The true SME doesn’t exist

For the older generation, the game show “To tell the truth” (“Wie van de drie” on Dutch TV) was a hit in the 70s. Three people pretended to be a certain persona, and the panel had to ask questions to find out who was the real baker, teacher, plumber or violist.

This came to mind in our recent struggles to support SMEs in their endeavors to innovate. It’s a popular mantra and (regional and national) R&D projects are fighting for their attention, while knowledge institutes are eager to help them.

However, what keeps bothering me is the generalization involved. As if they’re all the same and need help, for example with the digital transformation. To paraphrase Queen Maxima (when she was still a princess): the SME doesn’t exist. Maxima received a lot of push-back over her difficulty in determining what a ‘real’ Dutchman is. I have similar problems when we’re asked how to support SMEs.

It’s useful to segment this group into categories and based on that segmentation define what type of innovation we could initiate with them. I think three categories make sense: makers, shapers and users.

Makers are firms that manufacture machinery or develop software. These are the organizations that make the headlines when they launch a new product. They sell to end-users, who could be either consumers or businesses. An example could be an autonomous robot or drone that can map potato fields to detect and remove sick potato plants.

Shapers help others with a certain technology. They’re referred to as system integrators in the IT world and as solution providers in the technology space. Think of a computer vision engineering company that develops artificial intelligence modules that spot the spots on the leaves of sick potato plants.

Users are, well, the aforementioned end-users. Often they’re early adopters of new technologies. They want help to change their business models and processes while adopting (digital) innovations. Think of a farmer who wants to use drone technology to improve his potato harvest.

Of course, one company can have multiple roles at the same time. And as a result of servitization, many makers are transforming into shapers. However, by their nature, the shapers are more like contractors. They produce modules and/or knowledge, but they don’t assume responsibility for the complete products that are finally shipped to the market.

With this distinction, it becomes easier to steer the innovation support capacity, particularly of knowledge institutions such as universities, with more targeted simulation programs. So, when asked the next time “Will the real SME stand up?”, I expect either none or all to rise.