MID-SIZED AND SMALL CORPORATIONS
Change in companies requires
above all one thing:
Mid-sized firms form the backbone of the economy. They are innovative and inquisitive. Simultaneously, they are conscious of tradition and cautious. Their success rests on knowledge and ability – often coupled with a thirst for perfection. Many of them are market leaders or even global market leaders in their niches. Hidden champions. They are agile and flexible.
Occasionally, however, strengths can also be weaknesses. Unlike large companies SMEs with their lean structures and operative orientation do not always have the resources, know-how or tools for handling changes or crises on their own.
Yet there are any number of challenges that SMEs face that call for precisely such specialist know-how:
Today, almost every SME is part of international value-added chains. Many SMEs are increasingly gaining new clients or suppliers everywhere in the world, opening up outlets or production facilities abroad and expanding their markets in the process. Elsewhere is not the same as home, however. Anyone who participates voluntarily or unintentionally in globalization needs to fundamentally alter their approach and work processes, learn different mentalities, cultures and languages and understand how foreign markets operate. Expensive mistakes can be avoided by engaging assistance.
Efficiency is the key to competitiveness. Today, digitization is as able to boost efficiency as did relocating to low-wage hubs in the 1980s and 1990s. That said, Industry 4.0 means more than just introducing software. Even if products and services remain the same, Industry 4.0 alters the entire business model.
Most SMEs are chronically underfinanced. At the latest since the financial crisis bank loans can often only be procured against unrealistic collateral – a hindrance to growth and investments. Consequently, many SMEs rely on venture capital. Yet bringing new co-owners or even majority shareholders on board also spells new rules, greater control and occasionally a demand for altering traditional procedures. Which amounts to both risks and opportunities. And most certainly leads to a decisive shakeup of any corporate culture, something that needs to be carefully managed.
Many SMEs lack young entrepreneurs willing to follow in the footsteps of the older generation. The result: A change in ownership. Frequently this also entails completely different ideas about goals, strategies and management methods. This represents a far-reaching cultural change that needs to be carefully communicated and circumspectly managed. Otherwise a company can quickly slip off the success track.
Innovation pressure due to commoditization
Technologies and products which were a specialty yesterday are common knowledge today. The commoditization of know-how is advancing ever more quickly. That is especially the case in traditional sectors such as chemicals, electrical engineering or mechanical engineering, but also applies to the IT industry. The consequence: SMEs have to accelerate their innovation cycles. That can be learnt, but it does require far-reaching changes in executive behavior and in how employees see themselves.
Shortage of talents
Today, well-qualified employees can choose where they want to work. However, large corporations tend to have the edge when it comes to recruiting young talents as they can offer broader career options, attractive remuneration packages and supposed security. If smaller businesses are to compete equally they need to create and promote a special corporate culture which attracts talented employees.
No one is immune to crisis. They occur at some point in every company, no matter how good the management and owners are. The list of potential incidents is long: accidents, environmental catastrophes, fraud, financial difficulties, kidnappings, faulty products and processes. Emergencies not only put management and those affected to the test but can also cause long-term damage if they are not carefully handled. One of the most important factors is excellent communications.
We support our clients in managing and communicating voluntary and unwanted change processes. And always our motto is: “convince rather than dictate”.