Most of what I have discussed about the Delta Model in previous presentations in this forum applies without much adaptation to any kind of organization. After all, every firm, regardless of its nature and specific circumstances, has customers and competencies – the two pillars of the Delta Model. However, there are two types of organizations that, because of their importance and singularity, deserve special attention. They are the small- and medium-sized enterprises (SMEs) and the not-for-profit organizations (NFPs). I will devote in this presentation to the analysis of these institutions, examining what lessons can be derived if we approach them from the perspective of the Delta Model.
The Importance of SMEs
There is no uniform and widely accepted definition of what constitutes an SME. The standards vary from country to country. Typically, SMEs are defined by an upper limit in the headcount and/or the sales revenues. An agreement is emerging, particularly within the United States, to classify a company as small if it has less than 50 employees and medium if the headcount is below 250. This gives you a sense of what kind of organization I am addressing here.
Regardless of its definition, we know that the overall impact of SMEs is overwhelmingly large. Uniformly, 95–99% of the total companies in any country are SMEs; they employ between 40% and 60% of the workers; and they contribute between 40% and 50% of the GDP. In addition, they play a central role as a leading source of innovation and creativity. For these considerations, we feel the SMEs deserve special treatment.
The Challenges of Managing SMEs
We believe that the Delta Model can guide us in defining a successful strategy for SMEs by looking at how an SME can adopt each of the strategic positions represented in the Triangle. It may seem odd that most of the examples that I have used when I teach the Delta Model are large, successful companies. I do this for two reasons. First, at one point, all companies were small, and it is interesting to understand how our chosen examples were able to make the successful transition from very embryonic companies to the large organizations they became. Second, we want to use companies that are universally well known to greatly simplify the communication process.
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