Signs that UK SMEs are losing sight of the human element behind their growth have emerged from research by Yorkshire Bank. In its 20 May report Expect More – compiled from a survey of 2,000 entrepreneurs working across a variety of sectors in the UK’s ten biggest cities – the bank reveals that 46% of them view technology as more important to their firms than people. [1] In terms of how that sentiment resonates in individual cities, the figure rises to 50% in Liverpool, 52% in Birmingham and 56% in London.


Reflecting on the findings, Gavin Opperman – group banking business director of Yorkshire Bank’s parent company CYBG – said: ‘’Technology is disrupting many different aspects of our lives, and it is truly revolutionising the way we work. The rise of e-commerce in particular is enabling SMEs to access markets they may never have been able to reach previously, meaning high-growth businesses are more likely to be driven by tech.


“We’ve seen a huge adoption in the SME world of many technologies, from digital marketing and social media to AI and the Internet of Things. And the advent of 5G has the potential to push boundaries even further.”


However, he warned, “we shouldn’t forget the importance of people in a digital economy. It is the personal element that helps to build a rapport, creating the longstanding relationships necessary for a trusting and efficient connection between business and customer.”


Opperman noted: “It is clear that technology can help businesses take that extra step in their growth plans and it is great to see so many UK SMEs embracing this. [But] as a bank, we don’t underestimate the balance between tech and people.”


Angela McClelland, co-founder of scale-up advisers and CYBG affiliate The Extraordinary Club, added: “Technology helps with digital skills, productivity and processes within the workplace, but I don’t think we should lose focus on the importance and power that people have. People and tech need to be complementary.”


How worrying is it that such a large proportion of SME leaders are prizing the technology that drives their firms’ products and business models over the people who keep their companies going? And in the quest to be a good leader, what should they know that will encourage them to reframe their outlook?


The Institute of Leadership & Management head of research, policy and standards Kate Cooper says: “Carrying out a survey of this sort when we are in the middle of the Fourth Industrial Revolution may yield rather skewed results. It’s almost like asking, ‘What’s your biggest issue of the moment?’ And at present, the process of identifying, sourcing, installing and optimising the use of the correct technology for your business must be of greatest concern to the nation’s entrepreneurs.”


She explains: “The prevailing outlook among SME chiefs will be that people are always going to be people, so that’s not the area in which they are expecting to see radical change. However, they are dealing with constant change and flux in the realm of technology, so will be under intense pressure to harness what they consider to be the most effective, up-to-date tools on the market. While technology may deliver huge improvements over time, there’s a pressing requirement to fund it at the earliest occasion so it can be integrated with the business, and that calls for significant capital investment. With all that in mind, I can understand why we are getting these sorts of results.


“However,” Cooper notes, “it’s important to acknowledge that regardless of how many chatbots we use, how much AI we adopt or how many routine tasks we automate, there is still no substitute for the human empathy and emotional intelligence that so many customers want from the businesses they rely upon. Indeed, we frequently praise small businesses for their enhanced customer service, typified by inherent flexibility and responsiveness, as well as niche offerings. If, for whatever reason, SMEs are going to make that style of service less of a priority, it will come back to them in the shape of reduced customer satisfaction.”


She points out: “A great deal of business technology is brilliant for handling activities and interactions that play out on a large scale. For example, financial services software provides for broad process automation and enables staff to gather all their documents and deliver quotes online. There are so many facilities that work around the need to speak to human beings. But if a small business adopts those sorts of anonymous practices, then to some extent it will sacrifice its unique, competitive advantage.


“Even some financial services firms have recognised the commercial limits of anonymous service styles. As a brand, Handelsbanken has distinguished itself with a local emphasis, whereby branches adapt to the requirements of their communities and provide a personal service. So even in that sector, a human touch can be a valuable differentiator.”


Cooper adds: “Once you have updated your technology, it’s vital not to lose sight of the more human factors that have contributed to your success. Imitating the impersonal practices that are so often seen in big business may well create efficiencies in the short term. But it certainly won’t deliver the customer service – or, indeed, employee satisfaction – that you will need for long-term sustainability.”


For further insights on the themes raised in this blog, check out the Institute’s resources on enterprise


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