Six Dysfunctions of SMEs: Unstructured Processes

Addressing the most common six SME dysfunctions which regularly inhibit effective scale-up

The SME Productivity & Innovation Centre (PIC) at Edge Hill University is an internationally recognised Centre of Excellence supporting SMEs to achieve growth through scale-up. The scale-up phase is typically the quickest and most significant stage of growth, based primarily on the most effective use, allocation and tracking of resources, and one that can bring the most challenges for an SME. However, unlocking your organisation’s scale-up potential will hold significant profitable rewards such as enabling you to measure your company’s competitiveness in the marketplace and improve your organisation's ability to avoid waste and rework. The six articles in this series will share the experiences of PIC’s scale-up experts in addressing the common six SME Dysfunctions which regularly inhibit effective scale-up: Undefined demand, Undifferentiated offer, Ineffective communication, Unclear processes, Undefined organisational structure, and Ineffective use of data.

Unstructured Processes

Structured and clear processes are vital to allow an SME to scale-up. Effective business processes have a direct effect on how businesses operate and function daily. Unstructured processes are a key challenge experienced by many SMEs – one that is often identified at our business diagnostic stage when discussing with companies their current operating and performance management practices. Many SMEs that we facilitate through the Rapid Innovation Sprint Programme have core business processes in place, however, the detailed mechanics of the processes are often tacit knowledge held by key people. From a growth-potential company perspective, the processes are neither structured nor documented and are therefore difficult to repeat systematically, or to scale-up as the business grows. This can pose a high risk to the business if the person(s) with the knowledge exits or becomes unavailable. Therefore, this tacit knowledge needs to become explicit throughout the business. Every internal action or customer interaction has a process involved to a greater or lesser extent depending on the activity requirements. Having unstructured processes within an organisation can affect SME performance and ability to scale-up in numerous ways:

1. Workflow and instructions. If internal teams do not have a documented workflow or explicit instructions to follow, crucial time can be wasted repeatedly explaining how things should be done. This is an ineffective use of resources resulting in a negative impact on productivity.
2. Service design/customer journey/after-sales care. An absence of a ‘blueprint’ to inform staff will inevitably result in a lack of consistency within the business. Best practices may be shared, however, if there is no formal process in place everyone will follow their own practices leading to issues with inconsistent customer experiences. This also makes it more difficult for organisations to measure and monitor their Key Performance Indicators (KPIs).
3. Outbound sales process. Implementing structured, repeatable processes to drive demand through sales & marketing activities is a common hinderance to the performance of many businesses that are looking to achieve the next phase of scale-up. A lack of documented outbound sales workflows can make it difficult for staff to first identify who their target customers are, describe concisely how their products and services meet their needs, and to understand the level of activity required to achieve sales targets.
4. Ineffective use of technology. Companies are adopting technology at a faster rate than ever with a focus on digitisation enabling businesses to automate their processes. However, if processes have not been designed and clearly documented, the technology can be under-utilised and less effective than desired. One of the most common technology adoptions by companies following the Rapid Innovation Sprint Programme is a Customer Relationship Management System (CRM).

A CRM system can be used to effectively manage sales, with a suite of tools to shorten deal cycles and increase close rates, marketing tools to run campaigns, and service tools to build organisational efficiency in customer service teams. During the Rapid Innovation Sprint Programme, we work intensively with businesses, and through completing a series of strategic exercises, guide SMEs to design a set of clearly defined, documented, repeatable and scalable best practice processes that can be embedded into business-as-usual activities.

See also in the series: Six Dysfunctions of SMEs: Undifferentiated Offer  | Six Dysfunctions of SMEs: Undefined Demand | Six Dysfunctions of SMEs: Ineffective Communication | Six Dysfunctions of SMEs: Undefined Organisational Structure Author: Joanne McCaffrey, SME Growth Expert, Edge Hill University SME Productivity & Innovation Centre The SME Productivity & Innovation Centre has worked with over 200 SMEs in Lancashire and the Liverpool City Region since 2018 to address exactly the types of issues and inconsistencies described here, helping SMEs drive on average 29% growth. Until June 2023 places on the Rapid Innovation Sprint Programme are fully funded via the European Regional Development Fund. If you recognise these challenges in your business, then we would be pleased to discuss if we can help.

Boost is helping Lancashire businesses. We have a range of funded support programmes and a team of business advisers you can talk to. To speak to someone from the Growth Hub about business support, contact Boost online or call 0800 488 0057.