THE LONG TAIL - land of milk & honey
The Small to Medium Business (SMB) segment, oft referred to these days as the ‘long tail’, holds tremendous promise for those firms looking to effectively expand their product offerings beyond their ‘well understood’ corporate partnership roots. No matter how pumped up the press on this opportunity, the decision to do so must nevertheless be taken with due care …there are traps for those who might expect to see a ‘mirror image’ of their more familiar markets.
‘Abundance is the driving force in all economic growth and change’ – p. 148, Chris Anderson, The Long Tail
A key issue being that the SMB segment does not conversely enjoy the same predictability from the big company ‘engaged management’ as one might have been used to with public firms in particular. The view proposed here suggests that most decisions (of any significance) within the enterprise tend to emanate only from the owner/MD.
Thereby, one will very rapidly discover that whilst titled management positions in SMB, familiar to one from ‘the big end of town’, do not by their very nature offer the same empowered sense of ‘surety to act’ as one might expect. In doing so, a lot of time spent with the line management of SMB may well be unproductive.
‘In the family centric model of Asian corporate governance, the head of the family is typically also head of both management and the board’ – p.372, Bob Tricker, Corporate Governance
The defining element to this is founded in the governance style which is usually adopted in the running of small businesses; one that does not produce clean cut decision making by ‘managers’. This, in many ways, is reflecting a mutually understood position taken by the leader (MD) and the followers (managers) whereby authority, whilst seemingly delegated by the owner in titles given, is not genuinely accepted by the managers as one might expect
The reason for this: the managers are all too aware that the intuitive change expected of team behaviours is not backed up by a clear ‘mandate to act’ in specific situations. These managers expect to see documented thresholds and procedures that would support their decision making; however this expected rationalistic approach is seldom defined given the leader’s preferred intuitive sense of the operating model. The owner’s style subtly reflects an inability to give up control of some key tools and activities (eg: budgeting) because of an intrinsic and unstated desire to work ‘in the business’ and not just ‘on the business’ as true leaders would do in public practice.
‘They (owners) don’t trust anyone to ‘manage their money’ despite the perfunctory company entity that is placed in between them and their ‘best endeavours’’ p. 139, Bob Tricker, Corporate Governance
People, in the end, are people; and will usually act conservatively in most situations. The desired change by both parties acts on two distinct planes, possibly, sadly, never intersecting. The scenarios described of ‘offering empowerment’ and ‘demanding enablement’ can be depicted as follows:
A proposed ‘external view’ then for effective SMB penetration is:
1/ adopt at large a ‘systems based’ approach in dealing with the SMB’s administration (featuring the internet/CRM)
2/ develop and preserve an invested relationship (suggested trusted adviser model) in engaging with the owner/MD.
The latter, exponentially, is more difficult than the first.
In conclusion, highlighting the trap for the eager (but unprepared) in tackling SMB; there are two decidedly different strategies are suggested here: one that is perfectly suited to commodity sales only …but the second being a necessary platform for all value added propositions. And that implies ‘services’, the nirvana of today’s commercial aspirations.