Volker Soppelsa, Founder and Managing Partner of Strategies 4 Sustainability, discusses why it is important for SMEs to integrate sustainability in their core business.
Tell us about your sustainability strategies for SMEs.
We believe that in the future, sustainability will be at the heart of most business strategies as the global economy shifts from a fossil fuel-based ‘business as usual’ model to a new stakeholder-based resource efficient model powered by renewable energy sources. Our clients tend to focus on providing a value proposition that considers social, economic and environmental factors as part of the final product or service proposition. The understanding of sustainability in this region is improving but still behind other countries. Too often it is seen as a single dimension problem when in fact it is almost always multi-dimensional in nature. Countries like Germany, Norway and Denmark provide good examples of SMEs capitalising on sustainability trends. We encourage our clients to think about sustainability from a systems perspective considering human, environmental and support systems that are connected and interdependent. It is through a better understanding of these systems that our clients identify their future strategies.
What are the biggest challenges faced by regional SMEs?
Challenges vary from organisation to organisation and range from a basic lack of commercial and business knowledge to access to capital and managing cash flow. Challenges also vary depending on where in the business lifecycle the SME is, with strategy and access to capital being issues early on and cash flow and business continuity being issues later on. Overall, in our experience, SMEs don’t know where to get the best help for the challenges they are facing as the support ecosystem is fragmented and not very transparent. At a practical level, cash flow is a huge problem, but one that could be fixed very easily with huge benefits for a large number of SMEs and the economy as a whole if large organisations settled their invoices with their SME suppliers on time. This would accelerate fund flows in the general economy and help SMEs who may be constrained by capital, releasing cash for expansion.
Are they often lack hamstrung by a lack of support and experience?
Support for inexperienced entrepreneurs often still comes from personal connections rather than a clear institutional support process and this is a problem for those who have a good idea but are not well connected. You can compensate for a lack of experience through support mechanisms but these need to be targeted appropriately and the client must see the value. Often, this value lies simply in the new perspective an experienced consultant can provide to an entrepreneur who has an idea; constructive challenging is very important to ensure ideas are robust enough to make it in the market. For a more established business, support is often required to effectively manage the business once it is up and running as the skills needed to be an entrepreneur and those needed to be a successful business manager are not necessarily the same. Entrepreneurs are not always the best business managers and need to recognise when to separate these two functions.
What is needed for successful strategy development?
You need to understand what strategy is and what it is not. Too often strategy development gets confused with strategic planning but they are not the same. Strategy development is a problem solving process that tries to identify how and where you can compete and win. It is able to very clearly demonstrate a value proposition and requires stakeholder involvement and a sense of honest introspection to challenge well established assumptions and misconceptions. The most successful strategies tend be quite radical and applied at scale.
What experience and market knowledge do you draw upon for your advisory services?
I have been advising organisations for over 30 years and these have ranged in size from a single owner to global multinational corporations. Regionally I have helped to launch commercial and not-for-profit organisations and supported clients in most major sectors. Our consultants come from a ‘Big 5’ background and have many years of experience in the region and internationally.