Management Tools and SME Growth
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Organisational Solutions

Summary and Impact

Project Sound Bite

Utilising a set of transformation toolkits the ERDF Transformation for Growth Project acted as a catalyst for Small Medium Enterprises (SMEs) to identify and implement strategies for transformation and growth. We successfully and measurably turned SME aspiration into reality. Overall, we have helped the SMEs involved in our Project to add value to the economy by increasing their turnover, creating jobs and improving confidence in their leadership – their business goals are being achieved.

The European Regional Development Fund (ERDF) awarded Transformation for Growth £479,276.00 to achieve this ambition.

Transformation for Growth was a follow-on Project to The TRANSFORMATION Project, because of the proven success of the initial Project, which became award-winning in 2013 as an Economic and Social Research Council (ESRC) Good Practice Case Study for Co-Production Action Research. Contact Dr. Michael JR Butler for more information

The purposes of the web pages are:

  • To capture the substantial impact, by succinctly presenting in a lively way what was done, how and why
  • To bring together like-minded people who want to work with us in the future to achieve similar goals, and this includes members of all types of organisations, in any international location. If this is you, then contact Dr. Michael JR Butler, to see how we can help, and to discuss potential funding routes available to you

Transformation for Growth worked with 38 SMEs from the West Midlands region of the UK. In ERDF terminology, the language of our funder, we have completed 38 business assists. However, we had a waiting list, but our funding restricted the number we could help. This suggests that more SMEs would benefit from our work. Other organisations might also be intrigued by what we do and our track record, and see applications extending beyond what we capture here, hence my call to action to contact me.

Impact on Performance

GVE (Gross Value to the Economy)

For the 23 SMEs which responded to our survey, we estimate that we have added £1,036,520 of gross value to the economy. This figure is based on the length of time an SME actually spent with Transformation for Growth.

Extrapolated across the entire data set (including all 38 SMEs), we can estimate that we have added £1,712,512 of gross value to the economy.

The above two figures rise to £1,426,520 and £2,356,942 when they are based on a 12 month (annual) financial period. This methodology is in line with other Aston University ERDF projects.

Jobs Created

38 jobs were created by 23 respondents over the course of their time on Transformation for Growth.

Extrapolated across all 38 SMEs, we can estimate that 62 jobs were created over the course of each SME’s time in the Project.

Leadership Survey

93% of respondents felt that their confidence as a leader has improved as a result of Transformation for Growth.

73% of respondents felt that they had achieved, or were on course to achieve, the goals that they had set at the beginning of Transformation for Growth.

Sample: 14 out of the 23 respondents volunteered to give supplementary data in addition to the data on GVE and jobs created.

Current Organisational Challenges - Are YOU Ready to Grow?

Within the UK, as elsewhere in Europe and globally, there is both market success and failure.

Growth Champions – Market Success

There are growth champions amongst Small Medium Enterprises (SMEs), for example, 4.5% had achieved high levels of growth over the last decade (Roper and Malsche, Leading From the Middle, GE Capital, 2012). However, even high-performing organisations undertake regular reviews of their strengths and weaknesses (Heseltine, 2012). In other words, all SMEs require Transformation for Growth’s new and innovative services and products.

The key issue is that the performance of the best needs to be extended more widely (Heseltine, 2012). Our SMEs had growth ambitions, but the big challenge was to develop and transform their capabilities. Indeed, the large mass of lower growing and lower performing businesses need this help too (Heseltine, 2012).

Prevailing Problem – Market Failure

Evidence of market failure is clear in terms of growth, productivity and exports:

  • Overall performance in leadership and management is mid-table by international standards, dragged down by a persistent tail of underperforming businesses (BIS, Constraint on Developing UK Management Practices, 2011)
  • A tipping point must be crossed which includes taking on staff, formulating and executing strategy, formalising systems, entering new markets, obtaining external sources of finance and driving operational improvement. This leads to a higher capacity to absorb advice when they receive it (Heseltine, 2012)
  • 74% of SMEs have aspirations to grow over the next two to three years, however, only one third actually grow in terms of turnover and a fifth in terms of employment (Heseltine, 2012)

There are few formal structures within which these problems can be addressed. The UK’s business representative bodies only skim the surface of the business population because levels of membership and engagement are low, and the business voice is fragmented eg the largest business representative body is the CBI (240,000 members) and the lowest is the Engineering Employers Federation (6000 members) (Heseltine, 2012).

The key issue was to raise the demand for and improve the quality of advice at a local and sectoral level to supplement the various sources that already exist through accountants, banks, consultants and government. We wanted to improve the quality of advice because there can also be a lack of trust in existing providers, for example, consultants can be tempted to provide easy solutions, irrespective of the nature of the problem presented, leaving a legacy of mistrust (Heseltine, 2012).

New Solution – Transformation for Growth

Transformation for Growth directly addressed market failure in the West Midlands as the Project increased innovation rates amongst the SMEs which were limiting their growth, productivity and export potential. Transformation for Growth concentrated on stimulating and improving the competitiveness and performance of businesses by taking the SMEs through the stages of transformation to improve productivity and growth.

Transformation for Growth complemented the Greater Birmingham and Solihull LEP and Black Country LEP growth initiatives.

The Growth Solution

Transformation for Growth provided SMEs with access to a unique set of support, management toolkits and transformation processes, which allowed them to review and develop all aspects of their business operations and service delivery.

The transformation toolkits and processes are unique because they are the outcome of many years of research, collaboration with users and rigorous testing to show measureable benefits. For example, The TRANSFORMATION Project Toolsets were developed over two years from prior academic research by the project Lead with funding from the prestigious ESRC Knowledge Transfer Programme. CHAMPS2 has ten years of development and about £750million of investment. Alternative toolkits and processes do not have this level of investment nor testing.

In short, this structured and holistic approach enabled organisations to redesign their approach to transformation and growth whilst focussing on what is important to their customers.

Take Action

To find out more about The Growth Pathway and The Transformation Toolkits visit our Management Toolsets page and then see case studies of successful implementation on the Case Studies page. Don’t forget to look at our other pages to find out the full story of what we have been doing.

For more information on Transformation for Growth, or to discuss the potential engagement of The Transformation for Growth Team, please contact Dr. Michael JR Butler.

Endorsments

We believe that Transformation for Growth is a creative, practical and exciting and we look forward to working with you in its next phase of development.

Our project partners have already found value by working with us – see the impact evidence presented at the beginning of this page, the Case Studies page and the Resources and Publications page.

SME Definition and Local Economic Impact

SME Definition

This proposal uses the ERDF definition of an SME, which states that the category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million.

Meeting ERDF Policy

Transformation for Growth contributed to the ERDF 2007 – 2013 Operational Programme through delivering to Priority2 ‘Stimulating Enterprise Development’. The overall aim of this Priority is to increase enterprise in the West Midlands in order to improve regional economic performance, to be achieved through the provision of tailored business support together with a limited range of integrated access to finance measures.

Meeting Birmingham City Council’s Policy

In terms of ‘local fit’, Birmingham City Council involvement in the project will contribute towards a number of key priorities featured in the Leader of Birmingham City Council’s policy, including:

  • “Stronger Partnership Working – The City needs leadership – provided by a strong partnership between the City Council, business, academia, the public sector and the community. Our programme to grow jobs and businesses in Birmingham, to work with the Third Sector, and to use the expertise of our Universities all seeks to build that partnership.”
  • “Birmingham as Britain’s Enterprise Capital – BCC will assume a strategic role for the Greater Birmingham area, working with the LEP to develop collaborative solutions to common problems, and facilitating coherent programmes with regional and international partners to deliver an economic strategy for the city and the region. The aim is to increase employment and reduce poverty across communities, improve the skills base, drive expansion of key growth sectors, enterprise and innovation, and position Birmingham as an ‘Entrepreneurial City’, as a ‘Smart City’, and as a ‘Green City’.”
  • “Promoting Birmingham – by renewing the way we project our city and its strengths, in Britain and abroad. This will include bringing together our city region and building a reputation nationally and with government.”

Meeting Aston University’s Strategy

The project also supports Aston University’s aim to develop strong relationships with business, professional and public sector organisations and to respond effectively to their needs.