Business well-being Indicators for Small and Medium Enterprises

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Business well-being Indicators for Small and
Medium Enterprises

• Sponsored by Anew New Zealand
• Draft only 21/06/2006

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What is the BWI?

• What?
• The BWI are indicators and learning tools for
  individual SMEs, associations of SMEs and the SME
  sector as a whole to assess and develop their
  present and future health and well-being, and
  their contribution to a healthy and sustainable
  world that supports them.
• Why?
• The purpose of the BWI is to enable individual
  SMEs, associations of SMEs and the SME sector as
  a whole to be healthy and sustainable during
  these times of great change.

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Purpose of this presentation

• To describe the basic model of the BWBI and a
  plan for taking it the next step.
• To create formal partnerships with organisations
  active with SMEs to develop a pathway for
  definition of a fundable project. This project
  will
• undertake a research, development, design, test
  improve cycle with partner organisations
  involving SMEs
• integrate into a communications programme and
  website
• engage broader groupings of SMEs to complete the
  design and
• set up an implementation plan and means.

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What is in this presentation and who is it for?

• For the project team it summarises thinking
  around the structure of the indicators and the
  pathway forward
• For potential partners it engages you in
  thinking about the value of the BWBI opportunity
  to your organisation and SME constituency
• It covers
• A statement of the problem and opportunity
• An outline of a conceptual approach to SME
  indicators
• An outline of a pragmatic approach to using SME
  indicators to further their well-being and that
  of the nation
• Some proposed next steps

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Who is Anew New Zealand and why are we promoting
the BWI?

• Who is Anew NZ?
• An independent, non-partisan trust to create and
  facilitate a network of networks (business, civil
  society and government), for
• Addressing issues critical to the future of the
  country through the
• Formation of an informed, deliberated shared
  public vision and action programme for building a
  new New Zealand
• Why are we promoting BWI?
• SMEs are the dominant form of business and
  economic activity in NZ
• They are a driver for creative solutions to both
  economic, social and environmental issues that
  face us in the future
• AnewNZ believes SMEs could be more effective
  through enabling tools to assess and develop
  their present and future health and well-being
• We see our role to help through facilitating
  thinking and action via organisations that have
  an interest in SMEs, aiding integration and
  synthesis across diverse settings

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What do we mean by health and well-being of SMEs?

• A cluster of concepts
• Healthy viable for the people involved, the SME
  itself and role within its broader networks
• Resilient able to adapt and thrive within change
  and adversity
• well-being a sense of happiness, connection,
  stability, contribution
• Sustainable both now and into the future
• Richness fullness, vibrancy, excitement
• Core assumption
• Good indicators guide more than just the
  functioning of the SME they help balance
  personal and business within broader concerns of
  community and environment

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What is the issue?

• SMEs are the largest form of business activity by
  number, by people employed and contribution to
  the economy
• SMEs are also, by definition those where there is
  a close personal connection between individuals,
  their aspirations, values, well-being and their
  enterprise
• They are a potential force for positive change in
  balancing macro-economic, environmental, social
  and personal aspirations
• Yet SMEs are generally time poor, niche
  specialists, deriving limited utility from tools
  such as triple bottom line
• Could there be a way to have usable indicators as
  guides for SMEs to realise their potential as
  drivers of a balanced, positive, dynamic society?

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What is the opportunity?

• Indicators that use our best knowledge of what
  health and well-being mean
• That are structured on our best knowledge of what
  viable and sustainable organisations require
• That are simple and useful to SMEs as people in
  business, as individual entities, and as part of
  broader communities
• That could help networks, associations and public
  policy better understand SMEs, better support
  SMEs
• Creating an environment for SMEs to realise their
  potential as drivers of a balanced, positive,
  dynamic society

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How might BWI contribute?

• Indicators usable for
• SMEs self analysis, improvement - easy to use,
  providing levels suitable for different
  situations, skill, time availability
• Networks and associations of SMEs - wanting to
  understand the issues in a more systemic way
• Policy makers - as a tool to help provide
  aggregate information on the SME sector
• A common framework for thinking about SMEs
• Conceptual framework that helps make sense of the
  data
• Facilitation of inquiry, research debate
• A framework for action by
• SMEs through targeting self-help and support
  resources
• Networks through developing of resources for SMES
• Policy-makers through influence on thinking and
  policy

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Conceptual framework

• Framework for defining business well-being
  includes a
• balance of four levels
• Individual owners and family
• SME business itself
• Close community of stakeholders employees,
  customers, suppliers, etc.
• Broader socio-political, economic and natural
  environment

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Understanding SMEs
Typically SMEs are thought of as being similar
to large organisations only smaller
However because of their sizethe personal
situation, needs and values of the owners and
staff, as individuals are more evident and
persuasive. SMEs and personal well-being are
closely interdependent.
A Small/Medium EnterpriseSME
Similarly, the small scale of SMEsstrengthens
the power of personal relationships with
suppliers and customers. SME well-being is
interdependent with the well-being of this close
community
Individual owners,staff and families
The SME within its close community of
stakeholders
SMEs and their stakeholder community is embedded
within a broader socio-political, economic and
natural environment. Individually SMEs may have
little discretionary time for broader issues,
relying on associations or networks in this area
The SME and its community within the broader
socio-political, economic and natural environment
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Using the nested view
The lesson from this nested view of SMEs is that
we cannot see SMEs in isolation
The health of an SME is both driven by its
internal well-being, and its healthy
relationships with the bigger or smaller wholes
of which it is part
Individual owners,staff and families

• Sustainable cash flow can be seen as an important
  property of an SME
• But if the commitment, energy and motivation of
  its owners flags,
• - or, it abuses key customers or suppliers

A Small/Medium Enterprise (SME)
The SME within its close community of stakeholders
The SME and its community within the broader
socio-political, economic and natural environment
Then its contribution to the health of the whole
is jeopardised
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Health is both internal and external
With the close personal nature of SMEs, our
understanding of their health and well-being must
encompass both the external, objective components
and the subjective interior world.

• In one the owner is stressed and demoralised, the
  team is feeling low

For example take two SMEs both with a negative
cashflow, owners taking little or no money from
the business

• In the other there is still stress but confidence
  and forward-looking vision within the team of
  what is possible

A set of well-being indicators based only on
objective criteria would miss this critical
difference
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Health is both internal and external
External / Objective
Internal / Subjective
Keeping the analogy going

• In one, the owner is avoiding being open with
  suppliers, not communicating

Two SMEs both with a negative cashflow, overdue
on payments to suppliers

• In the other, the owner is communicating, taking
  suppliers into confidence, building trust

There are critical internal correlates of
well-being that apply at each level - personal
- SME - SME within its close network - SME and
network within broader society
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Health of both wholes and parts
Objective view of SMEs as a part in isolation
While cash flow in the short term is controllable
by a SME
In the medium term it depends on a sustainable
surplus between costs and revenue
That is based on value created with customers and
suppliers
Based on capabilities and practices that are
sustainable and legitimate within the broader
community
Objective view of SMEs as awhole in
relationship to others
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Health of both wholes and parts
People in SMEs viewed as a part in isolation
While motivation and commitment in the short term
is controllable by an individual
In the medium term it depends on shared
understanding and purpose of people within the SME
That is based on fairness and balance of value
for the time, effort and return to those people
within the context of their personal/family life
Based on capabilities and practices that are
fair, sustainable and legitimate within the
broader community interests
People in SMEs viewed as a whole in
relationship to others
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E.G. - Putting the framework together
Internal
External
Part
Individuals within the SME
Personal sense of purpose, commitment
Sustainability of personal income
Personal health and mental well-being
Balance of work, personal, family
Whole
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E.G. - Putting the framework together
External
Internal
The SME
Part
Sustainability of cash-flow
Clarity of SME purpose and values
Effective business systems
Quality of staff relationships
Whole
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E.G. - Putting the framework together
The SME and its close communityof stakeholders
External
Internal
Part
Sustainability of added valueand profitability
Sense of shared identity and values
Whole
Quality of product and services
Quality of network relationships(Suppliers /
Partners / Customers)
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E.G. - Putting the framework together
The SME and its community within the broader
socio/natural environment
External
Internal
Ecological sustainability of value chain
Sense of community identityshared principles,
values
Part
Whole
Quality of industry / system structure and design
Quality of community relationships(Professional
/ Industry / Local)
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E.G. - Putting the framework together
External
Internal
Part
Whole
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How could the indicators work?
The indicator framework invites peole to think
their way from the personal attributes of being
inside a SME out to the larger wholes of the
business, its networks, its community
Imagine a website based survey (it could work
on paper too) where the first questions were more
like a personal inventory. Feedback could show
how you stand versus others in like situations,
you could dig in deeper if you felt it important,
or get pointers to assistance for issues of
relevance to you
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How could the indicators work?
Using a metaphor of ripples spreading out in a
pool the website would invite you to analyse
your SME.
The first step might be to aggregate the personal
inventories completed by others in the SME,
creating an opportunity to seedifferent
perceptions, understand each other
Next, key parameters of the SME itself would be
the focus. Connections between attributes could
be highlighted in feedback, patterns from similar
businesses could be portrayed
At the next level it could be possible for key
suppliers and customers to be invited to give
your SME feedback via a web questionnaire,adding
to your own evaluations (like a 360 degree survey)
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How could the indicators work?
At the final step you would be asked to think
more broadly, to ask yourself how your
SMEconnects into its community, contributes to
and is sustained by that community
It may well be that only some SMEs get to this
stage without help and prompting from members of
that community professional bodies, industry
associations, local government
This represents an opportunity for organisations
that aim to support SMEs to work together beyond
traditional definitions of interest using common
frameworks tuned and adapted to their SME
environment
While behind the scenes there is a repository of
data that is available, on an anonymous basis,
for research and policy development.
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How could the self help work?

• Indicators/self analysis helps focus attention
• Links from each area to existing resources and
  service providers
• Use of self-organising mechanisms
• SME ratings of helpfulness to guide improvement

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How could it work for a partner organisation?

• As a web-based system, SMEs would go to the web
  and
• Assess their lives and their businesses
• Obtain guidelines for improvement
• Network with other SMEs about relevant issues,
  and
• Obtain aggregated results
• As a industry association, local
  government/community you could use the BWI to
• Add value through a new way of building member
  capability
• Provide a distribution medium for SME resources,
  both yours and those available elsewhere
• Use as a tool for identifying patterns and needs
• Work along side others to develop effective
  partnerships that support SMEs

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Next Steps?
1
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3
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Establish basic propositions
Acquire institutionalPartners
Acquire Funding for PhD Candidate
Co-develop and test tools with SMEsbuild web
site
Develop and use SMEnetworks
Review trial and Plan Implement- ation
2009
2006
Completed 2006

• Programme design
• Communications
• Initial full trials
• Feedback from SMEs
• Evaluation of framework and benefits of process

• Engage SME development partners
• Draft indicators
• Self analysis tools
• Feedback tools
• Self help directories
• Web site
• Communicationmaterials

• Core concepts
• Draft framework
• Proposition
• Draft implementationplan

• AUT Faculty of Business support
• plus seek financial support from
• Corporate sponsor(s) wanting to support their
  supplier network
• Industry Assoc.
• Sustainable Business Network
• NZ Business Council for SD

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Steering Group

• Initial steering group to guide process through
  to more formal structure including partner
  representation
• Robb Donze MD Interface New Zealand Ltd
  Member of NZ Business Council for SD.
• Phil Gandar Synergia Ltd, Systems Consultant
  Designer and technical consultant for project
• Dr. John Craig Professor of Environmental
  Science University of Auckland
• Professor Kate Kearins - Professor of Management
  AUT
• Professor Trish Corner Professor of Strategic
  Entrepreneurship - AUT
• Dr. Anne deBruin Professor Economics, Commerce
  Department Massey
• Annette Lusk Board Member, Sustainable Business
  Network, works at MFE
• Sandra Crosby Enterprise North Shore
• Peter Townsend CEO Canterbury Chamber of
  Commerce
• Clare Feeney Business Care
• Ray Skinner Consulting accountant, Founder of
  Sustainability Working Group
• Lisa Er SME, Founder and MD of Lisa's Middle
  Eastern foods
• Dave Breuer Director Anew NZ

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In conclusion

• The BWI are indicators and learning tools for
  individual SMEs, associations of SMEs and the SME
  sector as a whole to assess and develop their
  present and future health and well-being, and
  their contribution to a healthy and sustainable
  world that supports them
• The project so far has laid the foundation of
  concepts, process and plans
• Partner organisations who value the outcome of
  healthy SME are the next step to drive the
  project forward
• This requires funding for a formal project
• That can engage SMEs in co-development while
  using the skills and resources of partners and
  specialists