Small businesses excel in their innovative thinking but fall down in areas such as planning, the head of Enterprise Connect claims, suggesting start-ups need to strike a better balance between management and creativity.
Judith Zielke is the head of the Federal Government’s $50 million Enterprise Connect program, which is designed to boost productivity and increase the competitiveness of Australian SMEs.
Since its launch in 2008, the initiative has conducted almost 6,000 free business reviews to identify problems.
Under the program, companies can apply for grants of up to $20,000, which they must match, to pay for outside consultants to help implement the recommendations of the reviews.
According to Zielke, whose comments are based on the reviews, many businesses in the program have a “comparative lack of basic business capability and business leadership”.
Zielke believes small businesses are weak in strategic planning and human resource management. Other weaknesses include IT systems, financial systems and marketing.
“They also often have limited awareness of competitors and market conditions, while succession planning is poor,” Zielke told The Australian.
But Nick Leeder, managing director of Google Australia and New Zealand, has highlighted the importance of innovation as a competitive strategy, particularly in tech companies.
Speaking at the University of Technology in Sydney, Leeder said an inability to harness trends led Eastman Kodak to go bankrupt, highlighting the importance of being able to adapt to change.
Commonly known as Kodak, the film pioneer filed for bankruptcy protection early this year after struggling to adapt to an increasingly digital world.
Leeder went on to acknowledge the high level of failure among Australian start-ups, which he put down to inadequate prototyping.
“People place some very big bets on technology that they haven’t necessarily prototyped... How, as an industry, can we learn to do iterations and testing faster?” he said.
Leeder also said there is immense pressure on businesses to keep up with new developments.
“Many of the things we’re seeing on the web, we’re seeing them for the first time... Is it all butterflies and beer? No,” he said.
According to Leeder, the worst thing an online business can do is act in a “knee-jerk fashion” as problems emerge.
“The smart approach is to let things unfold a bit. This risk is that we squash all that innovation that we’ve started to see,” he said.