Business Growth = Economic Growth: And the curse of technophobia

It’s a simple equation really: business growth = economic growth. The phenomenon of governments trying to influence the first element of the equation is nothing new – neither is their inability to succeed in any meaningful way.

The first hurdle governments always seem to fall at is when they ask SMEs if they want to grow. The majority response is usually “yes” and the uplifted politician on the receiving end of this good news scurries off before hearing the inevitable “but”. Even if the politician stays around long enough to hear the “but”, the truth will rarely come out; only the usual negative influencers of growth may follow (finance, regulatory burden, employment law etc) and they are big enough challenges for any government. And whilst these are justified concerns that need tackling, they often hide other facts that are arguably more significant for your average SME.

I have attended business round tables where the stream of useful suggestions on how to encourage business growth masked the fact that half of those SME representatives at the table had no desire to grow their business in the first place. Of the remainder, two-thirds probably would grow their business somewhere down the line but left you with the distinct feeling that world peace would arrive sooner. This left the loudest voice to those who talked from either a purely academic perspective or who were already trying to reach-out and grow their business. Little wonder then, that whatever governments do to encourage business growth, disappointment is almost always on the cards.

As the current economic crisis has deepened, our politicians look increasingly desperate. They know that increasing the start-up rate is one thing – and right now, necessity entrepreneurship is pretty much doing that job for them – but increasing growth from the current business gene-pool is now even more difficult. Too many miniscule, stationary businesses will eventually drag down productivity and the national economy but even those SMEs that want to grow will be reluctant to invest too much of their reserves in such uncertain times – and who would blame them?

So what should be done? To start with, the Lisbon Council’s recent policy brief ‘Wired for Growth and Innovation: How Digital Technologies are Reshaping Small and Medium Sized Businesses’ should be added to the essential reading lists of the leaders of our key government economic ministries. The report argues that encouraging greater use of technology by SMEs has the potential for profound and positive changes at ‘minimal political cost’. It highlights the role of technology in reducing business costs and overheads and the business benefits of making extensive use of cloud technologies. And if in need of some evidence, sales by high and medium-use web businesses in the UK grew by 4.1% annually between 2007 and 2010, which was roughly seven times faster than for low and non-web-use businesses.

From the practicality of micro-manufacturing, to the affordability of three-dimensional printing; and from the dynamism of crowd financing to business models that exploit hypothesis-testing and experimentation in the marketplace, this policy brief highlights exactly how the new kids of business will succeed. And whilst the seven point ‘to-do list’ is Europe facing, the fact is that policy-makers and politicians have all the signposting they need in this document to develop a strong blueprint for economic growth through SME exploitation of 21st century ICT.

If anyone thinks that we can rest on our laurels because (at least in European terms) the UK may be doing rather well, I suggest not. There is so much more we can do to encourage established businesses to work smarter through the exploitation of modern, web-assisted ICT and if we don’t take action we run the risk of too many of our SMEs remaining stationary and bringing little or nothing to national economic growth.


About mikewpaice

Freelance writer and researcher.
This entry was posted in Business, Economy, Politics. Bookmark the permalink.

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