We currently have a unique opportunity to give the SME sector in Poland the significance it deserves and to support it with precisely and effectively targeted assistance.
Navigating the new, post-COVID global market situation certainly requires SMEs to have access to know-how and development capital. However, effective advisory services are even more important. It’s not just about investing in new technologies and innovations. It’s about fundamentally restructuring business models and guiding employees and leaders through the change process so that innovative solutions actually yield the intended results. Results in the form of increased productivity and employment, greater resilience to crises and global competition, higher international activity, and innovation in processes, products, organization, and marketing.
Author: Stanisław Pisarski, CEO of Factor Consulting, Strategic Advisor
How to Program SME Development
The traditional way of supporting sector and enterprise growth funded by public funds does not sufficiently consider the medium- and long-term effectiveness of the project. Too often, it focuses on narrow, superficial, and temporary effects. It does not reward above-average and outstanding projects. Traditionally implemented development projects sacrifice the actual needs of the beneficiary in the context of their market and value chain for the sake of literal interpretation of the project subject and rigid assumptions of its implementation. Thus, the project’s implementation according to the assumed plan is more important than achieving the goals related to the project’s effectiveness and efficiency. Beneficiaries do not have the flexibility to manage the funded project based on experience and changing circumstances. Additionally, there is a significant challenge related to the project’s concept and implementation. The lack of appropriate competencies in modeling organizational development and experience in change management, project management, and efficiency processes leads to far from satisfactory results, questioning the rationale for spending public funds on such support. Meanwhile, we should focus on ensuring that public funds result in noticeable and long-term economic development of the country. Meeting this requirement includes professionalizing the process of developing and implementing pro-development solutions in enterprises, managing projects flexibly in relation to their goals, and continuously monitoring project implementation against the set milestones and key success indicators (see Figure 1). Figure 1. Assumptions for public-funded SME support projects.
The 5W Modeling
Referring to the above remarks, I propose a five-dimensional model for programming the development of the SME sector as a response to the needs of the Polish post-COVID economy. This model provides a framework for thinking about designing support for SMEs. It also defines the essential dimensions of this support, presented as steps in the development modeling process. These steps can occur iteratively, and the process itself can be cyclical (see Figure 2).
Figure 2. 5W programming for SME development
A key element of my model, and simultaneously its starting point, is the Breakthrough stage. While typical anti-crisis aid is universal within selected industries, the pro-development impulse should target selected enterprises regardless of the industry. The leading selection criterion in such a system is the verified potential for significant productivity growth, creating new and sustainable jobs in future professions within the organization or its cooperative network, and greater diversification of the customer base towards international markets. Here, selecting solutions as tools for achieving set developmental goals is crucial. These tools and solutions must align with documented global trends in technology, society, and the economy, and respond to challenges characterized by volatility, uncertainty, complexity, and ambiguity (VUCA[i]).
Defining the breakthrough threshold leads to the entire support mechanism, developing and implementing solutions confirming the project’s assumed values. The sine qua non condition for the success of this approach to SME development modeling is linking this support with professional and proven consulting support, which is usually inaccessible for enterprises in this sector. A multifaceted control mechanism built into this model ensures effective use of support funds. It allows for ongoing responses to project deviations, project reorganization, or termination at any stage defined by milestones, stimulating effectiveness through a success fee mechanism based on the value of achieved effects. This mechanism and the project management method also minimize most weaknesses of previously implemented support projects, significantly increasing the efficiency of public fund expenditures and trust in the central administrative apparatus managing public funds on behalf of taxpayers (see Figure 3).
Figure 3. Publicly funded modeling of SME development
Which Path Will We Take After Winning Against the Pandemic?
In highly developed and democratic countries, to which Poland belongs, the SME sector is fundamental for economic stability and development, economic freedom, improving citizens’ living standards, and building a civil society. In many countries, this sector is also a generator of innovation and a guarantor of jobs for millions of workers. It is this sector that primarily acts as a shock absorber for economic disturbances. We currently have a unique opportunity to give the SME sector in Poland the significance it deserves and to support it with precisely and effectively targeted assistance. The result will be a predictable increase in productivity and efficiency in the sector, which will quickly spread throughout the economy and society. But we must act now because the world will not wait for us.
[i] (ang.) volatility, uncertainty, complexity, ambiguity.
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