bcg.perspectives - Lessons on Technology and Growth from Small-Business Leaders

bcg.perspectives - Lessons on Technology and Growth from Small-Business Leaders:

The pace of technological innovation is accelerating. SMEs need to mobilize quickly and embrace currently available technologies—from office productivity software to cloud-delivered solutions and services. They must then prepare themselves for the next wave of new technologies. SMEs that fail to do so will, at the very least, miss out on promising growth opportunities. Others may find that the only alternative to attaining leadership status is to fall out of the competition altogether.

Some SMEs—and the national economies they support—are already lagging behind. And the leaders of companies in a good position today may not be leaders tomorrow if they rest on their laurels. Technology moves quickly and the risk of losing ground is significant. Both SMEs and the governments of the countries in which they reside should take action to achieve the following objectives:

• Technology laggards make the leap into leadership roles.

• Technology followers move to the forefront of IT adoption.

• Technology leaders continue to use the newest technologies to scale up their businesses, accelerate job creation, and compete globally. 

Achieving these goals will not be simple. SMEs and policymakers alike need to address a number of barriers to adoption. In our research, SME decisionmakers frequently cited data security and privacy, the perception that technology costs are high, inadequate broadband infrastructure, shortages of talent, incompatible technologies, and excessive regulatory costs and restrictions as key barriers and concerns. These problems are admittedly complex, but they are also largely addressable through sound public policy. The imperative to overcome them has never been greater than it is today.

An Agenda for Policymakers

Given the importance and size of the SME sector, governments that fail to encourage growth among SMEs today will face stagnant economies tomorrow. For local and national governments, there is a real imperative to help these small businesses tap their full growth potential. Policymakers must act now. They cannot afford to wait until the next wave of technology breaks. This means ensuring access to new technologies, supporting the training required to use them, and promoting a legislative environment that allows SMEs to fully leverage these technologies and protect whatever innovations result. Governments must foster the right conditions to fuel the growth of the next billion-dollar enterprises.

Ensure access to world-class infrastructure and networks. In order to connect, collaborate, and compete, SMEs need information and communications technology (ICT) networks that are accessible, affordable, trusted, and secure. Their customers and suppliers need access to these same networks. Our research shows compellingly that SMEs that are able to leverage such networks, and the advanced services that they enable, perform better. And as more businesses learn how to take advantage of cloud services and mobile services, the importance of broadband network access—both wireless and wireline—increases dramatically. Government leaders must carefully evaluate their own policies to ensure that their SMEs truly have access to multiple secure and affordable wireless and wireline networks. Consumers and workers, who are increasingly adopting mobile devices and are mobile themselves, also demand such access. 

Currently, the quality of ICT infrastructure and networks varies dramatically around the world. While almost 100 percent of South Koreans, 82 percent of Germans, and 94 percent of Norwegians use the Internet, for example, less than 8 percent of Indians have access. Indian policymakers are now dedicating significant resources to increasing connection rates. The Indian government plans to invest $6 billion in ICT infrastructure and to boost the number of broadband connections from 13 million in 2012 to 600 million in 2020. The Kenyan government has likewise made ICT infrastructure a priority—and has made remarkable strides in a relatively short time. In 2008, less than 10 percent of Kenyans used the Internet. In 2012, this figure surpassed 25 percent. Kenya has now risen to the top of the World Economic Forum’s Network Readiness Index among low-income countries. In 2013, it launched a super Wi-Fi public-private partnership to deliver low-cost, high-speed wireless access to unserved and underserved communities. Such creative approaches can provide Internet access in situations where conventional deployment is too slow or expensive.

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