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Out-of-the-box thinking for SMEs: Lessons on how to thrive in an inclusive economy

SMEs are well placed to succeed in tomorrow’s business landscape, says Anne Lise Kjaer, CEO and founder of Kjaer Global and a leading global futurologist. With agility on their side in a period of ongoing global uncertainty, she believes SMEs need to leverage their supplier and stakeholder networks, champion their locality and adopt a transparent and responsive approach that respects consumers’ new needs.

‘One of the biggest challenges facing SMEs today is the lack of time; time to think and plan where to go next,’ says Ms Kjaer. ‘The solution to this challenge is clear: focus. But to do that we need a whole new mindset and a simple system that talks back to us in an informed way – and that’s where trend management comes into play.’ Ms Kjaer, a key-note speaker at the EUROSME 2013 conference in Dublin on 11-12 June, will deliver a speech with the working title ‘Tomorrow's Global Citizen and the Inclusive Economy’.

Kjaer argues that, as physical and virtual borders dissolve, seamless transitions and self-defined boundaries in all areas of life will become the norm: ‘The physical retail store is no longer the core customer universe, so businesses must evolve to be where people are. A new generation, raised on the freedoms of technology, expects convenience, exchange and interaction plus lower-cost products and services. Without a doubt, we will witness the continued growth of social commerce and other technology-enabled industries.’

Paving the way for holistic economic models, more inclusive economy

Ms Kjaer has developed what she calls the 4P (People, Planet, Purpose and then Profit) concept, a checklist of sequential priorities that managers should pursue in order to achieve future success: ‘Following the 4Ps is a strongly social and ethical approach, but it also works for the bottom line because once we have a positive impact on people and planet with an ethos to match, we guarantee a place for our organisation in the future. Instead of feeding off its surroundings, our organisation enriches them, and this leads on to profit.’ Ms Kjaer also refutes the notion that her approach is not practical during difficult economic times: ‘4P thinking is more essential than ever right now because it offers a sustainable and human-centred focus that will rebalance the relationship between society and business.’

Her company, Kjaer Global, is in the business of preparing companies for the future by identifying key societal trends on the basis of quantitative and qualitative data, as well as value-based research. It works with leading brands, as well as SMEs. A core tool is the Kjaer Global Trend Atlas, a trends filter used to determine the emergent scientific, social, emotional and spiritual drivers that impact everyday life and redefine our culture and the way we choose to live.

Using this core tool, Ms Kjaer outlines key trends she believes will determine SMEs’ foreseeable future. She says the first of these is the evolution of the ‘Global Brain’ – cumulative intelligence gathered by individuals, organisations, governments and things – all connected to the Internet of things: by 2020, over 50 billion devices could be connected, bringing immense opportunities in education, media, health, commerce and leisure. The second is ‘Access over Ownership’: ‘lightweight’ is the buzz-word that describes how people will want to live and do business in the future, and this offers scope to radically redesign products and services across all sectors. The third major trend is ‘Deep Storytelling’: in a mass market, there is a premium on local goods and services, so being an SME is an advantage, provided there is a clear focus on authenticity and companies tell a compelling story about what makes them stand out from the crowd.

Ms Kjaer says that SMEs need to adjust their strategies for products and services offerings to meet future consumer demands, but there’s something more required for success: ‘Caring is now integral to any business plan, and that means inviting shared ownership with customers and ensuring all initiatives deliver – and are seen to deliver – mutual benefits.’ Ms Kjaer adds that this move towards a more inclusive economy – what she terms ‘Weconomics’ – has potential advantages for SMEs when it comes to sourcing funding: ‘Growing distrust of big business and current global economic instability are set to foster the development of radically different and disruptive business models, notably crowdfunding platforms. It now is quite common that people want to own a share in the start-ups they buy from, transforming them from mere consumers into respected partners with a stake in the success and strategy of the business they are part of.’

Think global, act local

In this broad context, policy-makers and business organisations have a vital role to play. Ms Kjaer emphasises that all the key trends are closely interlinked and shared ownership concepts are part of a ‘bigger picture’ response to globalisation in business: ‘One way for all organisations to play a part in this movement is to embrace “glocalisation” – literally, thinking global acting local. They strengthen their own operation by leveraging their networks, supporting local trade and production, and celebrating regional heritage and values.’

A new business landscape also requires a fresh communications approach, says Ms Kjaer: ‘Recognise that we already live in a flatter and more democratised world, in which communications must deliver immediacy and transparency. Put simply, organisations must move from top-down messages to a dynamic two-way narrative about their brand values and core purpose.’

Ms Kjaer concludes that SMEs have real opportunities to prosper, even though consumers will continue to question business practices across all sectors, adding: ‘People are looking for fresh approaches, so SMEs that cut the noise and focus on developing an honest and meaningful interaction with their customers and stakeholders can overcome the challenges and thrive.’

Register now for the SME conference under the Irish EU presidency in Dublin on 11-12 June.

News & Events

SMEs in a networked world: Applying open innovation successfully

Wim Vanhaverbeke

Open innovation (OI) can be a catalyst to improve the competitiveness of European SMEs in the midst of the financial crisis. Academic Wim Vanhaverbeke explains that for OI to prove successful for SMEs, it needs to be adapted to their specific needs. To this end, coaching, awareness-raising and dissemination of best practices should be pursued by the EU and national governments.

‘Most SME entrepreneurs are people who would want to implement OI but are scared to begin,’ argues Dr Vanhaverbeke, Professor on Strategy and Organisation at Hasselt University (Belgium) and visiting professor at both ESADE Business School in Barcelona and the NUS National University in Singapore. ‘What they need is conviction, good examples and coaching.’

Dr Vanhaverbeke, a key-note speaker at the EUROSME 2013 conference in Dublin on 11-12 June, will deliver a speech on ‘SMEs in a networked world’. He emphasises: ‘I want to caution European policy-makers, managers and associations that OI as they know it is designed for large companies and is of no help to SMEs.’ He explains that according to the traditional definition, OI is about external knowledge that a company acquires from a third party and uses to develop new services and products, or improve its current ones. Furthermore, the term also refers to the technology that belongs to a company, but for various reasons remains unused and can be monetised, that is, licensed to other companies or used to set up a spinoff company.

OI: a 4-step implementation process for SMEs

The concept of OI needs to be modified when applied to SMEs, especially low- and medium-tech small companies. According to Dr Vanhaverbeke, OI is crucial for SMEs because they don’t have enough internal competences and internal technology, so they have to look to third parties if they want to develop a new product. In SME terms, OI can be understood and implemented by a four-step process:

  • SMEs need to think about and define their strategy, i.e. what they want to achieve and succeed in. They need to make strategic decisions regarding their growth techniques, strengthening of competitiveness, product differentiation, etc.
  • SME entrepreneurs need to adopt entrepreneurial insights in order to make a difference. They are the ones who will come up with the ideas of how to differentiate and gain in terms of competitiveness. Entrepreneurs themselves are crucial in the process.
  • The SME applies OI, which comes as a natural consequence of the two previous steps. Since the SME might not have the competences internally, the entrepreneur tries to cooperate with partnering organisations who can provide the know-how and/or the technology required to implement the strategy chosen by the SME.
  • SMEs need to manage their networks. This is a new management challenge, not only because entrepreneurs have to work on management internally, but because they also need to utilise the external network of partners.

OI and European SMEs

Dr Vanhaverbeke speech will emphasise that it would be a mistake to think that innovation management is only related to leading-edge technology, for instance. This counts for hi-tech companies, which constitute only 5% of the European SME landscape. The priorities for SMEs concerning OI should be different. The top priority is to ensure that companies and entrepreneurs get connected with each other. ‘Networking allows for the flow of information in a period when many SME managers in Europe are isolated,’ says Dr Vanhaverbeke. ‘They are not aware of the opportunities universities or research institutes offer, or of the privileges of networking in the value-chain.’ Building trust amongst key partners is of crucial importance. He stresses that successfully implementing OI is an issue of trust.

Another point Dr Vanhaverbeke will highlight is that European SMEs should not focus that much in developing new technology. The critical success factor is not about developing technology, but creating applications from existing technologies. ‘It’s all about developing new business models, finding the right technology, licensing it and developing the right application,’ he says.

But can OI help SMEs cope with the ongoing financial crisis? Dr Vanhaverbeke thinks that it can, as it is a vehicle for the development of innovative products in a highly competitive business environment where the traditional strategies for an SME have become really cumbersome. He argues however that there is a growing need to structure and implement an OI policy at the European level: ‘What managers really need is to become aware of the power of innovation. Too many SME managers are very preoccupied with surviving and they don’t think about strategy. All these companies that have been very successful in implementing OI have been contemplating strategy on a long-term basis. You need to make managers reflect on what is possible if they collaborate. In order to achieve that they must be aware of the possibilities they have.’

SME managers must also learn from experience and best practice examples. Dr Vanhaverbeke underlines that there are very good examples of SMEs that implemented OI successfully in Europe, but they remain unknown. He proposes to create instructive 15-20 minute videos showing what managers have been doing and then disseminate them online to provide guidance for SMEs. The EC can facilitate this effort at Union level, while local associations can help with dissemination and promotion. ‘It’s very easy and bears low cost,’ says Dr Vanhaverbeke. ‘I’d like to turn the attention of policy-makers towards education, raising awareness and promotion of good examples. That’s what SMEs need more than anything else at the moment.’

Register now for the SME conference under the Irish EU presidency in Dublin on 11-12 June.

News & Events

Lead to Win: Canadian business innovation project has lessons for EU stakeholders, SMEs

Dr Tony Bailetti

Crises breed opportunities that can lead to economic recovery and job regrowth. This is the lesson learnt from the Lead to Win (LTW) project, which was initiated in Canada and now aims to serve as a best practice for the EU. LTW has at its core the creation of knowledge jobs in hard-hit economies.

LTW is an engine that supports technology entrepreneurs grow revenue and create knowledge jobs in a region. Each venture in LTW works to create six or more jobs three years after venture inception. The LTW engine is a business ecosystem that cost effectively applies state-of-art knowledge on technology entrepreneurship and economic development to create knowledge jobs in a region. Currently LTW’s successful implementation in Ottawa involves 70 SMEs.

‘It has to be the community that takes responsibility for the creation of such jobs. It’s a process that involves everyone, this is not a one-sector show,’ argues Dr Tony Bailetti, Director of Carleton University's Technology Innovation Management programme who is the driving force behind the project. He emphasises that LTW could be successfully replicated in various EU countries as a tool to combat rising unemployment and to contain the economic recession. The key element is to motivate the community to come together and support an engine that creates knowledge jobs. Dr Bailetti stresses that ‘together organisations can do something that no one organisation can do on its own, and in Europe this would work very well. It will be a community challenge as opposed to a government-led project. The project is transparent, open and innovative.’

Creating an innovation eco-system for SMEs in the EU

On 12 June, Dr Bailetti intends to convey his experience and knowledge to the EU as a panel member for the discussion on ‘The Ideal Innovation Eco-system for Globally Competitive SMEs to Grow,’ at the EUROSME 2013 conference in Dublin. He will provide European policy-makers and businesses with insights on how to design an ecosystem that takes SMEs to the next level through creative participation and job creation. The main argument is centred around directing all efforts towards transforming the entire ecosystem in a way that every company within it is a ‘born-global-company’, namely, a venture that is global from inception. Based on Dr Bailetti’s experience, the difference between successful companies and those that have died is that the former became global very early on. He will highlight the unique challenge of creating an ecosystem in Europe that goes beyond a concept, one which will be further improved or developed, and where all stakeholders would be ‘born-global’.

The concept for LTW was first conceived in Ottawa in 2002 at a time when the region’s two major high-tech players began to drastically slash their workforces. The project assisted axed workers to become technology entrepreneurs. The graduates of the first cohort of LTW launched companies that created 300 knowledge jobs in a four year period. Given the radical changes undergone by the economy and the diverse profiles of the laid-off workers, LTW was relaunched as an ecosystem in late 2008.

‘In 2008 we needed to deploy the project in a much smarter way. We built on the 2002 experience with technology entrepreneurs and went worldwide looking for models to be able to create a machine that could generate knowledge jobs in the region,’ underlines Dr Bailetti, who is also an Associate Professor in the Eric Sprott School of Business and the Department of Systems and Computer Engineering at Carleton University.

What in 2002 was a course and supporting mechanism to raise money to create new businesses, in 2009 became a job-growth engine in the SME sector. The idea behind this scheme was to support companies by providing technology entrepreneurship. In return, these companies would pledge to generate six jobs each within three years. Dr Bailetti explains that LTW became an open-source project which produced technology businesses instead of code. Its success is no small feat, considering that the jobs were created for SMEs in a business landscape where big companies traditionally thrived.

The real innovation of the project was the development of a process to organise the services delivered to technology entrepreneurs via a multi-sided platform. In this way, even small companies have the same support that new ventures have in big companies. Entrepreneurs, instead of working independently, were now able to immediately create a network that can be used later on to launch and grow their businesses.

LTW was designed for sustainability; there’s no end date in sight. The eco-system is characterised by multiple logics that allow robustness in the entire system. There is not one source, but many sources of funding, thus offering independence and obstructing the creation of bottlenecks in the funding process. ‘We have different elements and each element has to be funded on its own,’ says Dr Bailetti. ‘Every component is self-funded, it must be before it goes into the system.’

LTW was originally structured so as to generate knowledge jobs for displaced knowledge workers. Today, its implementation scale is larger and the requirements it has to respond to are different. The next challenge now lies with creating jobs in non-knowledge sectors. Dr Bailetti is confident this can be achieved as he considers the most important outcome from the implementation of LTW in Canada: ‘The lesson that I have engraved in my head was that it’s an opportunity to take the entire community to the next level.’

Register now for the SME conference under the Irish EU presidency in Dublin on 11-12 June.

Success Story – EuResist

EuResist – Enhancing HIV treatment with more precise patient modeling

HIV is not curable but it is treatable, states Dr Francesca Incardona, CEO of EuResist Network GEIE and research area manager at Informa Srl, the SME responsible for coordinating the EuResist project. The thirty-month initiative was devoted to providing better treatment by implementing an intelligent system that uses patients’ clinical information together with viral genetic data, thus personalising treatment, delivering better results and coping with the complexity of the virus.

‘Choosing the best treatment for a specific person can be very challenging. The antiviral drugs designed to help deal with HIV are numerous, and furthermore the HIV virus evolves very rapidly so that each person hosts slightly different mutants of the wild virus, with a different response to the various drugs. Some viruses become resistant to several drugs and doctors may encounter many difficult situations,’ says Dr Incardona.

Drug resistance is the main source of treatment failure today in western countries. There are numerous antiviral drugs that can be used, and in most cases, it is relatively simple to treat a patient at the onset by prescribing a cocktail of antiviral drugs. Such treatment success is usually short-lived. The virus evolves and becomes resistant to the medicine. When doctors choose new medicines to combat the disease, they may find that the viral population (the mutated viruses hosted by the specific patient), is already resistant to the treatment. EuResist was launched with the objective to collect as much data as possible in order to understand how patients fare under this particular virus.

Dr Incardona explains that the vision behind the EuResist project was to create a system with the ability to learn from real data through smart modelling techniques. Sufficient amounts of data and a modelling algorithm were first becoming available at the time. The system was intended to help doctors choose the best treatment for a particular patient with a given viral population and resistance profile, in a more specific and accurate way than before. The achievement of the project was based on two key outcomes.

State-of-the-art tools for effective management of HIV patient data

First, an integrated database was created, which is among the largest HIV resistance databases available today with over 62,000 patients. It is used by hundreds of countries and contains such data as patient information, drug therapies and AIDS defining events. It proved trouble-free for the project initiators to gather data from different sources and encourage people to share such details, which is in stark contrast to common practice. This surprising willingness was key to project success, she says, and it was accomplished thanks to ‘a pure collaboration of spirits.’ The database is freely available for studies, unless these studies are driven by pharmaceutical companies, which are required to provide a financial contribution.

Second, a prediction engine was developed based on the database, which examines data that is given online and foresees how treatment will work best. The engine boasts a high accuracy percentage (77-78%) in predicting the right treatment. Increasing this percentage remains challenging, as it cannot be done simply by populating the database. ‘We have to take into account other factors, especially the human factor,’ underlines Dr Incardona. ‘What we believe will drastically change the accuracy is to consider the profile of the human immune system.’ The engine is free online.

This system enables more effective patient care and considerably reduces the prohibitive international therapy management costs. Designed to offer more treatment options to patients, the EuResist system can contribute towards saving lives. By reducing the possibility of choosing wrong treatment, it contributes to better quality of life and to the decrease of expenses. The benefit derived from adoption of a treatment optimisation tool is a function of the increase in effectiveness with respect to the standard of care, the treatment failure rate and the availability of treatment options in a specific geographic area.

Increasing effective treatment

Dr Incardona puts the system’s added value into perspective. A 10% yearly increase in the number of effective treatments in an area where 10,000 patients are being treated with a success rate of 80% would result in the reduction of the final treatment failure rate from 20 to 12%. Based on this, an additional 800 patients would benefit from effective therapy every year. ‘Using a system with this modest rate of increase in successful treatment on a large scale can make a considerable difference when we consider that around eight million patients are under treatment in low- and middle-income countries and more will be put on treatment every year,’ she adds. By suggesting a number of possible treatment options, the EuResist engine also contributes to a rational, case-based cost-efficacy paradigm.

Dr Incardona emphasises that there is significant merit in EuResist. Its prediction models - the ideas behind the prediction engine - can be applied to other diseases as well, although not directly. The first area of application with similar issues is hepatitis, where antiviral drugs are now coming out on the market. The idea to use large data sets and these kinds of models can also be applied to cancer.

The EU's funding instrument was vital in getting the project off the ground. When it ended, the EuResist Network was set up, an entity which involves most of the initial project partners. The Network participates in EU co-funded research initiatives, but it is economically independent and self-sustained thanks to a successful business model. The large amount of data collected is highly valued by pharmaceutical companies. Studies on data requested by pharma companies are first evaluated by a scientific committee that consists of all the Network partners. If approved, the paid studies are carried out. This enables the EuResist Network to continue its basic activities which require the efforts of seven professionals, in addition to the involved scientists.

Dr Incardona stresses that additional public financing at this stage is necessary to continue to build on achievements. The broader research aims of the project, such as further efforts to make it applicable to third world countries, require funding which private companies and organisations cannot allocate.

‘The project was a success beyond expectations,’ says Dr Incardona. Not one to rest on her laurels, she aspires ‘to increase accuracy by considering the patient’s genetics, particularly that of the immune system.’ Furthermore, the EuResist Network plans to use similar models in other domains like hepatitis, and to adapt the system for users in third world countries who are most in need.

Participants: Italy (coordinator), Germany, Sweden, UK, Israel
FP6 Proj. N° 027173
Total costs: EUR 2,973,442
EU contribution: EUR 2,143,000
Duration: January 2006 - June 2008