In need of growth? Break glass…

Posted on 20 May 2010 by The Manufacturer

Peter Templeton of the Institute for Manufacturing gives some pointers for taking advantage of the upturn...

Manufacturing is back in the spotlight, and for the right reasons. It’s seen as a means of driving economic growth, and so it should be a good time to be in business. But a rapidly changing business environment brings new challenges and it’s not always obvious to SMEs how to respond, Peter Templeton of the University of Cambridge’s Institute for Manufacturing gives some pointers.

The country is facing the biggest economic slump for decades and, for once, all the political parties recognise the need for a more diverse economy. Growth in manufacturing is seen as essential. The reported rise in output for March – the biggest monthly rise for 15 years – is an encouraging start.

The future may well be bright, but first we face the challenge of rebuilding a manufacturing landscape battered by the storms of the recession.

Much has been written and said about the problems businesses face in accessing finance, but there are other important consequences of the recession: major changes to the structure of key industries, changes to customer behaviours and changes in Government Policy.

The automotive industry is a stark illustration of the effects of the slump, and the subsequent impacts on SMEs. As customers cut back on spending, the industry experienced a rapid decline in demand. Global manufacturers like Ford and General Motors were forced to restructure and reduce capacity; Volvo was sold to Chinese firm Geely and SAAB to Dutch Spyker.

Responding to consumer demand for more economical, ‘greener’, small cars Nissan developed the Leaf. Projects like the Leaf are strongly supported by policy-makers and backed by government funding – from the Technology Strategy Board and others – and this has had an impact throughout the industry’s supply chain.

It has left many SMEs feeling like they’ve hit a ‘glass ceiling’, the invisible and unforeseen obstacles which hinder progress. Changing conditions have affected order books, slashed margins and left senior managers fire-fighting rather than having the time to develop strategy or build capabilities. But activities at the IfM have shown there are some simple steps which can help you smash through these barriers.

Ceiling your success Firstly, re-visit your business strategy. Changing times may mean you need to adapt. It will take time, but will be the key to creating opportunities from the challenges your business faces. The good news is that strategy development processes are available for manufacturing SMEs, designed to help save time and effort. The processes start by focusing on the needs and wants of stakeholders, then evaluate the opportunities and threats created by the changing external conditions, and identify the key capabilities and core competences of the firm.

The next step is to generate and appraise alternative strategies in order to select the one that best meets the needs of your business. This includes considering how your business should compete: is it on providing the best price and delivery? Or is it by providing distinctive customer value, perhaps based on product leadership, or a service-based business model? Having selected the strategy, the next step is to develop an action plan to make it a reality, consisting of discrete, executable projects – and supported by performance measures to keep you on track through the hurly-burly of industrial life. Finally, identify a manageable number of appropriate criteria to measure business performance. Regularly reviewing performance against these targets is key to ensuring successful achievement of business goals.

This needn’t be done alone, however. You can find a business mentor to help plan strategy, guide capability and maintain focus. No one knows your business better than you; however, getting someone with the right experience and knowledge of the issues affecting your business can make the difference between achieving real growth and just hitting your head, once again, on the glass ceiling.

The election has just ended; to borrow from an earlier campaign mantra – the thing to remember is to ‘focus, focus, focus.’ If you focus on the right business strategy, the right capabilities and the right execution, the only problem you’ll have with glass ceilings is sweeping up the competition after you’ve smashed your way through.

Peter Templeton, University of Cambridge’s
Institute for Manufacturing