SMALL AND MEDIUM-SIZED enterprises (SMEs) are primary engines of
growth in most economies. According to the World Bank, they account
for up to 60 percent of total employment and 40 percent of the GDP
in emerging nations. Yet they struggle to achieve revenues of greater
than US$5 million because they find it challenging to obtain financing,
and they often lack critically needed management know-how.
At the Olayan School of Business (OSB) at the American University
of Beirut in Lebanon, the tagline on our website simply states,
“Transforming business thinking in the MENA region.” One way we
are doing that is by helping SMEs scale up. We have launched the
Growth Readiness Program with the goal of giving SME leaders access
to education, mentoring, and investors.
The program was set up as a close collaboration between OSB
Executive Education and the school’s Darwazah Center for Innovation
Management and Entrepreneurship. The school also partnered with
key ecosystem players, including SME investment advisors Inventis
Inc.; the U.S. Agency for International Development (USAID),
which provided the funding for the inaugural offering; and the Jordan
Competitiveness Program, an NGO that aids SMEs and helped recruit
participants in Jordan.
SITUATION AND SOLUTION
There are three reasons most SMEs
never bring in more than $5 million in
revenue. First, most current research
focuses on the “what” of growth, not the
“how” of getting there. Second, most
available business services are geared
toward startups or large companies, but
very little advice is aimed at businesses
in the scale-up stage. Third, the knowledge
that is available for SMEs comes
mostly from venture capitalists who
only advise their own clients or from
consultants who are too expensive for
smaller businesses to hire.
Our Growth Readiness Executive
Education Program (GRP) helps SMEs
overcome all three of these barriers
through four key components:
A deep dive. We assess each company
in terms of its growth readiness along
dimensions of strategy, business model,
financial health, governance, legal structure,
and financial needs. Investment advisors
identify the specific barriers that
each firm faces, as well as the competitive
advantages that will help these firms
outpace their competitors. We share the
assessments with each firm’s management
team in an easy-to-read format
that highlights the company’s strengths
as well as the areas that need attention.
Capacity building. Two members
of the top management team from each
company attend seven executive education
modules covering growth strategy,
HR tools for growth, financial tools
for managing growth, market sizing,
sales management, negotiation, and
governance. These two-day sessions
are interactive and include hands-on
exercises with scale-up tools. Over a
four-month period, executives spend
a total of ten days with OSB Executive
One-on-one mentoring and coaching.
We provide company representatives
with a basic template for preparing
a growth plan, including a growth
pitch deck that summarizes their plan.
Leveraging the findings from the deep
dive results, the pitch deck includes the executives’ objectives for their companies—such as doubling their revenue in
three years or expanding to new regional
markets—as well as the steps they’ve
taken to ready themselves for scaling up.
Once these pitch decks are completed,
the participants share them with two
professional investment advisors,
as well as faculty who have previous
experience in mentoring SMEs.
Matchmaking. We hold a “meet and
ignite” event where SME representatives
can meet with investors and lenders
to discuss investing and borrowing
opportunities. At one such event, SME
managers met with lenders to discuss a
co-financing program that would allow
customers of the SME to buy products
by borrowing money from the investor.
THE IMPACT SO FAR
The Olayan School launched the Growth
Readiness Program in 2015. Because
the initial offering was subsidized and
designed with impact in mind, we put
the applicants to the first cohort through
a rigorous vetting process to make sure
they were fully committed.
The initial 140 applicants eventually
were winnowed down to 12, who were
required to sign an agreement that they
would share company-related data
during the assessment stage; commit to
taking actions in support of growth; take
part in the educational component; and
develop a post-action plan.
GSP participants receive mentoring and coaching that
will help them prepare their companies to scale up.
Just 15 months after the program
was completed, we conducted a phone
survey of these companies to determine
what impact the program had had on
them. The results of the survey showed
us that, even within that short period of
time, our inaugural cohort had achieved
visible impact through four metrics:
Qualitative improvement in readiness.
All of the 12 companies reported
improvements in strategy, human resources,
financial health, marketing, and
the sales process.
Growth in revenue. Here, the amount
varied widely, from 5 percent to 35 percent;
average growth was 20 percent.
Growth in staff. Eleven out of the
12 participants added employees, for
a total of 39 employees added.
Securing of additional financing.
All of the participants had an improved
ability to attract funding, whether by
receiving equity investments or by
borrowing. Six of the companies raised
a combined US$16.5 million in equity
investment; another raised just under
$500,000 in debt.
As the program continues, we hope
to track other key performance indicators,
including expansions in products,
services, and geographic footprints.
EXPANDING IN SCALE
In 2017, GRP was selected by the University-
Industry Innovation Network as
one of the top 18 cases of good international
practices. That same year it was
selected by the MIT iEcosystem Symposium
as one of the top 24 international
programs to involve stakeholders at the
university, government, venture capital,
corporate, and entrepreneurial levels.
The GRP has led to additional offerings.
In 2018, OSB Executive Education
developed the Global Scale-Up Program
(GSP) to address larger organizations
with revenues ranging from $100 million
to $500 million; it focuses on external
growth drivers, including launching new
ventures and acquiring new businesses.
The GSP was first completed in April
2019, in collaboration with IE University
in Madrid, and it was delivered in a
blended format with face-to-face delivery
in both Beirut and Madrid. The GSP
is an open enrollment program paid for
by the participants and their companies.
We believe that such programs not
only will help SMEs and larger organizations
scale up, they also will boost
the local economy. In a recently published
piece on its website, the World
Economic Forum noted the importance
of SMEs to the Middle East and North
Africa region. The article says, “With the
fourth industrial revolution underway
as the digital age disrupts business, the
flexibility of SMEs, their innovative
capability and ability to create jobs are
crucial for MENA countries’ global
If the Olayan School can help even
a small percentage of these companies
grow, we can make the radical impact
we aim for in the MENA region.
Watch this video to see Bijan Azad discussing the Growth Readiness Program.
Fida Kanaan is director of executive
education at the Suliman S. Olayan
School of Business at the American
University of Beirut in Lebanon. Bijan
Azad is associate professor and director
of the Darwazah Center for Innovation
Management and Entrepreneurship at
the Olayan School.
This article originally appeared in BizEd's November/December 2019 issue. Please send questions, comments, or letters to the editor to [email protected].
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