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Business well-being Indicators for Small and Medium Enterprises

Business well-being Indicators for Small and Medium Enterprises. Sponsored by Anew New Zealand Draft only – 21/06/2006. What is the BWI ? . What?

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Business well-being Indicators for Small and Medium Enterprises

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  1. Business well-being Indicators for Small and Medium Enterprises Sponsored by Anew New Zealand Draft only – 21/06/2006

  2. 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.

  3. 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.

  4. 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

  5. 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

  6. 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

  7. 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?

  8. 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

  9. 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

  10. 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

  11. 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

  12. Motivation/Energy Sustainable cash-flow Sustainable valuerelationships Sustainable wealth and well-being 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

  13. Internal / ‘Subjective’ External / ‘Objective’ 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

  14. Health is both internal and external Internal / ‘Subjective’ External / ‘Objective’ 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

  15. Efficiency Indicators(Do things right within the SME) Effectiveness Indicators(Do the right things withinthe network of customers/suppliers) Legitimacy Indicators(Fulfil purpose within service of larger whole) 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 a‘whole’ in relationship to others

  16. Efficiency Indicators(Do things right as individual) Effectiveness Indicators(Do the right things with others) Legitimacy Indicators(Fulfil purpose within service of larger whole) 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

  17. 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

  18. E.G. - Putting the framework together Internal External The SME Part Sustainability of cash-flow Clarity of SME purpose and values Quality of staff relationships Effective business systems Whole

  19. E.G. - Putting the framework together Internal The SME and its close communityof stakeholders External Part Sustainability of added valueand profitability Sense of shared identity and values Whole Quality of network relationships(Suppliers / Partners / Customers) Quality of product and services

  20. E.G. - Putting the framework together The SME and its community within the broader socio/natural environment Internal External 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)

  21. Ecological sustainability of value chain Sense of community identityshared principles, values Sustainability of added valueand profitability Sense of shared identity and values Sustainability of cash-flow Clarity of SME purpose and values Personal sense of purpose, commitment Sustainability of personal income Balance of work, personal, family Personal health and mental well-being Quality of staff relationships Quality of product/service Quality of network relationships(Suppliers / Partners / Customers) Quality of design and innovation Quality of industry / system structure and design Quality of community relationships(Professional / Industry / Local) E.G. - Putting the framework together External Internal Part Whole

  22. 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

  23. 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)

  24. 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.

  25. 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

  26. 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

  27. Next Steps? 1 2 3 4 5 6 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 • 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 • Core concepts • Draft framework • Proposition • Draft implementationplan

  28. 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

  29. 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

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