Business 2.0, Sustainability

Shared value and small business — does it resonate?

Can you help us find small business owners to participate in some research we’re undertaking? More details.

Over the past few months I’ve been talking to Allison Heller (from UrbanAffect) about the role that shared value can play in supporting small businesses in achieving their goals. (I’ve drafted a paper for my masters on the topic as well, which I’ll hopefully be in a position to share soon.)

Sustainability and SMBs

According to the Australian Bureau of Statistics there were over 2.1 million actively trading businesses in Australia as at June 2011, with 96% of those being classed as small businesses — i.e. businesses employing less than 20 employees. In 2009–10, these small businesses made a significant contribution to the Australian economy, representing close to half of all employment in Australia, or around 4.8 million people. If medium enterprises — businesses employing up to 199 people — are included in the equation, small to medium businesses account for 70% of employment. Small and medium businesses generate just short of 60% of industry value-added to the economy.

As Linda Condon points out, “it is apparent … that SMEs contribute significantly to the economic success of a country, but aggregated they undoubtedly have a significant impact on ecological systems as well as on the social fabric of a society.”

The challenge, though, is expressed in the key words “in aggregate.” It strikes me that the common arguments for business sustainability don’t resonate for small businesses, especially those in service industries (non-manufacturing/agriculture etc.). For example, for many small businesses efficiency measures may not create sufficient savings to justify the expenditure, or more importantly the time and focus, required to measure, define and implement.

Electricity bills, while rising, are still a (relatively) small part of expenditure for many SMBs, meaning that there is insufficient motivation for even quantifying (measuring/reporting) and explore efficiency measures, let alone doing anything beyond very easy things such as changing light globes and turning off standby power — the oft-quoted “low hanging fruit.”

In other cases, small business owners and managers don’t have control over their office environment and key plant and equipment (e.g. landlords control key fixtures and fittings etc.), making changes relating to efficiency and sustainability difficult, even when quantifiable savings can be achieved.

Turning attention to the broader concept of shared value, aligning business objectives with societal and environmental goals, there are further barriers. My experience (both in running a small business, but also talking to clients and colleagues running their own businesses) is that it is often hard to step outside of the day-to-day challenges to focus on strategy, let alone actually implement.

While more common in larger businesses, running a “strategy day”, or investing in a workshop for management/staff (and the subsequent impacts on operations and productivity) are not something that business owners are able to take on lightly (if at all). These kinds of activities are often pushed to the back of the queue as operational considerations (i.e. servicing customers) take the fore. The capital required to shift directions and invest in new initiatives can also be a limiting factor, negating some of a small business’s advantage over larger competitors being their nimbleness.

Our research and personal experience has highlighted that SMB owners are:

  • Looking for “one-stop-shop” guides — not having to hunt around and piecing together bits of knowledge and advice to apply in their business context;
  • Seeking “nuts and bolts” advice — checklists, tips, “how to’s” — rather than support in developing the “big picture”;
  • Challenged to rise above “day-to-day” activities to think strategically about their business and implement new practices;
  • Open to/interested in sustainability practice, but find it hard to justify the “expense” and “extra overhead” of pursuing sustainability initiatives;
  • Of the opinion that they’re largely efficient/sustainable already (that there’s not much they can do);
  • Business leaders in sustainability and shared value have achieved this position through strong leadership from owners and/or senior management. That is to say, owners must be committed and engaged with sustainability/shared value to gain the flow-on strategic benefits.

Research project

With this in mind, over the coming months Allison and I are looking to do some research to consider what sorts of tools and approaches might support owners in embedding shared value concepts into their businesses. So we’re on the lookout for participants to work with us in understanding practices better.

Specifically, we’re recruiting small business owners who:

  • Has between 5–20 employees
  • Are in the greater Sydney metropolitan area
  • Run a services business (that is, businesses that aren’t manufacturing, importing goods, or in agriculture)
  • Could spare 2–3 hours across a week (during September) to talk to us and (lightly) document what happens in their business using mobile video tools
  • Isn’t actively pursuing a social innovation/sustainability agenda with their core business — i.e. an interest in sustainability is ok, but we’re not looking for a Haul or Digital Eskimo ;)

We have budget for a small financial incentive in recognition of the time commitment. And, of course, we’ll be happy to share the (non-identified) results of the research with all participants.

If you or anyone you know might be interested, please get them to contact us — we would really appreciate it.