How well do Local Enterprise Partnerships (LEPs) provide a strong value proposition in their business support ecosystem to prepare small firms for a tendering capability learning journey? A productive economy in part depends on SMEs developing a capability to tender for public sector contracts and the enterprise ecosystems that support that capability. In the Covid-19 context, enabling small firms to permeate public sector procurement markets – and ensuring that procurement is used to fulfil economic and social goals so we can “build back better” – is an even higher priority.
The UK Government’s SME Action Plan[i] sets out a modern, ambitious strategy that includes an ambition to spend £1 in every £3 of public sector procurement on smaller businesses by 2022. Achieving the Government’s laudable objectives will demand both a reform of procurement practices to streamline the capabilities demanded by tendering and investment to build the capability to tender in small firms.
An enterprise ecosystem needs to know how to support small firms to strategically commit (or not) to tendering, build the capability needed to be tender-ready and continuously develop tendering capability through tendering experience. This ecosystem will not only supply information via learning opportunities but enhance social capital: an entrepreneur’s ability to get resource – in this case information and sensemaking about tendering – out of networks. The support will, therefore, draw them into a relationship with procurers, expert business support providers and peers and encourage information sharing, reflection and mutual sensemaking. In other words, if an ecosystem is a multi-lateral arrangement of actors and organisations that creates a value proposition[ii] then it requires a coordinated infrastructure to ensure that £1 of £3 of public sector procurement can be spent on small firms that have capacity to tender.
Outside of the retail sector, business founding is usually focused on delivering goods and services to customers, rather than being ready to sell. Selling via tendering can be particularly alien to small firm leaders because most have product or service specific expertise and lack any experience of tendering. For many, their previous employment may have provided face-to-face customer negotiation skills but not ability to strategically situate a business in a tendering environment, decipher tender invitations and write a technical and competitive document.
Small firm learning tends to be problem-situated and small businesses tend to be focused on the short-term problem of survival. Typically, they are not likely to spontaneously develop capability to tender prior to an individual tender invitation. There is an argument, then, for aligning learning to the process of responding to a specific tender invitation. Yet, the Centre for Tendering’s Capability Model for Tendering depicts top-performing capabilities that suggest being successful at tendering demands some pre-existing capability as well as the ability to learn fast about efficient and competitive means of selecting tender invitations, writing tenders and reviewing outcomes. When a small firm approaches tendering without any awareness of its demands, and very low tendering capability, they are likely to waste resources on failure or an aborted attempt to tender, particularly when they have failed to ‘triage’ the opportunity to realise that they are trying to tender for a contract they cannot win or do not want.
For some firms, public sector tendering is not the right strategic choice and learning to avoid this market is sensible. Of more concern are discouraged tenderers, with the potential to thrive through public sector contracting but low optimism or access to support to build capability. And, repeat failures that make multiple unsuccessful attempts to tender but do not learn from these or make a strategic choice to properly invest in building capability or to avoid this market.
There is a puzzle here: how to motivate and support small firms to strategically invest in developing a core set of capabilities so they become tender-ready as well as supporting them to use experience to hone and adapt tendering capability so they build and sustain their competitive edge.
Join The Centre for Tendering free webinar on Tuesday 30th June 1-2pm https://us02web.zoom.us/webinar/register/8815918639780/WN_hu_4r4zuRka3ruOw-9A0Cw to learn how regional enterprise ecosystems can comprehensively support small firms: Enhancing Business Support for SME Tendering: A Dashboard of Priorities for Regions.
Finally, small firms are open to innovation at a time of crisis and we know they often turn to their customers or suppliers to find collaborators for innovation[iii]. It would be unproductive for procurement to become a ‘flat process’ of administration rather than collaborative means of developing economies and communities. To achieve this, LEPS must commission enterprise ecosystem actors that can invest in developing small firm capability to tender and procurement must become more open to input from small businesses.
[i] Department of Business, Enterprise and Industrial Strategy (2019), SME action plan, Crown Copyright, https://www.gov.uk/government/publications/beis-small-and-medium-enterprises-sme-action-plan
[ii] Adner, R. (2017) ‘Ecosystem as structure: An actionable construct for strategy’, Journal of Management, 43, (1), pp.39-58
[iii] Roper, S. (2020) ‘R&D and innovation after Covid-19: What can we expect? A review of trends after the financial crisis’, Published: 7 May 2020, https://www.enterpriseresearch.ac.uk/people/stephen-roper-3/