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A policy-maker's guide to mid-sized business

Mid-size business is going to be big news over the next few weeks, led by its (widely expected) coverage as a significant plank of Chancellor Osborne's November 29 Growth Review. I was asked (in my capacity as co-founder of M Institute) to present to an audience of policy-makers at the Department of Business, Innovation and Skills (BIS). Here's a note on my presentation.

My presentation focused on some basic truths about medium enterprises (or mid-sized businesses, or MSBs, as they are increasingly being referred to):

The mid-sized bandwagon rolls on as UK Growth Review focuses on medium enterprise

Medium enterprises are suddenly getting a lot of attention, here in the UK as well as in other parts of the world. M Institute co-founder Jyoti Banerjee lays out some home truths about midsized business that should not be forgotten as new players jump on to the medium enterprise bandwagon. 

I have taken part in more meetings about medium enterprises in the last two months than across the previous three years. These meetings cover government departments, membership organisations, academics, researchers, event organisers and business people.  

It looks like medium enterprise, the long-hidden secret of economic growth in western economies, is not going to be hidden any more. In fact, it is going to come leaping out into the open, particularly once the UK government announces its Growth Review in the autumn, which focuses on the opportunities in the medium business segment. 

Thanks in part to its inclusion in the Growth Review, medium enterprise is suddenly hot property among all the agencies that want to influence policy thinking in the UK. Who does not want to know best, and to be seen to know best, when the policy-makers ask for help.

But it is not just the UK where this is happening. In the next few weeks, M Institute will be announcing partnerships with international organisations that want to play roles in reaching medium enterprises, and enhancing their performance. One is based in Australia and the other one is global. 

So the medium enterprise contagion is spreading. And that is a good thing, from my perspective. In fact, as I reflect on all the newbies jumping on to what has essentially been our very own bandwagon, I can quote Mr James Brown directly and say, "I feel good." When we set up M Institute (my colleague Paul Druckman is co-founder), we did so because we felt that the power, stability and growth that medium enterprises bring to an economy are largely hidden because people failed to distinguish medium business from SMEs.  Now that everybody else is getting involved, we can feel vindicated. 

But, and there's a big but here, I would like to reiterate what we have learned over the last five years or so of delving into medium enterprise because we see some common errors being made in people's understanding of midsized business. Some of the home truths about medium enterprise are easily missed, especially to people coming in from the cold. So, for the benefit of all, here are some things that we recommend all the new players in medium business pay attention to.

Growth planning: there's plenty of confusion among policy-makers

Ever wondered how governments come up with policies on growth? Well, on March 14th, I got some insight on how this is done. The UK Department of Business, Innovation and Skills, or BIS for short (nee BERR, even more nee DTI, if you have not been keeping up with the changing alphabet soup), invited a mix of policy-makers, academics and industry players to listen to some long-range views on growth policy. Long range? There were no announcements regarding policy, just an exchange of views on issues that might impact growth policy in the future.

Did I learn anything? Was I encouraged? Will UK growth policies change the growth opportunities for medium business in this country? In short: yes, no and probably not. In that order.

Hanging Parliament

Should we care that next week we may have a hung parliament in the UK? Jyoti Banerjee investigates the options.

I see that a recent study of growing businesses by the British Chambers of Commerce finds that two-thirds are concerned or very concerned about the impact of not having a majority party, while only one in seven respondents feel that it would be a good thing.

Let’s try and place the hung parliament discussion in context. The one thing that medium enterprises crave from their politicians is a stable economy so that business decisions within the firm are not constantly upset by changes without. But it is not just a stable economy that they need. Medium businesses also need top-flight transport and communications infrastructure, access to finance, and a well-educated workforce.

So ask yourself this question? Will a hung parliament actually deliver any of these hopes? Or will it stand in the way of achieving these objectives?

It is reasonable to expect the main political parties to be different from each other, and given the opportunity to exercise their policies, the UK could look very different in a Labour regime of Big Government, compared to a Tory government of Small Government / Big Society, or even Nick Clegg’s Open Government.

But reality is likely to be very different. While each of them could lead Britain into completely different economic territory, that is going to take rather a long time. I suspect Britain’s appetite for a hung parliament may not last long enough to see change on that scale. In fact, a split leadership may not even last the course of a single parliament.

Say no to bank bonuses!

Britain's bankers are planning to reward themselves with billions in bonuses out of their bail-out funds. Should they be allowed to get away with this? Jyoti Banerjee says most emphatically not.

Let me say this as plainly as I can: Britain’s bailed-out bankers should not get a bonus. 

It must be a morally-corrosive atmosphere in Britain’s banks if their senior management are prepared to pay out bonuses in the billions of pounds a few short weeks after these banks have been bailed out by the public purse.  Their argument is two-fold – they need to reward those who did a good job, and they need to hang on to the talent needed to rebuild Britain’s banks.

Their PR message seems to be getting across to some quarters since even Chancellor Alastair Darling, arguably the closest thing we have to an owner of the near-nationalised banks, is parroting the same worn spiel. 

Both arguments are a nonsense.