It’s a good point and one that lots of businesses are going to ask as super-fast broadband rolls out thanks to local councils and BDUK. Everyone wants better connectivity, or for some, connectivity full-stop. What if you are a small or medium-sized business? Will you watch more YouTube? Send faster email? Allow people to order on-line? When everyone has it, where is the competitive advantage? It just becomes a hygiene factor – it’ll be a competitive disadvantage if you don’t have it. Perhaps.
I’ve had lots of discussions this week about small businesses and the digital world. The first was about better connectivity and what it might mean for SMEs. The second was about how some SMEs, particularly in retail, can compete with Supermarkets. The third was why did I care?
So, what if you aren’t a digital business (whatever that means)? What if you don’t build websites or aren’t a social media agency. What if you haven’t got a huge warehouse, trading website, and complex tax arrangements covering most of the world? While connectivity will undoubtedly help your access to markets, effectively reducing that cost to zero, it wont necessarily mean more business. If everyone can get their shopping on-line, all of it, would I get one type of produce from elsewhere? I might – if its special enough. Would it be enough for me to attract more customers, diversify, or sustain what I already have? Would it help me regain something from the supermarkets?
Years ago I worked in retail. It was a friend’s shop who now has very sensibly moved to renting cycles in Cornwall. The thing I always remember was how we saw the same faces. Some week in week out. Others when they returned from working or studying away. Others because they’d been recommended the shop. We didn’t have the internet. We had a phone. We did however have great relationships with our customers. We were social. It was fun. Customers came back.
So how might his apply in a connected world? Lets say you are a butcher. Why do you want access to markets in Dubai? You sell sausages and cuts of meat. It’s just not economic. But what it might help you do is strengthen the relationship with your customers. Become more of a socialised business – not only off-line but on-line. Effectively build a community of interest, or place, around what you do and sell. You could get some brand champions – they could influence their friends to buy from you. You might find people don’t just want to buy your produce, but your expertise as well.
You could ask customers for recipes and, if enough ‘liked’ it, offer the cuts at a discount. You could incentivise that behaviour and have a more reliable link between supply and demand – negotiating better discounts with your suppliers. You could encourage your customers to share those incentives and offers. Most have no idea what happens in a butcher’s behind the counter where stuff gets chopped up. Some don’t know how to cook or cut certain types of meat – perhaps they’d value learning? What if you posted some short videos about how to prep some common cuts of meat? Would your customers then have more interest, connection, with what you do?
None of this is radical or new. But if you haven’t been involved in the social web then these things might not come to mind and for those local businesses struggling in the current economic climate it could make a difference to cash flow when that is what strangles retail.
Why do I care? Because.
- Social media boosts revenue for SMEs: MYOB research (computerworld.co.nz)
- BBC – Butcher harnesses power of social media
- Giving UK SMEs the digital tools they need (computerweekly.com)
I recently read this Guardian article about a survey into Councils’ use of social media. As seems common these days it gets around to questioning the return on investment of social media activity. It approaches social media from the angle of customer contact. It identifies that the financial benefits are hard to justify.
It’s not necessarily wrong – but it really misses an important point.
What it fails to recognise is that social media is not just a channel, it’s also a means of identifying, building and involving communities. These communities are the lifeblood of local democracy, they always have been. Social media is another route to join them. It helps to get access to some of that messy and essential space where conversation happens, where understanding is sought, and given. It’s also the route where local government can work alongside communities. It could be information, skills, knowledge, it could be sharing views and opinions.
The work on the Networked Councillor and Made in Lambeth are good examples of where online and offline worlds are combined to create more value than they could alone. Social media complements and builds on the physical networks that have always existed making them increasingly transparent and accessible.
That’s a huge return on investment.
There are a lot of articles about savings in local government about how much has been delivered and just how much more can be done? Has local government really been innovative in redesigning services or is local government reflecting its journey along the experience curve and there just isn’t much more room to save more.
The other common topic today, economic development, might hold some clues. National and Local Government often measure the success of their economic development strategies on the numbers of startups that are created. If we build a new business park they will come. If we fund startups more employment will result. This will be good, this means more confidence in the economy. The presumption is that more startups means more entrepreneurs seeing opportunity, which means more jobs, which means the economy is growing. Or does it?
Research suggests that his approach mainly produces market churn and it is only a small number of businesses that create most of the jobs. New companies set up and create jobs and these displace jobs in other companies who are less competitive. Churn is a mechanism by which labour markets reallocate workers towards more efficient ends. In this way, the churning of the labour market contributes to growth in the potential output of the economy. Or at least it would if those businesses were in a growing market. It doesn’t mean there a more jobs, or even that disruptive innovation is happening and new models of business or services are being found. When the market is maturing, or even reducing, businesses learn to do things more efficiently. That generally begins with making successively larger improvements and then successively smaller ones.
The exception to market churn, those businesses that create more net jobs, are those that are innovative and disrupt exising markets. They do something radically new that is significantly more efficient and/or meets the market’s needs more effectively, or even creates a new market. Interestingly evidence suggests these businesses are also more resilient though a downturn.
But how does this apply to local government and the impact of austerity? Have we seen a similar journey in how local government has delivered savings. A lot initially and then they get harder to find. The experience curve begins to flatten. What we may be seeing isn’t the creation of anything really different, we are just seeing market churn that pushes public services along the experience curve. Its just getting cheaper to do what has always been done. Costs are going down, salaries below inflation, jobs are being deskilled though the introduction of technology and changing practice, systems and processes are getting leaner. Simply, people doing fairly similar things for less and probably for a different employer. Will this improve services? If improvement means cheaper then probably not. If it means reducing demands, finding better ways of doing things then maybe, but its not looking promising.
This isn’t to lay the blame on anyone. NESTA, in their study on innovation in Whitehall found, for many valid reasons, public services have typically not been subject to the same kind of creative destruction seen in some private markets. The risks are high, decommissioning services isn’t cheap, writing off sunk costs is hard politically, and considerable social harm would result from the breakdown of the public services. Service closures could push demand elsewhere, undermining the actual efficiency and legitimacy of any cuts.
A lot is stacked against radical innovation, and so transformation, in public services. Is it just too much?