Sailing through the digital era

Can SMEs survive the disruption?

Small and medium-sized businesses (SMEs) are in danger of failing if they don’t adapt to digital disruption, regulatory requirements and the economic shifts that are fundamentally changing their markets.

According to research, 34% of the 3.300 SME leaders surveyed from across 23 countries last year, said that they will go out of business by 2020 if they aren’t able to innovate in response to these changes1. With the majority of SMEs trying to increase profit and working to grow their operations, they must be ready to challenge traditional assumptions about growth.

The age of disruption

As disruptive companies leverage breakthroughs in cloud, mobile, social, and artificial intelligence technology to deliver personalized, valuable, and immediate experiences, customers have more choices than ever. As a result, they grow to expect this superior experience from any business they engage with. Countless business models were forced to adjust at the feet of the digital age. Those that did so successfully, and catered to engagement, visibility, and immediacy, continue to reap the hefty benefits.

The digital age has transformed traditional business models in four ways:

1) Engagement: In today’s connected world, it’s all about engagement. This spills beyond social comments and shares, and into the very core of how humans prefer to learn and communicate. One-way communication is no longer adequate.

2) Facilitation: The digital age has taken once arduous processes and streamlined them in a way never before possible.

3) Visibility: Aiding to the element of engagement is the advent of increased visibility. Every action a consumer, or potential consumer, makes can be documented and used to serve them personalized content.

4) Immediacy: The undercurrent pushing these massive shifts is the element of immediacy. Human’s carnal desire for instant gratification has only proved to grow with the widespread connectivity of the digital age. Millennials are conditioned to give and receive feedback immediately. Because of the digital age, customers give feedback at rates of frequency and immediacy that once were unimaginable. Each of their opinions has the potential to turn into a firestorm if not consistently monitored by the company.

The impact on SMEs
Running a small to medium business in the digital age isn’t easy. The market is changing at an extraordinary speed, customers are increasingly harder to please and there’s an abundance of digital tools available. It’s easy to understand why many SME leaders find it overwhelming to shift direction and set-up their businesses for future success. The overwhelming majority of small businesses aren’t personalizing their marketing content. Instead they are still using basic methods of recording and analyzing customer interactions

So why are small businesses not embracing the digital age?

The truth is, many small businesses are not aware of the benefits of the internet and other digital tools. They consider that these are not relevant or will not be effective for their business. For small and medium size business owners, the perceived cost, time and tech-proficiency required for building a digital presence can feel like an insurmountable obstacle.

Cloud technology has levelled the playing field — it’s no longer those with the biggest budgets that have exclusive access to the advantages of technology. Digital enables businesses to elevate their capabilities to compete with larger resourced competitors.

However, now that access is easily available, a decision not to invest in digital tools might leave a business behind. When your company is small, you might be able to get away with using manual processes and spreadsheets, but there comes a point when such practices limit your ability to grow, meet customer needs and operate in an efficient manner.

With online tools, businesses have greater insight into customer preferences, and build lasting relationships with them. Using digital tools such as online and e-commerce marketing methods can benefit small business. Small businesses can access new markets and target new customers at a relatively affordable cost using digital tools.

In fact, according to research, digitally advanced small businesses have nearly 4 times as high revenue growth over the previous year, than less advanced businesses, are almost 3 times as likely to be creating jobs over the previous year, earn 2 times as much revenue per employee and are 3 times as likely to have exported over the previous year.

Understand what your customers want
Customers are the lifeblood of a small business — it’s imperative that we’re listening to them and responding to their needs. Each small business has to answer the following questions:

• Do you have regular ‘listening posts’ to hear the good as well as the bad in a qualitative sense?
• What problem you are solving for the customer?
• How many customers have that problem?
• Where do those customers hang out (and how do they want to interact with you)?
• What will it cost to find strategies for consumer engagement

An accelerating opportunity

A misconception about digital transformation is that it simply means digitizing the current way the business is run and how it interacts with others. But the opportunity for innovation is much greater.

Take, for instance, the opportunities for digital customer engagement: It is not simply a matter of digitizing the existing touchpoints, but about reimagining new levels and methods of engagement to get closer to the customer.

In the same way, digital transformation is about moving from being a traditional organization that initiates digital projects to being a digital organization with an integrated strategy that puts digital at its core.

Where do we begin?

Start with a vision of where you want to go, then start small with a focus on digitizing existing value streams. You don’t need to completely digitize the business overnight.

Start thinking about data management. New technologies, like artificial intelligence (AI) and IoT, are poised to push business forward in a big way. But, a business’ ability to leverage these technologies will entirely depend on the quality of its data. While AI might seem like a quantum digital leap, good data management practices will go a long way in setting your business up for the future.

We can help!

MAP Innovation is boutique strategy consultancy, which combines strategy and data science to deliver value to small and medium-sized clients.We strive to create actionable knowledge. Our work is based on scientific research and the transfer of our insights to practical application.

If you want to know more, feel free to email us at hello@mapinnovation.eu