SME & Entrepreneurship
Chapter 1: Introduction to CSC
Open innovation is a business management model for innovation that promotes collaboration with
people and organizations outside the company. This innovation modelbecomes viable when the
company acknowledges that there are many bright professionals and greater knowledge outside the
organization. It is in this very moment when the opportunity to attract those external individuals
and/or companies becomes more real.
Closed innovation is based on the view that innovations are developed by companies themselves.
From the generation of ideas to development and marketing, the innovation process takes place
exclusively within the company.
3 horizons theory (by Mckinsey):
Horizon 1: Maintain and strengthen core business
Horizon 2: Explore and discover new expansions
Horizon 3: Create entirely new possibilities and
competencies
More information:
https://www.boardofinnovation.com/blog/what-is-
the-3-horizons-model-how-can-you-use-it/
CSC: Corporate Startup Collaboration is the act of
bigger corporations collaborating with smaller
startups. Open innovation aims to leverage both
internal and external resources to come up with new
opportunities and solutions. In other words, this
strategy wants to go beyond a company’s internal
1
,boundaries to explore new ventures, which are often originated by the synergies between internal
and external participants in the innovation process.
While large companies often lack speed in identifying and grasping disruptive opportunities, startups
are the opposite. Innovation and disruption are at the core of these companies, so they thrive at
reimagining the norm and developing new technologies. Amid this landscape, collaboration has
proven to be the best way for both sides.
Chapter 2: SME’s perspective
General
SME: Small and medium-sized enterprises.
Criteria for SME’s
Characteristics of SME’s
Often no separation between ownership and management
Overlap between private and business issues
More difficult access to finance
Shares of SMEs are usually not publicly traded
No developed management team – flat organisational structure
More flexible and faster decision making
More difficult to infuence environment
2
, SME shareholder characteristics
Limited number
Know each other
Personal (lifelong) relationships
Shares important part of wealth
Difficult exit
Different type of owners
SME’s succes and failure
Firm size
Vulnerability of smallness: risk of failure decreases if a company gets larger
Smaller companies also pay higher taxes, are less productive and pay lower wages
Main causes of failure
1. Internal: under the control of management: lack of strategic management
2. External: beyond management control: customers’ default of payment
3. Personal: characteristics of the business leader/owner: financial, conflict, leadership style,…
Causes of failure according to liquidators:
Internal: lack of financial and strategic management
External: direct competition of large firms
Personal: divorce and conflict between business partners
Causes of failure among established SMEs
• Lack of strategic management
• The chase for growth: trying to grow to fast, growing for the sake of growing, …
• Importance of strategic change
• Importance of corporate governance (BoD, AC)
• Lack of financial management
• “Self-employed business people are good in their profession, but they usually know
little or anything about the administrative part behind their business. In addition, law
and regulations are constantly changing. And because they don’t have the time and
knowledge for it, they depend on others. For that reason they risk that others
(accountants, bankers, …) will make the wrong choices for them or that they get in
contact with the wrong people.”
• 7% of the SMEs do not expect a failure, although in reality they are in serious
trouble. “These business leaders have a too rosy picture of their firm’s situation. One
out of five SMEs who believe they have an adequate financial buffer, in reality have a
3
Chapter 1: Introduction to CSC
Open innovation is a business management model for innovation that promotes collaboration with
people and organizations outside the company. This innovation modelbecomes viable when the
company acknowledges that there are many bright professionals and greater knowledge outside the
organization. It is in this very moment when the opportunity to attract those external individuals
and/or companies becomes more real.
Closed innovation is based on the view that innovations are developed by companies themselves.
From the generation of ideas to development and marketing, the innovation process takes place
exclusively within the company.
3 horizons theory (by Mckinsey):
Horizon 1: Maintain and strengthen core business
Horizon 2: Explore and discover new expansions
Horizon 3: Create entirely new possibilities and
competencies
More information:
https://www.boardofinnovation.com/blog/what-is-
the-3-horizons-model-how-can-you-use-it/
CSC: Corporate Startup Collaboration is the act of
bigger corporations collaborating with smaller
startups. Open innovation aims to leverage both
internal and external resources to come up with new
opportunities and solutions. In other words, this
strategy wants to go beyond a company’s internal
1
,boundaries to explore new ventures, which are often originated by the synergies between internal
and external participants in the innovation process.
While large companies often lack speed in identifying and grasping disruptive opportunities, startups
are the opposite. Innovation and disruption are at the core of these companies, so they thrive at
reimagining the norm and developing new technologies. Amid this landscape, collaboration has
proven to be the best way for both sides.
Chapter 2: SME’s perspective
General
SME: Small and medium-sized enterprises.
Criteria for SME’s
Characteristics of SME’s
Often no separation between ownership and management
Overlap between private and business issues
More difficult access to finance
Shares of SMEs are usually not publicly traded
No developed management team – flat organisational structure
More flexible and faster decision making
More difficult to infuence environment
2
, SME shareholder characteristics
Limited number
Know each other
Personal (lifelong) relationships
Shares important part of wealth
Difficult exit
Different type of owners
SME’s succes and failure
Firm size
Vulnerability of smallness: risk of failure decreases if a company gets larger
Smaller companies also pay higher taxes, are less productive and pay lower wages
Main causes of failure
1. Internal: under the control of management: lack of strategic management
2. External: beyond management control: customers’ default of payment
3. Personal: characteristics of the business leader/owner: financial, conflict, leadership style,…
Causes of failure according to liquidators:
Internal: lack of financial and strategic management
External: direct competition of large firms
Personal: divorce and conflict between business partners
Causes of failure among established SMEs
• Lack of strategic management
• The chase for growth: trying to grow to fast, growing for the sake of growing, …
• Importance of strategic change
• Importance of corporate governance (BoD, AC)
• Lack of financial management
• “Self-employed business people are good in their profession, but they usually know
little or anything about the administrative part behind their business. In addition, law
and regulations are constantly changing. And because they don’t have the time and
knowledge for it, they depend on others. For that reason they risk that others
(accountants, bankers, …) will make the wrong choices for them or that they get in
contact with the wrong people.”
• 7% of the SMEs do not expect a failure, although in reality they are in serious
trouble. “These business leaders have a too rosy picture of their firm’s situation. One
out of five SMEs who believe they have an adequate financial buffer, in reality have a
3
