Whether in global economics, socially or in technology. There is currently more than one disruption factor going through the SME sector.
We are also noticing this with our customers.
Whether in global economics, socially or in technology. There is currently more than one disruption factor going through the SME sector. We are also noticing this with our customers.
And the “digitalization” of their processes and sales channels is still in the bones of entrepreneurs and the labour market - or not, because according to the digital intensity index by the Federal Network Agency around 40% of small and 20% of medium-sized companies in the German SME sector still only had a low digital intensity of their processes and infrastructure in 2023.
Either way, the days of “standing still”, of “German cautiousness”, are over, now ‘adaptation’ and “innovation” are required, and on an ongoing basis, not just to keep up, but to gain a real market advantage.
In other words, a real REALIGNMENT, because we have not done this for too long.
So how can SMEs meet the current challenges and adapt their business models, processes and international strategies? A few approaches:
1. Dealing with global economic uncertainties in a targeted manner
Uncertain supply chains and sales markets, tariff increases, and similar challenges require a stabilization strategy. So, what can companies do?
Diversification of supply chains
- Reduce dependencies, including on service providers.
- If you are in the manufacturing industry, diversify your procurement for your production. The best way to do this is to relocate to countries with stable prices and supplies. Ideally as close to your market as possible.
- Establish alternative sales markets (e.g. Southeast Asia, Africa, Latin America) as soon as possible, especially in industries with strong exports.
Localization of production
- Relocate production capacities closer to the core markets (“nearshoring”).
- Adapt this for services as well - this will not only diversify important parts deliveries, but also bring know-how closer to the company again.
2. use of new technologies such as artificial intelligence (AI)
“Be ahead of the curve”. We tell this ourselves continuously at digital rapids. We simply must not waste any time here from a business perspective. We don't have time for five-to-ten-year technology strategy elaborations. That is our sincere conviction. And if we do, then we should urgently parallelize. How can new technologies quickly and pragmatically improve existing processes and support new products and new business?
Process improvements and efficiency gains
- Invest in process automation, e.g. in administration and customer service (e.g. chatbots, document processing, self-service portals). But also, in logistics and in your sales channels. Digitize your supply management (e.g. through a digitized warehouse) and your sales. Get them on the phone or in a web conference. Use Augmented Reality as customer service for products and machinery. Automation and digitalization do not equal a less personal contact. When set up correctly, both are faster, closer to the product and even more responsive to the customer.
- Use AI sensibly in production and product design, e.g. with rapid prototyping, Predictive Maintenance or in quality assurance. Secure old legacy processes with AI and reduce costs so that you can invest them in new projects. This drives our economy forward!
Data, data, data
- Work with the right ERP and CRM infrastructure. Develop on the basis of customer data. “User or customer centricity” is the key.
- AI can now support market and scenario analyses. Use this for better evaluation and positioning.
Invest in your employees
- Build up internal skills now, not necessarily (only) with certificates and theory, but with real projects. Strengthen data literacy and AI know-how from practical experience.
- Cooperate with universities, design joint projects and bring new colleagues on board who are “growing up” digitally and with AI.
- Invest in the right leadership - human and professional - to properly sort and operationalize the issues at hand.
Get external know-how
- You are already training your employees but need immediate impact - team up with external experts! An incredible move is happening in the AI sector in particular.
- Especially exciting for larger companies: venture clienting - innovation through cooperation. Ambitious start-ups that are really “ahead of the curve” can help quickly in cooperation.
3. create organizational resilience and a culture of innovation
- Build agile structures. In your systems, in your organization, in your strategy and project roadmap. Only those who know how to react quickly to change will be able to make the most of the market.
- Promote a culture of innovation: “Make mistakes!” - Allow mistakes, this is the only way an organization can learn. “Continuous Testing and Improvement” - constantly test new ideas and promote an entrepreneurial “start-up” culture internally.
- Take advantage of government funding programs for digitalization, energy efficiency and innovation.
- Make consistent use of your advantages as a family business but keep an eye out for a financially strong partner (private equity, cooperation partner, commercial bank) who can help you keep pace with listed competitors when it comes to innovation investments.
A good mix of measures is needed to successfully counter the current disruption - global economic foresight and technological openness. Above all, however, a willingness to react flexibly to changes and to invest.
In our experience, this works best with a fresh view from the outside. No stagnation, forward-looking transformation with the right know-how, both professionally and in terms of leadership - with a “getting things done” mindset. Interim managers often offer the unencumbered and perfectly suited advantage here. They transform and break down change barriers over a certain period and until the permanent team in the company has been empowered and established accordingly.
Or contact us for an informal exchange!