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10 lessons big business can learn from SMEs 

As a business that advises organisations on how to achieve stretching growth, we work with a wide spectrum of organisations – from blue-chip multi-nationals to start-ups with little more than a couple of founders and a dream. Given our broad client base we’re often asked what lessons can be learned from others. Most commonly it’s the biggest businesses that ask us what they can learn from SMEs and start-ups. They have a warped view of what it’s like to work in such an environment and misinterpret the realities behind the strong growth that smaller organisations can achieve. So, when we outline what we think the most helpful lessons are for them, they can be somewhat unexpected. In no particular order, here are the 10 most valuable lessons I think big businesses can learn from SMEs… 

  • Focus
Justin Wright
Justin Wright

One of the biggest challenges for big businesses is the sheer number of ideas and projects being worked on at any one time. With resource comes a lack of focus and this can seriously compromise your chances of delivering step-change growth. Conversely, SMEs tend to be better at focusing on doing one or two things brilliantly, as they typically don’t have the luxury of big budgets and teams of people. In big companies, there is a palpable feeling of risk associated with just doing one or two things and there is perceived safety in numbers – the more we do, the more chance something will be a success. Wrong!

  • Stay Lean

The other big advantage of not having access to significant resources is that it forces individuals and teams to think more creatively. In our experience, too much resource can lead to complacency and even laziness in big organisations. There is a sense that money can be thrown at a problem to resolve it, but in truth, that is rarely the case.  When resources are restricted you have to think your way around problems and compensate for lack of budget by having bigger and better ideas. This is something SMEs often use to their advantage.  Limiting the resources allocated to a project team in a big business can significantly improve the creativity and quality of that team’s outputs.

  • Mitigate risk

In our experience, the smaller the company, the greater understanding there is of the risks involved in doing or not doing something. SMEs tend to be better at understanding risk and mitigating it because everyone is so much closer to the bottom line. Interestingly, when you ask big companies what they admire about SMEs and start-ups they always talk about their desire to take risks. This is a misunderstanding: it’s highly unlikely smaller companies seek out risk given the consequences could mean the end of the road for the business. Rather than taking more risk, big companies should spend more time assessing and mitigating risk – not just of projects they do work on, but also the risk of doing nothing.

  •  Share the spoils

If you want your employees to be motivated to deliver your vision and growth targets, then they need to know there are different outcomes for them if those targets are successfully delivered. Incentivising individuals via significant upside is much more difficult to do in bigger organisations, where HR is focused on implementing and adhering to rigid bonus schemes. Equally, we find the corporate world less adept at using other non-financial ways of recognising performance and a general reluctance to single out the contributions of any particular individuals. The best SMEs are much more willing to share the spoils with those who delivered them and understand the power of the annual company away day or Christmas party to motivate as well as galvanise.

  • Be courageous

SMEs are more likely to ‘play to win’ whereas big businesses are more likely to ‘play to not lose’. The bigger you get, the more you have to lose, and this can drive conservative attitudes and behaviours. For SMEs, the potential gains are always so much greater than the potential downsides of trying something and failing. This is one of their advantages – they have a ‘challenger mindset’ that so few big businesses manage to adopt. The increased focus on short-term goals in big companies also restricts their ability to make courageous decisions that may only payback in the longer-term. Employees need to know what kind of behaviours and decisions are appropriate and be given the ‘freedom to fail’ knowing there will be no negative consequences.

  • Be agile

From first-hand experience, we’ve witnessed how quickly decisions can be made within SMEs. During a workshop with a small, fast-growth business, we saw a critical strategic decision made during a cigarette break – one that determined the future direction of the company. Perhaps quite rightly, given what’s at stake, this could never happen in a big organisation. However, decision making and planning in big business tends to take an unreasonable amount of time and involve an awful lot of people. There are huge gains to be made by becoming quicker at making good decisions AND acting upon them.

  • Learn & adapt

The other advantage of being small is the ability to learn and adapt quickly. If a marketing plan or new product launch is not going to plan, then SMEs seem more adept at finding out why and intervening quickly. They tend to be closer to the market and to their customers, whereas sitting in the ivory tower of a Corporate HQ can give a sense of being detached and distant from the real world. Learning tends to be more formal, involving expensive and slow research, which means by the time the learning has permeated the business, it can be too late to act to rectify the situation. On the other hand, SME’s approach to learning is usually more informal – some conversations with key customers to inform the assessment of the situation, rapidly followed by a plan to fix things before it’s too late. 

  • Have a purpose

We all need to know why we get out of bed in the morning and come into the office. More than just the motivation of money, we want to feel like we are devoting 40+ hours a week to a cause we understand and believe in. Whilst corporates try very hard to do this, their expensively researched corporate ambitions tend to be so high level and distant from employees, that they are paid little more than lip service. Given SMEs are so often owner-managed businesses, there is a direct and immediate reminder of why the business was set up and what it aims to achieve. The motivations of these key individuals are inherent in everything the business does, so it cannot fail to rub off on the work force. And if anybody does not buy into that mission, the chances are they will not stay for long anyway.

  • Don’t try to do everything yourself

Invariably, when a big business spots a market opportunity, they dedicate resources to creating a new product, service or offer to exploit it. They have a strong bias towards working autonomously to developing an appropriate solution – even if the more logical solution would be to partner with others who already have part of that solution or the skills to develop it on their behalf.  We find that small businesses are much more open to joint ventures, collaborations or licensing options that get them to a fit-for-purpose solution quicker, and without huge development investment. They realise what their strengths are and play to them, supplementing additional capabilities by inviting others to work with them. Big businesses could learn a lot from this more pragmatic and collaborative approach.

  • Enjoy the journey

One of the most exciting things about working in an SME is being able to contribute to, enjoy and benefit from the growth of the organisation. You are much more able to enjoy the journey – which is often dynamic and stimulating. Most big organisations have existed for some time and they are well into their journey. Often the focus is on not going backwards or just keeping pace with market growth rates. The journey is less tangible – if there is one at all.  Whilst this may be true at an overall corporate level, there is no reason why the leaders of teams or departments cannot create this sense of journey and allow all team members to contribute to and enjoy it.

So there they are, 10 key lessons, many of which are clearly inter-related. The challenge for big businesses is they cannot just pretend they are small and act in this way – they have too much at stake. Instead, they must understand the implications for their organisation and focus on emulating a few of the advantages that SMEs enjoy as a consequence of them lacking scale.

Justin Wright is co-author of ‘Stretchonomics – the art and science of success’ and co-founder of innovation and growth agency,Mangrove