To compete internationally with the giants, small businesses have only one solution: to cooperate, to have a better mousetrap just does not wash.
Cooperation was always a winner, even if the forms of aggregation of the small businesses have evolved as a function of time and market demand and now are closer to a network. Geographical districts, industry associations and clubs of industry entrepreneurs were all meant to protect and promote small businesses (SMEs) in particular allowing a pooling of interests and retain healthy competition to win the market.
For years the success of Italian small businesses, in particular those of the northeast, depended precisely on ‘clusters’, i.e. geographically defined areas in which there was a high concentration of small businesses usually born around a recognised product type. Within these areas were stimulated naturally forms of cooperation/competition in which, around the large manufacturing enterprises, were born sectorally specialized suppliers.
These suppliers were offering high-value services and were the true ‘heart’ of the system and were the competitive edge of the district. Those who performed this role in neural networks are making the hub capable of promoting technology transfer and network growth.
Most of these districts, in fact, were born around craftsmanship where the real added value was given by knowledge of manufacturing processes and the ‘know-how’ rather than by scientific research and patents. A service company that supported more than one company was able to stimulate those small process innovations that define the advantages of the final product
The geographical nature of the district then allowed a total vertical aggregation of the elements of the product and the ability to create other common services such as: Group sales systems with fairs and trade shows, administrative and financial advisors specializing in that area, and a common image that became a natural attractor for international interests.
All this ‘system’ worked well while the domestic market demand was very strong and it allowed the survival of businesses with a wide range of products, from low cost to high quality. With the arrival on the scene of low cost products from other countries, companies that competed on price alone got into difficulties and the aggregation system in the district lost its strength by the reduction in the number of companies present in the same area.
The districts became ‘unbundled’, and businesses that depended on the high-end products had to learn about new demanding buyers, who often come from distant countries. With the lack of geographical proximity, the need to increase the product quality has become increasingly vital, the companies competitiveness depended both on adding services to end customers and reaching new markets.
But how do you reach these new customers increasingly serviced by producers from all over the world (how to sell)? What to do when you no longer have suppliers and consultants near your own company? One must resort to associations of enterprise networks and networking.
The board of the enterprise system, however, is also in crisis not having been able to adapt to rapid changes and to the need for new skills related to interaction with new international markets and with end customers rather than B2B. These external markets are reached with targeted missions and by building a ‘web reputation’ with a targeted strategy to increase the perceived value of the company and the product.
They need marketers with intercultural experience able to build or strengthen a brand, finding items in the company’s history or territory that can increase the perceived value of the product – people capable of handling international relations with demanding clients who demand personalized services. People who know the ‘tricks’ of the web and doing promotion moving between social networks.
All this is a simple process at a time when the economy pulls and you have the time and awareness to think of the overall strategy and management of all the different skills that need to be involved. But in times of lack of liquidity or market depression, this complexity can cause alarm and result in inaction.
In addition there are networking strategies in which companies meet with the express purpose of ‘doing business’, drawing benefits from cooperation that is not only geographical but of ‘vertical or horizontal integration’. The focus of these networks needs to be built around a vision and organised according to a plan in which the identities of the individual are not lost, but they follow an aggregative idea or common design objective.
This vision must then be expertly promoted in communication on the web in order to keep it alive and present in the minds of people in business. On social media and on the web you have to keep the connection between individuals up to date, yet, this must be useful additions to their information bank.
The recent regulations on enterprise networks seek precisely to fill this space by offering co-operative forms with fiscal and administrative advantages and there already are active associations of business networks (Assoreti) that pool the activities and exchange experiences. These associations mainly using business portals such as Linkedin and get together each time in different places.
But this model can not be generalized and there are other very interesting networks that were created (and continue to be born) around particular topics using virtual meeting platforms besides organizing meetings in beautiful places. The limitation of this model is that small businesses do not have real familiarity with virtual platforms, and these meetings are designed for medium to large sized businesses.
For SMEs, other forms of association have been formed that have affinity with the American models (Rotary, Lions, etc ..) but with a strong accent on the concept of ‘business ethics’ and ‘business together’. In this case you take advantage of the potential of society to be in contact but in preference with forms of real aggregation. Innovation is in the form of managing meetings and pragmatically cutting out some events.
There are platforms operating where companies sign up to schedule meetings with possible partners or for immediate matching, but there are also forms of association in which a wise edu-tainment expert promotes collaboration and supply chain interaction, such as in the case of Ad Hoc Veneto.
As for increasing the web reputation and building new brands we can mention portals such as Energitismo – Specialpeople, Specialplaces where the focus is on the stories of entrepreneurs and artisans on the one hand and the regions in which they find themselves on the other. These stories are written in two languages, are often the only news available for foreigners, and are a key means to increase the perceived value of the entrepreneur at a time when he is attempting to interact with the outside world. The intelligent optimization of the SEO makes these stories immediately accessible to the navigator of internet.
In any case, whether it’s real associations or combinations on the web, the important thing is that the stories are told with passion and simplicity to make the most of what is said, while delighting the reader with a pleasant story combined with the information.