Innovation must come from SMEs

New insights

Last 18 November, the Committee for Entrepreneurship and Microfinancing in the Netherlands presented the annual review of the SME sector, ‘MKB-jaarbericht 2016’. The launch also marked the introduction of the renewed website dedicated to SMEs, which is edited by Statistics Netherlands (CBS). The annual review was produced by CBS in collaboration with the Dutch Ministry of Economic Affairs. CBS used new data sources and methods for the project. This created more possibilities for breakdowns and cross-sections, which in turn yielded new insights. ‘One of the most notable insights I find is the increasing dynamism in the SME sector’, says Goddijn.
‘We are seeing record numbers of companies growing, declining and going out of business. Companies that were struggling have caused a loss of 45 thousand jobs. But at the same time, 45 thousand new jobs have been created by new entrants and by successful companies.’

Insufficient growth

The Dutch MKB sector has been through several years of decline and is recovering slowly. Last year, total sector turnover grew by around 0.3 percent, operating results by around three percent. How would Goddijn describe the current state of the MKB sector? Is it robust of does it need efforts to be stepped up? ‘That depends on how you look at it. In recent years, the MKB sector has shown it can adapt quickly to changing circumstances, which is good. But when looking at growth in the MKB, one has to conclude it is really insufficient. It is positive that profitability is growing slightly faster than total turnover, but it’s not fast enough. We cannot be complacent.’

Local employment

Goddijn underlines the importance of solid growth in the Dutch MKB sector. With three million full time jobs, it is the country’s driving force for employment. ‘SMEs are responsible for most of the jobs, for our prosperity and social cohesion. Therefore, we should go all out on this sector.’ And we must do so right now, Goddijn adds: ‘The economy is highly volatile. Companies go out of business, whole shopping streets are changing, local employment is declining. Innovation and change are sorely needed. The trends indicate we should not just rely on large companies for that. The trend there is automation and robotisation. A flexible and resilient SME sector – capping the theme of this year’s Review – is crucial for the prosperity and economy of the Netherlands. It also raises opportunities for SMEs to grow into larger enterprises, which is not happening often enough at the moment.’

Recommendations

But how does one stimulate this flexibility and resilience? The committee makes a number of recommendations. ‘The Netherlands has an open and competitive economy. So the basic conditions for growth are being met. We advocate a flexible labour market – something we have advocated for some time and not just because of the annual review. Filling vacant positions and cutting jobs have to be made easier in times when it is needed. We need an end to the abundance of red tape getting in the way of entrepreneurs. And the education sector has to adapt more swiftly to changing circumstances. Many SMEs encounter are chronically lacking knowledge and skilled personnel. If we are succeed in making these changes, we will become more flexible than our neighbouring countries and be able to achieve faster growth.’

Discover new trends

By combining of registers and other sources, CBS offers more insight into the patchwork of SMEs in its annual review and its renewed website. ‘CBS has done a fantastic job’, Goddijn says. ‘They went very far, making combinations and analyses that were not included last year. This greatly enhances our understanding of the sector. CBS has expressed its intention to continue this improvement and refinement in future editions. This may help us obtain insight into the development of exising trends, and we might discover and identify new trends.’

Common ground with SMEs

TomTom is a large multinational with 4,600 staff in 35 countries and an annual turnover exceeding one billion euros. To what extent does CEO Goddijn see common ground with the SME sector? And how does he keep his company as flexible and resilient as possible? ‘This depends on factors which apply to all companies. It requires a thorough knowledge of your product and understanding of market demand. Furthermore, it takes making the right decisions, and sometimes a bit of luck.’ When it comes to recruiting staff, Goddijn recognises the issues faced by the SME sector. ‘Like at many other technology companies, finding talent presents a real challenge. A lack of the requisite skills is often a factor which hampers growth. I often drop by technology companies around Amsterdam as our headquarters are located there. Questions I hear frequently are: where do you source your people? And how do you train them?’

Curriculum vitae of Harold Goddijn
Since 2001, Harold Goddijn (Oegstgeest, 1960) has been the CEO of technology company TomTom, the market leader in navigation, traffic information and map products, GPS sports watches and fleet management solutions. In 1989 he was co-founder of Psion, a computer equipment and software manufacturer. Goddijn graduated in economics from the University of Amsterdam. He is married with Corinne Goddijn-Vigreux (a French national), who is co-founder of TomTom, and they have two children.