How to create an SME network that Works
Our past post on SME networks wanted to explore if it was possible to build SME networks in health by analyzing cases in other sectors, so that difficulties, pitfalls but also best practices can be distilled from experience. After describing success cases in Norway and Spain, today’s post aims to analyze what is needed to set up an SME that really works, so that in the third post it is possible to see how to apply it to an clinic network in the field of human reproduction.
Co-coperation and entrepreneurial netowrks seem to be new, but 100 years ago companies also built intense collaborative networks. An interesting case of SME network is described by professor Joaquín Trigo, director of the Spanish Institute for Economic Studies. The little Spanish Town of Arbucies produces most of the bodies of busses used in Israel. This success is due the one century co-operation among all the bus and truck body building companies of the catalan town in the production and sales of their products (see report in Spanish).
According to profesor Trigo, the key success factors for entrpreneurial co-operation are:
- Obtain small initial successes that enforce confidence and allow participants to perceive that they can achieve more ambitious goals
- Always look to co-operation as a long term business
- Start with small projects and end with big ones
- Do not mix up guild or interest association (defending common interests) with co-operation (common competitiveness goals)
Competition vs. co-operation: a creative tension
The main barrier when planning an SME network is mistrust due to competition; but far from being only a breaking force it can be the lever that fosters a successful co-operation. Precisely the tension between competition and co-operation produces optimal collaboration forms so that each one can keep its interests and at the same time become more competitive, because the other one is more competitive too.
Thus, one of the success factors for SME co-operation is precisely to identify the particular interests, position oneself clearly so that conflicts can be worked out.
Mistrusts among providers and the facilitator’s roles
Mistrust is the big entrance barrier, as the surveys done during the CIADE project show. Mistrust against competitors (53%) and also non competitors (41%) was seen as the main obstacle for co-operation. The other great barrier was time. 51% were worried because of the amount of time required for co-operation projects. Mistrust vanishes usually with experience or with a big business order for one of the actors, that cannot fulfill it due to lack of capacity.
But when conditions are not given, a neutral facilitator that is accepted by all parties is ideal. In Norway this role was played by universities. In the CIADE experience the role was taken by town halls and province governments, that later subcontracted me as expert.
A facilitator rather than mediate should act as a catalyst
He helps players by making consulting for individual companies, identifying thus strong points as well as weaknesses that can be compensated with other companies’ strength.
They control the different phases of the process; they manage time and rhythm
They look for opportunities for those players that cannot see them because their position
They introduce other agents in the process (banks, universities, local powers, export authorities) that allow SMEs to achieve quicker their sales or savings goals.
In Spain, town halls and province governements (Diputaciones) play a major role as opening agents. They are not required to fund the project, but to pull and to open the doors. They have a great ability to bring players together, their participation legitimates somehow the process and they are able to dissolve stacked situations.
Creating an SME network: the process
Each network is different, but the following rough phases can be established:
1. Search for opportunities: identification of potential stakeholders, consulting among them, initial diagnosis, identification of natural leaders and finishing with diffusion work.
2. Creating shared goals: co-creation competences are key during this phase. Opportunities are there, but the participants have to be able to see them, create them and get enthusiastic about them. It is very important that players work together in the feasibility analysis of opportunities and get from ideas to actual work.
3. Project design: transform opportunities into real projects and create a business plan and model for them.
4. Implementation: here the facilitator becomes key again. At his point many projects fail: participants tend to prioritize their own business before a collaborative project and leave the project. A catalyst is important to get the work done.
Digital platforms and scientific parks: speed and effectiveness
The facilitator can be a consultant, a company or a business incubator. A company is effective in the case of cluster portals or e-marketplaces. Incubators and scientific parks can help in the case of more technological companies, especially by shared participation in technology fairs.
The company solution (web clusters, e-marketplaces) is probably the most effective. It makes a value proposition that is tangible and measurable, for instance reduce purchase costs or distribution. The company recruits customers at its conditions and sets up a clear procedure.
The advantages are evident: a simple process, distrust disappears and benefits are quick. The only disadvantage against the more artisan process (as the ones described in this and the former post) is that participants can miss the opportunity to make a better society that really changes a bit the world, like the Mondragón experience in the Basque Country shows, the case at Herencia or the Norwegian clusters.
In healthcare e-marketplaces are a reality since more than a decade ago. Also clinics associate in informal patient referral networks or in common on line consultation platforms. But can you imagine how healthcare players could assoc