SME Growth Summit, part of Manufacturing & Engineering Week 2023, saw the strategic leaders of UK SME manufacturers come together for two days of idea sharing and problem solving to drive development of strategy, product and the workforce. Here are some of highlights from the event’s keynote speeches and discussion sessions.
Manufacturing organisations are undoubtedly going to experience strong headwinds over the next two to three years (maybe longer). And while many larger companies will be able to successfully navigate these challenging conditions, smaller organisations may find themselves struggling.
If SMEs – often referred to as the lifeblood of the UK economy – are to weather the storm, they need to be focusing on areas such as talent, sustainability, digital transformation and supply chain resilience.
That’s why events like SME Growth Summit, which are designed to equip SMEs with the tools and knowledge they need, are so pivotal.
Keynote key thoughts
Accelerate Your Journey to Digital Transformation – the Future of British Manufacturing Initiative – Asif Moghal, Director for Market & Industry Development, Autodesk
One of the really great things about the work I’m privileged to do is I get to travel around and meet small to medium sized design and manufacturing companies and have conversations with them about how things are going. I think it’s probably the greatest part of my job because I get to meet some innovative, ingenious, resilient people in companies who are doing something they really care about it.
Now, despite a huge amount of diversity, there are a few things most of these businesses have in common: they all want to make better products; they all want to sell more to new markets; and they all want to generate greater levels of value.
But something we’ve all observed recently are the challenges being faced. The conversations I’ve had with SME leaders have been about how they are coping. While all are trying (with success in some cases), others are struggling. And generally, this is where we see digital technologies as a potential route to overcome those challenges so we can get back to doing what we care about.
However, these SME leaders tell me that as soon as they mention the word ‘digital’, they are bombarded with an absolute avalanche of jargon, terminology, buzzwords and theory. This means nothing and many SMEs are fed up with hearing this technical babble.
Digital transformation is a journey and it’s our belief that digital transformation doesn’t need to be difficult. There are some repeatable steps that we’ve seen time and time again, which will answer the question of where to start.
Firstly, don’t start with technology. People don’t tend to come to us wanting to buy a data management, PLM or ERP system. They come to us because they have a problem.
So, rather than start with technology, it’s better to sit down with your leadership team and ask three questions: Where are we today on our digital journey? Where are we today in our ability to serve our market and our customers? And what’s stopping us getting to where we want to be? This is a critical question because it feeds into step two.
Next, think about what capabilities would allow you to get to where you want to be and address those challenges. Is it the ability to flexibly customise your products or services for individual customers or segments of your market? If you can do that, you can charge a premium for it – up to 20% more.
Is it the ability to collaborate inside and outside of your business flexibly with increased speed, quality and effectiveness? Because that dramatically increases your chance of innovating.
Is it the ability to flexibly produce anything that comes in the front door of your offices, whether you do it in-house, through your supply chain or distributed?
Is it the ability to boost your engagement with your customers, so you have an elevated level of customer experience?
Or is it the ability to put data at the centre of your business and use it to create insight-based value-add services for your stakeholders?
We recommend you think about all these capabilities before you even consider technology. Connecting all these together is what can lead to digital transformation. And you don’t have to do them all at once; but you do have to understand where to start.
If you identify one of those five capabilities as being a game-changer for you, then focus on that and develop a strategy around it. But remember that you need to work with people – your employees, stakeholders and partners like us.
My call to action is to check out our British Manufacturing Initiative and all the resources that are there. We are looking for five SMEs that we are personally going to hand-hold through this process.
Attracting, Retaining and Developing Diverse STEM people for Growth – Oliver Buhlinger, Head of Technology, i3 Group
One of the biggest challenges for SMEs is competing on the national and global recruitment market, not only with each other, but with blue chips that have deep pockets and might be very attractive to talent. For SMEs to be competitive they have to think differently, innovate and point out what they have that others might not.
Diverse workforces and diverse teams breathe more innovation. That’s why we’ve focused on bringing a diverse team together and driving innovation that way. But while we’re still seeing under representation in manufacturing, for example, with the ratio of women in STEM roles, how do you attract more diverse talent into your organisation?
One of the keys is to be more inclusive; looking internally and externally at what we can do to attract different genders, people with disabilities, etc. as they will bring value to us.
The behaviour of people and what drives them is changing. If a role can be performed remotely, then why not consider offering hybrid working where possible. It’s a quick and easy way to differentiate yourself and make you more attractive than other companies – even the big blue chips.
Oliver Buhlinger, Head of Technology, i3 Group, speaking at SME Growth Summit 2023
Diversity isn’t about division – despite what some people would have us believe – it’s about unity. And when we are looking to bring a diverse team together, we’re looking to create harmony (if we do it the right way), which breeds productivity.
It can also be powerful to bring more diversity into your leadership teams. That way, potential talent can see itself in senior positions and making a real difference to your business.
As with many aspects of business, if it gets measured, it gets managed; and the same goes for attracting talent. By adopting an approach that utilises data to inform your decisions and drive your efforts, you can achieve your vision.
Try to get your people on board with your vision and show them the role they will play in helping you achieve it. When people see how they can and will be making a difference to your organisations, it gives them a boost.
Discussion Session Takeaways
Building a Digital Transformation Strategy – Adam Crowe, 3Dental
You might have three of four different pieces of software or technology in your business, and it can present a challenge pulling them together to create a holistic view of what’s going on.
One of the main reasons businesses want to build a digital transformation strategy is so they have information at their fingertips which allows them to make timely, impactful decisions.
Leveraging Data for Competitive Advantage in your Factory and Supply Chain –Tim Lawrence, Made Smarter Innovation
We explored some of the challenges SMEs face when it comes to data. One of the most prominent was the vicious circle many encounter; I need the right data but how do I gather the data that I’ve captured and what is the value of that data?
This is particularly true if you have supply chain challenges and want to capture data relating to your customers and suppliers. The same goes for your factory where you want to take advantage of data but aren’t sure which sensors to utilise or where to get the data from so you can start analysing it.
Sustainability for Competitiveness – James Crosby, Advantage Utilities
We looked at what sustainability means from both an individual standpoint (what it means to you) as well as what it means for your business, which can often be different.
We then dived into some of the drivers for why you should look at being sustainable, which vary from simply doing the right thing to marketing purposes and demand from your customers and suppliers. And finally what are the barriers for SMEs achieving their sustainability goals?
Change Management in Distress – Laura McBrown, G&B Electronics
We discussed some of the challenges of family businesses and culture. There was a lot on how you instigate change from the middle, particularly if you’ve got a director-level group that isn’t displaying the best example of what you want to achieve.
We also talked about the experiences people have had with family businesses and how they’ve created a safe learning environment to enable their people to grow.
Talent Attraction and Retention – Are you Competitive? – Joe Walton, Michael Page
On the attraction piece, there was a big emphasis on process. Candidates are often looking for different things, so how do we adjust our processes to (a) get them through the door and (b) add to our culture, not remove from it.
The retention piece was inwardly focused. Once you’ve paid a recruitment fee, how do you keep the individual in your business for a period of time? A lot of the answers weren’t new, they were mainly about how do we get back to some proper leadership and management skill sets? Feel the pulse of your teams and understand what they want because people often don’t want the same things, which is where you can tailor your retention offerings.
Automation for Productivity – Claire Turnbull, Seatriever International Holdings
Whether we are talking about automation from a machine or systems perspective, we mustn’t forget that people are still key to the success of any project and ensuring the business realises the gains.
Automation often causes problems with people thinking it could take their jobs, and we discussed how to overcome these obstacles.
And there was also a discussion about ensuring you have the infrastructure and processes in place after implementing automation; what if it breaks, do you have a recovery plan and/or do you have alternative options running in parallel?
Navigating Turbulent Waters: Mastering Change Management – Ian Parker, Managing Director, Verve4Growth:
Back in 2012, I set up Verve4Growth to offer transformational services to manufacturing SMEs, generally under family, corporate or private equity ownership. And my introductions to businesses usually come via the banks, the advisory community and those interim providers that specialise in transformation, and there are a few of them.
The common thread is that the businesses all face challenges at the time of my introduction, and these challenges were unresolved and capable of putting the firm’s viability at risk.
In the last 10years, I’ve undertaken 14 projects for clients as diverse as a family-owned custodial metering skid provider in Gloucestershire. Said business needed to ship an £8.5m skid on a certain day in August and if it didn’t, it would have gone bankrupt. Such a situation focuses the mind somewhat.
SMEs are very much the unsung heroes of the UK economy. According to national business statistics, there are 1.4 million SMEs with employees in the UK. Statistics will tell you there are 5.5 million SME businesses but only 1.4 million actually have an employee, an interesting fact in itself. And all those 1.4 million SMEs account for 53% of private sector employment and 47% of private sector sales. The vast majority of SMEs have fewer than 50 employees and only a resilient few make it into that medium gap of 50 to 249 employees.
There’s no doubt that the last few years for all of us in industry have been extremely challenging. We’ve had to cope with Brexit, COVID and supply chain shocks. We’re coping with war in Ukraine and what it’s done for energy prices. We’ve also had a fair amount of political turmoil in the last six months and if you’ve got a pension fund in your portfolio of assets, you’ll see what will happen to the valuation of defined benefit pension schemes as a result of that new budget. And of course, we’re living with high inflation at the moment.
The real question however, is whether we’re ready for what could happen next. We’re all familiar with the classic business growth cycle. A firm starts, it survives and grows, and at some point reaches maturity. But in a fast-changing world it’s inevitable that some will decline, get into difficulties and die. Turnover is always the driver in the launch and growth phases, and profit and cash generation are often thought of as being less important in those early stages of sales growth. And sadly, many good compelling businesses runs out of cash in that dash for growth.
My version of the classic lifecycle is slightly different. Yes, we share the five stages of growth – creation, survival, take off, success and maturity – but I add five more stages which are known in my profession as the decline curve. A business is in trouble but not yet aware of its problems; is in trouble but is still in control; has completely lost control; has lost the business and is entering insolvency.
The first two stages of the decline curve are perhaps the most critical. The business is in trouble but all too often management is not yet aware or in control of the situation. And in the early stages of decline, it’s much easier to change the trajectory, rescue the business and achieve a better outcome for all stakeholders.
When challenge strikes, outcome depends on management’s willingness to recognise that the business is potentially in distress. My key message is keep an eye on your cash flow. Cash is the commodity in any business. Very few SME businesses, in my experience, have adequate cash flow forecasting processes. But when challenge strikes, a rolling 13 week cash flow forecast is vital.
Cast yourselves back to 2009 when Jaguar Land Rover (JLR) nearly went bankrupt. No one on the board at JLR understood cash and they had to bring in KPMG to run their daily cash management processes. Cash is one of those commodities that people in corporate life are used to turning to the treasury and saying, I need a bit more this month. If you’re an SME, and you’ve got to make the wages at the end of the week or the end of the month, that really does focus the mind on your cash availability.
SMEs today are operating in profoundly challenging times. Events happen faster and a business can be rapidly undermined. Be aware of the signs of trouble ahead. Understand your business’s rolling 13 week cash flow forecast. What is driving the changes in business outlook? Are you seeing a trend or a blip, and if the business is in trouble, reach out for help. Talk to your bank and other key stakeholders. Time is a critical factor in finding a pathway to success. And lastly, leading turnarounds and transformation is a skill engaged with an experienced, accredited partner. We can provide management teams with help and support. Remember, it takes cash, time and help to find a pathway to success.
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