Earlier this month, I wrote about the fact that 70 per cent of all employment growth in Wales during the period 2003-2010, equating to 68,000 new jobs, had come from small to medium sized enterprises (SMEs).
This unequivocally demonstrated that it was SMEs that have driven employment growth in Wales during the last decade, especially within our more deprived communities.
However, as the proportion of employment within large firms continues to decrease within the Welsh economy, it is important that programmes are put into place that can enable the SME sector to become more competitive and, more importantly, to continue to grow and create employment.
As the business community is all too aware, the Welsh Assembly Government (WAG) has largely abandoned support to the SME sector as part of its economic renewal programme, a situation which may, ironically, lead to other organisations stepping up to the mark to fill the gap left by the civil service withdrawal of funding from such activities.
Given the bureaucracy that has bedevilled public sector support schemes over the years, some are now suggesting that the withdrawal of WAG support may not be such a bad thing and that the programmes being developed elsewhere are far more relevant to the needs of Welsh businesses.
Take, for example, the LEAD Wales initiative, which is a focused leadership programme aimed at owner-managers of SMEs.
Originally developed for the North West region of England as a partnership between the North West Development Agency and the University of Lancaster, it was introduced to Wales in 2009 as an £8 million European Social Fund project funded from Wales EU Convergence Funding, with match funding provided from the higher education partners.
It aims to provide leadership development to 700 businesses in the West Wales and the Valleys Convergence region between 2009 and 2015 and is being delivered through Swansea University’s School of Business and Economics, demonstrating the role that university business schools in Wales can play in driving forward economic development.
It is substantially different to many other business support programmes in that it is essentially driven by the needs of the businesses.
For example, the programme includes a learning experience to bring together the companies and build trust between them. It then moves onto a series of half-day sessions designed to stimulate thinking and build awareness in areas of leadership and business growth. These divide into ‘business’ masterclasses led by business school faculty and other external subject experts on themes of interest identified from delegates, and ‘leadership’ masterclasses led by proven leaders from corporate, public and sporting spheres and designed to provide inspiration and opportunity for reflection on leadership style and context.
The programme then moves to deal directly with the individual issues raised by participating companies in which an owner manager presents a personal current business challenge and other entrepreneurs ask open-ended questions to identify new options and actions. Presenters are charged with implementing action plans and reporting updates in subsequent sessions, thus providing each SME owner-manager with a board of temporary non-executive directors.
In addition, the companies are supported through a programme of business shadowing and exchanges and a series of one-to-one mentoring sessions with experienced, professional business coaches.
According to Swansea University, an initial review of the programme suggested that the average turnover of the first cohort of participants had grown by over 30 per cent in the past year. However, what is most interesting is the main factor behind this growth, namely gaining the confidence to win new business, particularly from larger companies. This demonstrates that the intangible benefits of attending such programmes are as important as those targets set by the programme funders.
Therefore, it would seem that a facilitated leadership development programme, with a strong emphasis on action learning and which is light on formal teaching, can be a powerful tool for small business development.
Perhaps the biggest challenge is that the LEAD programme, because of its nature, can only benefit a small proportion of the appropriate population of entrepreneurs although, as research has shown, whilst fast growth companies represent only 6 per cent of all UK firms employing ten or more people, they account for more than half the job growth. More relevantly, if appropriate ‘high growth potential’ entrepreneurs can be recruited, the LEAD programme can help create of a cadre of entrepreneurs to spearhead best practice in small business leadership in a peripheral economic region.
Business support in Wales is currently going through a revolution as government withdraws funding from all businesses except those in certain so-called ‘key sectors’. This will leave a vacuum which can provide new markets for other actors provided they are ready to take advantage of this situation.
Certainly, these changes give business schools across Wales a real opportunity to interact more with their local business community as well as their current focus on attracting overseas MBA students, and the Leadership and Management Wales initiative led by Cardiff Business School will certainly help with this aim.
Indeed, Welsh business schools could, and should, become major providers of leadership and management training to the SME sector in Wales and, as the LEAD programme has demonstrated, ensure that our entrepreneurial businesses not only become more competitive, but grow their capacity to create jobs within their local communities.