A model for Designed Business Support

Market failure

At some times and in some places there exists market failure (i.e. business is not being done where economic opportunity suggests it should be). Where there is a market failure, it is an article of faith amongst economic development professionals that effective business performance can be primed by the application of Business Support – which is thus a common feature of economic policy.

Debates around business support are usually characterised by three questions:

•        Does it make any difference?

•        Is it value for money?

•        Should it be done by public or the private sector?

There is a more fundamental question – should we be doing it at all? The answer requires a return to the basic principles of business management and economic performance.

The core functions of a business

There are 5 core functions to any business: Strategy, Finance, Marketing, Operations and HR[1]. Each is a necessary though not sufficient condition for business success – all need to be present and active for optimal business performance.

Levels of competency in business

In each of the 5 core functions, every business can be classified broadly as Inexperienced, Experienced or Expert, although that level of competence changes over time and with particular situations. For example, a business might be inexperienced in Operations at first and gain competence as they grow, or they may be Expert in marketing in the UK, and Inexperienced in marketing internationally.

Business support requirements

Where a market failure is deemed to exist, businesses need three things to prosper – Information, Advice and Assistance. These three assets are held to be generally deliverable by any competent business support service, and frequently quoted as being the “added value” provided to business.

However, information, advice and assistance are specific business requirements, and demand specific competencies in delivery. For example, “Assistance” might include grants or soft loans, help in identifying opportunities or brokering of network contacts. It does not include displacement (doing the business for the client), substitution (replacing paid services of professional firms) or rent-seeking (creating dependence in the client business.

To match business need, support measures must be well thought-out, imaginative, practical and cost effective. They must provide information, advice and/or assistance where, when and in the manner appropriate for the business, not the provider. This requires a deep, strategic, client diagnostic and some practical gap analysis.

The business support solution

The 3 levels of business competency and the 3 types of business support can be used to form the basis of a matrix for each of the 5 core business functions. This matrix helps in clearly defining the nature of business support that will fulfil the specific business need to acquire a particular business competency.

Below is an example of the Marketing matrix for a business experienced in exporting to the USA and aiming to enter Canada. They may be inexperienced in competitor analysis or product adaptation (sizing, customer preferences),  and therefore need information. They may be experienced in US marketing, yet still need specific advice on how to approach the Canadian market (language, geography). And they may be expert in US compliance issues and managing agents, yet still need assistance steering through a new regulatory structure.

The Business Support Model

The matrix identifies in straightforward fashion the practical nature of support required, and can be used to frame a “shopping list” of services from providers (including professional service firms) to customers, based on specific business need.

This forms a basis for the optimum model of effective business support

1. Clarify the business need – diagnostic and assessment
2. Identify the level of competency – analysis and recommendations
3. Draft the Matrices – service specification and partner identification
4. Deliver the appropriate support – provision and evaluation

There it is. A little strait-laced compared to my usual style, yet there may be something in it.What do you think?

JW

---

[1] “Raising the quality of our customers”, Williams J, presentation at UKTI International Trade Conference, London  2003 Two further functions could be included – IT and R&D. These are here deemed part of Operations (IT) and Marketing (R&D).