Strategy: Techniques for Analysing Industries an Competitors The Free Press by Michael E. Porter, copyright 1980, 1998 by the Free Press.

A luxury brand, such as Porsche, would go for “Differentiation” by targeting their marketing to a relative few wealthy customers while also investing in a highly specialised product. A low-cost brand, such as Lidl, would market to as wide an audience as possible while investing in logistics and price control to produce a high number of low-cost goods.

The participants revealed that they, like many SMEs, are “stuck in the middle”. Many of our business owners have chosen a hybrid strategy which involves keeping  their options open. They do not want to deter potential customers by becoming too expensive. Our manufacturing business owners were also reluctant to invest heavily in expensive operational cost controls which would keep their prices down. Kurt and Phil warned that the danger is that an SME can be out-performed by companies who have decided on a single strategy.  And are pursuing it ruthlessly. The advice to SMEs for strategy selection was therefore: ensure you have  a strong understanding of the culture of your organisation, what your customers want, what your competitors are doing, and what legal and economic changes may be coming your way. In other words, choose to be “stuck in the middle” with your eyes wide open.

So how do you think SMEs should create a vision for growth? What tools could help SME owners map out their vision? Does it matter than an SME approaches innovation and growth without a clear strategic plan?

 

Further Reading

Office for National Statistics. (2017). Management practices and productivity among manufacturing businesses in Great Britain: Experimental estimates for 2015. Newport.

Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York, NY: Simon and Schuster.

Schumpeter, J. A. (1934). The Theory of Economic Development: An Inquiry Into Profits, Capital, Credit, Interest, and the Business Cycle. Piscataway, New Jersey: Transaction Publishers.

Slater, S. F., Mohr, J. J., & Sengupta, S. (2014). Radical Product Innovation Capability: Literature Review, Synthesis, and Illustrative Research Propositions. Journal of Product Innovation Management, 31(3), 552–566.