How mid-market businesses can punch above their weight
There is a well-worn adage that says “only a dead fish swims with the current”. In a business context, the most literal interpretation of this maxim is ‘innovate or die’.
It’s widely accepted that mid-market businesses make an important contribution to the economy, employing a significant number of Australian workers. In order for these businesses to maintain their competitive edge and continued growth, the mid-market must constantly innovate. It is no longer enough to consider innovation as the icing on the cake; rather, innovation should be seen as a fundamental ingredient in every business mix.
One of the distinct competitive advantages of the mid-market is its agility. Mid-size businesses can bring new products and services to their customer bases faster than their larger competitors. However, it is important to recognise that ‘innovation’ is not always synonymous with technology. Of course, the two concepts are often intertwined, but often it is more accurate to view technology as a subset of innovation.
Business leaders need to dissect every part of their business and review them through the lens of innovation. Product development, customer service, recruitment and retention are but a few areas that provide scope for improvement and change.
Encouragingly, Bankwest’s recent Future of Business Innovation Report found business leaders are now far more open to incorporating innovation into the business cycle. The Bankwest study found 30.9 per cent of mid-size businesses have dedicated employees responsible for innovation efforts in their business, with a further 41.2 per cent intending to bring such individuals on board. And almost three-quarters (74.2 per cent) of mid-size businesses are optimising their cultures for innovation by actively embracing processes that facilitate the free flow of information and ideas across the business. I would argue that the most successful of these businesses will take the next step and incorporate innovation into their business culture.
I had the good fortune of working on a consulting assignment in Japan in the 1990s where I was struck by the cultural alignment that had developed between the ‘stated values’ of the company and the ‘lived values’ of the employees.
Employees came to work with a strong sense of commitment to the brand, looking for ways to improve their personal productivity and add value to the company. A Japanese colleague later explained that in the years following World War II, as Japan rebuilt its industrial economy, workers were encouraged to embody the ‘spirit of continuous improvement’ — what the Japanese referred to as ‘kaizen’.
The concept of ‘kaizen’ offers some key lessons in the important nexus between culture, productivity and innovation.
First and foremost, leaders of Australian mid-size businesses should ask themselves: how can we make this company an employer of choice? With the ongoing battle for talent, what innovative practices need to be developed that not only attract and retain the best people, but also ensure optimal outcomes in terms of efficiency and productivity?
A great Australian example of a highly innovative business is Atlassian, an enterprise software company valued at $3.5bn. Part of Atlassian’s success can be attributed to its flat, no-nonsense management structure that enables (and rewards) ideas from all staff to be presented directly (read: unfiltered) to the management team. Atlassian not only allocates staff a certain amount of time each week to work on their own ideas, it also encourages them to start their own businesses. For example, online shopping software platform Bigcommerce, which just completed a substantial capital raising.
In just over a decade, Atlassian has grown from a start-up to a billion-dollar business and is regularly recognised as an employer of choice by many business award programs, including BRW’s Best Places To Work Awards in 2014 (winner, Australia’s top employer category) and the Australian HR Awards in 2014 (finalist in Employer Of Choice <1000 category).
If innovation is the key to success but technology is not always the best approach, what is the best way for a mid-size business to innovate?
For many, what is old is new again. A renewed emphasis on customer service might just be the secret your business is looking for.
Recently, I observed the management team from a local web hosting business make the strategic decision to invest in customer service.
While the temptation existed to fully outsource help desk services to less expensive foreign operators, extensive polling demonstrated that customers placed a high value on being able to speak to Australian-based customer service representatives and the decision was made to deliver on this preference. Over the past eight years, it is simple, customer-driven decisions like this that has allowed the company to grow from being the fifteenth to the second largest web hosting company in Australia.
Sometimes we can fall into the trap of working so hard in our business that we fail to workon our business.
It is important to set aside regular times to meet with customers and staff to encourage and reward their ideas. You can be confident that this investment will be repaid many times over. Bankwest’s Future of Business Innovation Report found a large majority of respondents have adopted or plan to adopt face-to-face meetings, phone calls to customers and in-person customer meetings as part of their innovation agenda. This tells us that mid-size business leaders are already adopting a broader definition of innovation and are ensuring this approach permeates every facet of the business.
In a world that pre-dated technology, Charles Darwin proclaimed that “it is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” Business leaders should remain mindful of the fact that the only constant is change, and on that basis critically examine the role innovation plays in their business strategies. Innovation — in all its forms — will continue to play a critical role in the success of mid-size businesses.
*Source: https://www.businessspectator.com.au/article/2014/11/28/small-business-sme/how-mid-market-businesses-can-punch-above-their-weight