The following is the Breakthrough – Small Business Research Results: 2015 Report submitted by Dr. Kevin McCormack
October 5th, 2015
Dr. Kevin McCormack
DRK Research and Consulting LLC
kmccormack (at) drkresearch (dot) org
Survey Development: Dr. Kevin McCormack, Michael Kramer, and Bob Fangmeyer, Director of the Baldrige Performance Excellence Program
The ManageHub project started with first-of-its-kind research that was focused on identifying the specific steps that a smaller organizations can take to accelerate their company’s growth.
Why This Research is Important:
National economies are developing an ozone-sized hole related to small business falling contribution to GDP and employment. The following research identifies why business success is random and unpredictable. We found that business owners think they are building solid companies that are prepared to grow, but at most they are building a beautiful house of cards that can topple at any moment. Our research found that their success is random. Our research also identify why: Small businesses lack access to practical management tools used by larger organizations to succeed. This has led us to develop the ManageHub Accelerator to fill the Management Gap and make business success more predictable.
-Measurement, Analysis and Knowledge Management
Identify ways that best management practices (as defined by the Baldrige Performance Excellence Framework) can make business success more predictable. Specifically, we want to dramatically improve the success rate of smaller companies. Currently about 70% of businesses fail in their first seven years.
-Phase Zero: planning/startup
-Phase One: initial growth
-Phase Two: ebbing growth
-Phase Three: growth plateau
Our hypothesis is that small business success can become more predictable if startups apply appropriate best management practices (as defined by U.S. Baldrige Performance Excellence Program) earlier in their life cycle.
In a continuing survey from 2011 to 2015, we asked over 450 survey participants to rate themselves on business maturity (Level 0 to Level 5) and then asked them about their attitudes, behaviors, business structure and performance. Over 45% of the participants had less than 3 employees and of that, one half had 1 employee. 92% had less than 50 employees.
What we found is:
As business mature they seem to lose site of strategy, process and people and their performance degrades. At Level 2 they start to lose the importance of process and do not recover much as they mature to Levels 3-5.
Business success seems almost random (and a small difference from level 0 to 5). Although organizations report that they are “focusing on business basics” they do not seem to be engaging in process or strategic improvement. In other words, there seems to be a disconnect between their intentions and appropriate action.
We are currently midway in our multi-year study of small business and Baldrige best practices. The next report will be at the end of 2016. At that point we should be able to report some statistical test results on the things that matter the most to performance improvement.