It’s Time to Bust the Myths about SMEs

  • techUK techUK
    Tuesday07Nov 2017

    Guest blog post by Elizabeth Vega, Global CEO of Informed Solutions as part of our #procuring4growth week

If optimism is the faith that leads to achievement, there’s a good reason that SMEs don’t always win their rightful share of government contracts. It’s because, more often than not, they’re held back by a negative narrative, tired myths and a residual cultural resistance to change within too many pockets of government and the public sector.

In these areas, SMEs are still most frequently defined not by what they are achieving and by their capabilities but rather by a narrative that focuses on their perceived limitations and the ‘barriers’ and ‘risks’ to doing business with them. There is far less focus on understanding what has enabled the SME to be a successful innovator, served their other customers so well, and the benefits that a buyer gets from direct access to an SME’s Main Board and their commitment.

Latest government figures show SME spend has fallen as a percentage of overall government spending. We have work to do to help meet Ministers’ target of spending £1 in every £3 with SMEs.

To get back on track, we must challenge the stifling narrative, myths and engrained cultural behaviours that are holding us back. It is time to emphasise the achievements of UK SMEs; their proven capabilities, innovation, ability to create value and the modernising, energising power that SMEs deliver into the marketplace. We need to look beyond the prejudices and negative rhetoric to the facts.

For example, since it was established in 2012, Cabinet Office’s Digital Marketplace has spent £1.26billion with SMEs and this has delivered innovative new services, very substantial savings and created a huge amount of social and economic value for the UK. Waste has been cut and replaced by modern solutions that provide more responsive, user-centred services and operational efficiency at a lower cost. Cabinet Office delivered £755million of savings in the last year alone, primarily by working with SMEs.

There are many, many examples of SMEs doing excellent, pioneering work in the public sector. However, instead of highlighting these successes, too many conversations are dominated by the barriers and challenges that need to be overcome. Lessons learned should of course explore the things that can be done better. However, lessons learned must also look at understanding what is working, why it works, and how we can get on with doing more of it.

At a time of significant economic turmoil and uncertainty, there’s never been a more critical time to shine a light on what we’re achieving and on using balanced learnings and insights to encourage government and public sector buyers to do more business with SMEs.

As a member of Cabinet Office’s SME Panel for some six years, I have had the privilege of meeting wise, committed and hardworking SME champions across many Departments, Agencies and Local Authorities. They are making a difference in breaking down barriers and prejudices. However, I still see many pockets (some large) of deep cultural resistance and complacency within government and the public sector. Here, all too frequently, buyers and procurers try to legitimise a lack of meaningful progress by resorting to that old chestnut called ‘risk aversion’.

It is probably also a good time to remind ourselves that there’s no genuine ‘safety’ in the comfort zone of continuing with the old ways of doing things. The market has experienced a seismic shift and no company is too big to fail, as we’ve seen with household names such as Worldcom, NTL, Compaq, Woolworths, Blockbuster, Comet and Monarch.

I want to bust the myth that SMEs don’t have sufficient skills and capabilities to do heavy lifting on projects for large organisations. It is a fact that the most cost effective, successful and proven route to innovation for large businesses is to partner with SMEs.

Large corporates know this already – and that’s why research shows they are spending 31% more on delivering innovation through SME collaborations than on internal R&D, to help them modernise their operations, adopt new technologies and ways of working. Most recently, Network Rail called out the stagnation that is evident in the rail industry, encouraging operators to partner with SME “disruptors” to innovate, as a way of delivering a better customer experience, drive service improvements and reliability.

Lastly, I want to bust the myth that dismisses all SMEs as being much of a muchness. The Harvard Business Review applauds a new and growing breed of highly successful SME, whose business model is that of a “nano-multinational”; characterised by commercial maturity, agility, an elastic and scalable operating model, global outlook and big ambition. SMEs are busy innovating, modernising and delivering value for the UK economy. It’s time to focus on a more positive narrative around SMEs and to overcome the engrained cultural resistance that is still limiting too many areas of government and the public sector from doing business with them.

We can do this by debunking all the myths and prejudices that are currently holding us all back.

Complete techUK's SME Survey here and help us make the case on your behalf.

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