Speak out for SMEs

This post covers a couple of ostensibly dull subjects but at the end there’s a challenge and a joke so stick with it…

From time to time I agree to chair external conferences. I make sure the RSA is more than reimbursed for my time so the knowledge I gather, the networks I build and the Fellows I sometimes recruit are all a bonus. More than that, I am slightly obsessive about making conferences work. If well prepared and run they can be genuinely useful in advancing understanding and deepening purposive networks, if sloppy and dull they are a complete waste of time and money.

Small things can make a big difference; I have found the simple device of asking each delegate to spend two minutes asking the person next to them who they are and what they hope to get out of the day (and then picking on two or three people to introduce the person they’ve just met to the room) means the conference starts off feeling more engaging and energetic.

Today I chaired an event with the somewhat daunting title ‘Public Procurement Briefing 2012: Driving a culture of innovation and enterprise with SMEs’. In fact it was fascinating. I may not always be the Coalition’s greatest fan but there is no question the Government takes very seriously its goal of increasing the proportion of central Government procurement going to SMEs. This was evidenced by the Prime Minister and cabinet office minister Francis Maude hosting a Downing Street breakfast for conference speakers and key delegates. In his short speech David Cameron said that two years into office his catch phrase is becoming ‘that’s all very good but what is actually happening?’ (he seems to have got to this point a couple of years earlier in his term than did Tony Blair).

But on procurement there has been real progress, to whit a doubling in a year of the proportion of spending going to SMEs to 13%. If Whitehall achieves another doubling in the next two years it will hit its target of 25% by the end of the Parliament. And so it should. As far as I can see it is accepted by nearly all economists that SMEs will provide most of the job growth we desperately need in the years to come. Also, research suggests SMEs tend to be more innovative, flexible and provide better value for money. Despite this, the tendency over many years has been for Whitehall procurement to be overwhelmingly channelled to a small number of big providers. The progress made since 2010 has been on the back of some significant reforms of the process. These include simplifying pre-qualification and requiring all Government contracts to be placed on the Government’s Contract Finder website.

But further progress will require further reform and Francis Maude announced what seemed – at least to me – to be another pretty substantive list of changes today. These included steps to require ICT contracts to be broken up into smaller chunks of shorter duration, a new tool so that SMEs can rate departments by their performance as procurers and a strong direction to large suppliers that they too use Contract Finder for their sub-contracts (the minister announced that nine had already signed up).

The pressure is also going to increase on local councils, which really ought to be enthusiastic given that tendering to SMEs makes it much more likely that public investment will stay in the locality. The issue of council’s choosing to have full Pre-Qualification Questionnaires for contracts under £100,000 was raised repeatedly.

Helping more SMEs win public contracts isn’t just about demand-side reform. There are also important things SMEs can do to improve their chances. One is to find ways of banding together to identify opportunities and even perhaps develop joint bids. Indeed, it occurred to me this might be a good opportunity to develop a local social enterprise.

It role would be to help the council become better at buying from SMEs and help SMEs be better at winning. The enterprises could have sustainable business model based on consultancy fees plus a small top slice commission from successful SMEs. Perhaps something like this already exists, but if not maybe there’s an opportunity for a member of the burgeoning RSA Social Enterprise Network (the group had a fantastic event this week at the Westminster hub).

And so for the joke: Tomorrow there is a chance to hear my Radio 4 Analysis programme about Germany. As I said in a post last week, one conclusion I drew was that German success is based on a very different value system to our own, one aspect of which is greater restraint in the good economic times and the bad: which reminded me of little Hans.

Hans was a lovely boy, intelligent, content, healthy. All except for one thing; he never spoke. His parents tried everything from hypnosis to speech therapy but to no avail and eventually they gave up.

Then one day at the age of eleven Hans turns to his mother who has served dinner and says (in German of course) ‘this strudel is bitter’. His mother thinks she is hearing things but to her astonishment he repeats ‘this strudel is bitter’. The mother rushes to get the father who is astonished and overjoyed to hear Hans say again ‘this strudel is bitter’. The parents hug each other and cry with delight but then the mother turns to Hans and says ‘But, Hans, we tried everything to help you speak, everything! And now at eleven you do, why did you not speak before my son’. Hans looks evenly at his mother and father and says:

‘Up until now everything was satisfactory’