The Mittelstädte Model
Collaboration or not?
Small businesses (SMEs) can and should operate like their larger parent or client businesses, with an infinite mindset, which will assist them in navigating through these difficult times of uncertainty.
Spending 11 years working for a German GmbH SME, in Vlotho near Bad Salzuflen in northern Germany, gave me a great insight into how the world class economic machine operates and projects itself to world market.
In my role as a senior director responsible for engineering and health and safety, for the UK daughter company, I was privileged to be able to travel extensively throughout Europe with my British, German, French and Italian colleagues to evaluate and select suitable supply chain companies, within the group strategy, that could supply the parts and materials required at the right delivery and exchange. Many, if not most of the companies I visited, were classified as a SME, but when entering them, I felt they were much bigger in stature. This is when I learned about the Mittelstand the economic engine of Germany. Companies with 250 staff or less, but who are market leaders in their niche markets to the world.
During many years of travelling and many visits, I was impressed by the the level of commitment from these SMEs with respect to apprentice uptake, work life balance, retirement schemes such as annualised hours and generations of families who had been loyal to the company, which more often than not, was in the heart of the community. One important point that really stood out, was the way the larger companies enhanced the SMEs to help them grow and thrive. The deals were fair, the communication was transparent, they bought into training the SME staff and if financial difficulty arose, strategic talks between the parties would be called. It reminded me of the natural world situation between the shark and the cleaner fish that cleans the shark and doesn’t get eaten, due to a mutual respect and mutual benefit.
Due to the current pandemic and Brexit, our world has changed significantly since my time with the German company between 2005 and 2016, but the experiences and the memories will stay with me on how the collaborations of large and small, benefitted all, and created a robust world beating economic force.
During the last months of lockdown and self reflection, setting up my own consultancy, and pivoting, made me realise how much of a lonely place the business world is without collaboration. However, with it we are stronger, can draw on greater resource and can build bigger and more efficiently. Large needs small but small also needs large in order to look to a future way beyond these present times.
There was 5.9 million SMEs in the UK last year contributing 52% to the annual turnover of the UK economy, equaling over £2 trillion.
The relative importance of small businesses is increasing with these businesses making up 16.3million; 60% of total private sector jobs.
If you are a SME business, and are looking to grow, but are struggling during these difficult times, don’t lose heart, if you network, talk to people, look to those around you to collaborate with, your clients, your competitors, your suppliers. You will be surprised at how many people you speak to also want to create strong future proof businesses through trusting collaboration. It does work, I have seen it for myself.
If you want to discuss further or have your own views on this I would be pleased to hear from you.