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Measuring Success and Avoiding Failure in Small Business Management Training Nigel CUSHION Director of Small Business Research The Centre for Applied Research in Management, Education and Training City College Norwich Ipswich Road Norwich NR2 2LJ, ENGLAND Phone: 44 (01603) 773215 Fax 44 (01603) 633009 ABSTRACT This paper offers an alternative innovative conceptual approach to small business research in the training field. The paper constructs a conceptual approach traditionally assumed in the training field and fundamentally questions it. It then moves on to offer an alternative approach, which was devised on an innovative management skills development programme in Norfolk, the Norfolk Small Business Initiative. Some of the results of this case approach are then sketched. The paper then sketches out the obstacles to success, discovered on project transfer. INTRODUCING SUCCESS This paper offers an innovative conceptual approach to the measurement of the success of management skills development in small firms. The challenge to readers is to liberate themselves from the chains of conventional analysis and to explore the emancipatory approach of formative evaluation. The conceptual approach has been built on the successes of the Norfolk Small Business Initiative (nsbi). nsbi has enjoyed unprecedented interest and success since it started to deliver management skills programmes to established small businesses in Norfolk in March 1994, and is currently expanding into other pilot locations around the country. "It was the best course I have ever done" "If I hadn't taken part in the Golden Key Package, I'm sure my business would have failed!" "The best seminar I have been on, very informative and easy to understand" "At long last a sensible down to earth course for small business people at a very realistic price."

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These are just 4 representative testimonies of over 100 received from owner-managers of small business who have undertaken the financial management course of nsbi. The target group of small businesses for nsbi, were to be businesses that had been trading for at least 12 months, employed less than 20 people, and had a turnover of less than 500,000 pounds. Work by McCann (1993) has shown that firms who employ less than 20 people account for over 96% of the businesses in UK. Two of the many unique features of nsbi, for businesses who complete the programme of 5 evenings of financial management training, are the incentives offered by the main high street banks and the role of the evaluation. The bank incentives of a 1% cut in overdraft rates or a refund of 450 pounds bank charges are offered for completion of the programme (there being no test or examination). The role of formative evaluation has enabled unique insights into the creation of a conceptual approach to success. It is this approach which is explored in this paper. Other considerations at the time of the formation of nsbi included: *

The widely held belief that one of the major reasons for small business failure was the lack of general management skills within small business management teams. (Supported by research by Bushell CARMET 1992)

*

A concern that the traditional methods of providing management training to the small business sector were not proving totally effective.

*

The observation that existing training provision was fragmented and provider-driven rather than customer-led.

*

A concern that existing provision focused heavily on the business start-up market and upon those larger 'small businesses' employing 20 people or more (i.e. the largest 4% of all businesses!)

These considerations led to Weal (1993) conducting market research into the barriers to training for the typical owner manager in Norfolk. His work led to the unique nsbi operating formula being devised. This paper does not seek to prove the success on the sbi project. Sufficient evidence has been collected from small businesses, the project team, intermediaries, support bodies etc to support this conclusion. This paper focuses on the intellectual processes that are at the heart of success measurement and it is these that may provide illumination to others in the small business training provision field. With the customers, banks, accountants, the

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providers, and the sponsoring partners all claiming success for nsbi, can we learn anything about the nature of success measurement on a small business training context from this project? The starting point is to reflect on the traditional approach used. I will highlight some fundamental questions to such an approach and will then offer an alternative innovative approach to success measurement. The paper then outlines some of the results of the evaluation of nsbi. The paper then concludes with the evidence of the obstacles to successful project transfer. TRADITIONAL APPROACH TO SUCCESS MEASUREMENT There is no theoretical framework for research in the small business field (Downward et al 1995), and with the absence of a core body of literature, approaches are at best devised on a 'best fit' basis. The area of training for small businesses not only has these problems generic to all small business areas, but has inherited many of the (questionable and often unchallenged) assumptions about training from the 'big business' arena. The traditional view is that training is 'good' and can be used to improve performance. There is an implicit and sometimes explicit assumption that training will improve business performance. Work by CBI (1993), Midland Bank (1992), and Small Business Bureau (1993) are among this school of thought. Others have questioned or were unable to find a link between training and small business performance such as Marshall et al (1993), Wynarczyk et al (1993), and CSBRC (1992). Storey (1994) highlights the difficulties in attempting to isolate the impact of training on small firm performance. I concur with much of this work. However my thesis is that many of the problems arise because the theoretical measurement model is itself flawed. In order to pursue this argument we need to construct the traditional model. The 'assumed' model has a form something like that shown in figure 1. Figure 1: The traditional conceptual model for small business training 1 Know skills required \/ 2 Delivery of training \/ 3 Learning occurs in recipient \/ 4 Behaviour changed as a result of learning \/ 5 Behaviour leads to a change in business performance \/ 6 Change in business performance measured

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In my view the training-performance debate attempts to establish a causal link between items 2 and 6, i.e. the delivery of the training and the change in performance as a result of that training. However, in my view this approach is doomed, since this is not one link but a chain, and every link in the chain can be questioned. Firstly, it is assumed that there are a set of skills that can be agreed as being those that are 'fundamental' skills to run a small business. Peters (1994) would argue against this, and the entrepreneurial literature is renown for the huge diversity in skills profiles of those who are generally accepted as being successful. Many have questioned whether Branson would pass GCSE business studies. There will be those who will argue that it is easy to identify core skills e.g. decision making, team management, planning, etc but when these general concepts are translated into specific skills, the approach begins to break down. If we cannot identify the skills required to successfully manage a small business, while we may not fall at the first hurdle, we can by no means assume that we will clear it. Secondly, it is assumed that, armed with the knowledge of what skills businesses need, these needs can be met through the delivery of training. The problem is one of homogeneity, in that if we accept that every business is unique then the optimum skills profile for the owner-manager of that business will also be unique, and any training experience delivered with a curriculum focus, is destined not satisfy the needs of all customers. Using the dictionary (New Collins Concise English 1986) definition training is: the process of bringing a person ... to an agreed standard of proficiency ... by practice and instruction. Not only are there problems of 'agreeing on the standard of proficiency' as mentioned above, but the very concept of 'bringing a person to' suggests a linear truth, inconsistent with the business environment of today (Sanger 1995). Is it possible to 'instruct management'? Can practical instruction be completed in a meaningful way, away from the live business context? At this juncture the 'competency trainers' usually arrive and then we all get lost in the dark woods of assessment! Is 'training' in its traditional sense the best way to enhance the management skills of owner-managers? The third major assumption is that learning takes place on the training course. Our work into the learning experience with nsbi has showed that the learning experience is far more complex than the traditional approach assumes. A whole host of inter-related variables blend together to form the experience which appears almost unique for each business person on the course. Our qualitative research showed that it was possible to have what would be regarded as a traditionally high quality training product, but for very little learning to take place!

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The fourth assumption is that if learning has taken place this will lead to a change in behaviour. The traditional training literature is full of caution is this area. Often, immediate post course euphoria is measurable but is behaviour being changed in the long term? The decisions made by the owner-manager are just some of the factors that affect business performance. This model assumes that the change in the decisions of the manager will cause a change to business performance. This fifth major assumption is based upon causality. David Hume, centuries ago demonstrated that causality, as a guiding principle to human action, was in fact based on dubious premises (Noxon 1973). It is convenient for us to assume that training causes behaviour change ... causes improved performance. Sanger (1995) highlights that this type of causality is as seductive as it is unreal. The concept so beloved by economists "ceteris paribus" 'all other things being equal', was of use in a Keynsian world of managed aggregates. In the 'crazy' dynamic world of today highlighted by Peters (1994) et al, dominated by speed, information and relationships, the 'real world' of the small business owner-manager, are such approaches of any value? The sixth assumption is that the effect on performance resulting from training can be measured. Even if you accept that it is reasonable to make the above 5 assumptions, which I do not, there is still the problem of measuring the change in performance. Storey and Westhead (1994) provide an excellent review of the training-performance link issues and a critique of research to date. They have highlighted many of the multitude of problems here, including the issue of additionality. I.e. even if you accept that the training has caused the performance, how do you decide when looking at the performance measure which parts of the performance change were due to the training and which due to other factors such as the market, the personal life of the owner, actions of competitors etc. If the scientific approach is used, how do you establish a control group of 'identical' firms who have not received the training? There are also problems of agreeing what performance means. Do we measure profits, turnover, growth, avoiding failure? If growth, how is growth measured, and does the owner really want to grow? If avoiding failure, what is failure? Do these concepts change over time? What are the objectives of the firm? Do these change over time etc etc etc. Even if you can crack all these, change in performance is a long term exercise and hence will involve tracking over many years, and as the tracking time span increases so will the potential impact of non-training variables on small business performance! No wonder the trainingperformance link remains unproved! In conclusion, while researchers continue to use an inappropriate

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vehicle (training), in an inappropriate model (training-performance link), and an inappropriate approach (causality & proof), very little value will be added to the training debate. Even worse, very few results will be of use to the small businesses themselves. In 1994 The Centre for Applied Research in Management Education and Training (CARMET) devised an innovative approach to measuring the success of management development for small businesses, based on formative evaluation. The issues are illuminated by the evaluator who works alongside the project as it grows and develops, regularly feeding into the project research information to enable project management decisions to be shaped. AN ALTERNATIVE, INNOVATIVE APPROACH TO SUCCESS MEASUREMENT Grounding the research work in the responses from over 50 small business owner-managers, an alternative approach to success measurement was devised. In this alternative approach the learning experience lies at the centre. See figure 2. Figure 2: An alternative conceptual model for small business training

Product -focus

Customer focus | THE LEARNING EXPERIENCE

-- Organisational focus

Moving out from the centre the impact of the learning experience can be reviewed using three areas of focus: Product Focus, Customer Focus, and Organisational Focus. These foci are designed so that attention can be given to the fundamental evaluation questions, and so that a framework can be established through which the research work can be conducted and the reporting back given meaning. Product focus seeks to address the questions: What is the product, and how good is the product? Customer focus seeks to address the questions: What is the reaction of the customers to the product, and what impact does it have on their business? Organisational focus addresses: What is the best way to organise the delivery of the product, and how is it best transferred to other locations? An outline of the framework developed for nsbi is shown in Table 1. We can talk in terms of a successful product, successful customer responses, and successful organisation of delivery. The framework was established after close liaison between the project team and the evaluator. Table 1:

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The evaluation framework for nsbi ___________________________________________________________________ 1 Product Focus | a The Case Material | b The Delivery by Presenters | c The Learning Experience (a x b) | d The Environment | e The Price _______________________|___________________________________________ 2 Customer Focus | a Short term | (Product quality feedback and | initial Value Added reaction) | b Long term | (Value Added to decision making in | cash, profit, and working capital | management reflected in improved | survival and growth) _______________________|___________________________________________ 3 Organisational Focus | a Financial | b Marketing | c Operational _______________________|___________________________________________ Having established the framework, it was then important to think through the key features of the evaluation process. Key features of the approach included the emphasis being on contingency and not on causality, i.e. outcomes are not caused by inputs but are contingent on certain core inputs being present in varying degrees, in the process. In addition the approach was highly individualistic, in that each participant and groups of participants were accepted as having their own perspectives on the experience. The approach takes account of the perspectives of all who interface with the project. Hence the model can cope with factors like the diversity in objectives of small business owners, and the varying definitions of success. Translated to apractical example, each of the 10 owner-managers on a course will take away from it a unique learning experience, different from all 9 others. However, the approach is also holistic, in that the picture must be viewed as a whole, and not as having separable parts. The concept of gestalt is central to the learning approach. It is not a discrete series of parts that can be glued together to form a whole, but a blend of interrelated parts which together form a whole different to the parts that make it up. It was this thinking that enabled the identification of the 5 core ingredients of the product to be developed, as well as the 5 core qualities of a presenter. As an example of this conceptual approach I will highlight these 5 core qualities of an nsbi presenter. (See table 2.) It should be noted that the project team were aware from an early stage that the 'person' needed to deliver the nsbi financial management case study would have to be

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more than simply a lecturer or an accountant. Table 2: The five core qualities of an nsbi presenter Core quality Described in terms of presenter needs to: ___________________________________________________________________ | A manager of | Be able to manage the dynamic learning learning | processes, to enable each participant to relationships | attain real value from the learning experience. | A small | Be able to empathise with and sympathise with business person | owner-managers ... someone who has been there | themselves. | A technician | Be able to handle technical accounting and | finance issues. | A confidant | Be able to win the trust of the participants. | A showman | Be able to entertain and make accounting fun! _________________|_________________________________________________ These 5 core qualities were developed following observation, interview, and discussion of the best practice of the initial presenter team. This model was later used to devise improved presenter selection and training procedures. The framework itself is dynamic, in that it develops as the project develops. The central conceptual aim therefore becomes one of development and not one of training. The dictionary (New Collins Concise English 1986) definition of development is: the ... process of ... coming ... to a later or more advanced or expanded stage. The experience can then be seen in the short term as a catalyst, in that it stimulates change in the ownermanagers who participate. Of course it is only catalytic in the short term, since with the support of formative evaluation, the experience itself does not remain unaffected, and it develops itself to an improved quality level. Hence we have an approach where the vehicle is development (and not training); where the model has at its heart the learning experience; addresses all perspectives on the experience (and not simply a training-performance link); and where the discourse is one of contingency not causality. RESULTS OF SUCCESS MEASUREMENT Due to that fact that the approach developed with nsbi was heavily

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qualitative and formative, it is difficult to provide a short summary of all the feedback. For the complete picture see Cushion (1995). For a flavour of the success measures, some of the summative quantitative results are included below: By July 1995 over 300 businesses had graduated from the sbi programmes. Some of the year-end statistics are given in Table 3 below: Table 3: Some of the nsbi year end summative results. ___________________________________________________________________ 95% of participants said they would definitely recommend the course. 67% of participants gave the course the highest overall rating of 'very good'. 88% of participants thought that the course would affect their long term decision making. 63% of businesses identified themselves as a growth business. 45% said that participation in the course had affected their growth plans. The Financial Management Skills Index, a measure of perceived value added to financial management competence rose by 55% as a result of the course. 2/3rds of participants provided positive testimonies about their experience on the course. There were almost no negative testimonies received. The completion rate of businesses on the programme is almost 100%. ___________________________________________________________________ In addition the project had: *

Formulated a model of the ingredients of 'product'.

*

Was using case material with almost 18 months of live development work behind it.

*

Devised a model of presenter specification, and developed selection and training procedures for presenters.

*

Obtained evidence on the pricing of the product and the value of the bank incentives.

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*

Developed a model to transfer the project into new contexts.

*

Following substantial national interest in the programme, it has been transferred to Suffolk and Belfast.

For the purposes of review, 5 success ingredients were identified at the year end to highlight what made the sbi project successful. These 5 were: 1.

The role of the evaluation

2.

The learning experience being at the heart of the product.

3.

The project is customer led and not supplier driven.

4.

The project is organised like a small business.

5.

The role of the incentives offered by the banks.

These five make up the critical success features of the nsbi project. The challenge to training providers is to discover what critical features are specific to their particular delivery. OBSTACLES TO SUCCESS:

THE STORY OF FAILURE ON TRANSFER

Within the last 12 months the sbi has attempted to transfer the project into 3 other locations in the UK: Suffolk, Northern Ireland, and Derby, and is on the verge of transfer into 4 or 5 other locations in 1996/97. The evidence to date, is that the new localities have acted to substantially change the package, despite the proven tack record of the package. This raised two problems. Firstly the changes often conspired to reduce the quality of the product. Secondly if substantial changes are made to the project in different locations, this questions the efficacy of a pilot test. From the transfers to date, a number of issues are emerging. These issues are very much in the early stages of formation, and for sbi will be tested as further centres come on stream, and more information is generated from existing centres. There are 7 'obstacles to success' that have been identified. These have acted to either change the product or reduce the quality of the whole programme, or both. They are: What is being transferred; Ownership and Control; Local Politics; Global and Local Integration; Embedding and Culture; Managing Transfer Paradoxes; Nature of Management. What is being transferred?

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It has observed that there has been a lack of clarity of description and understanding in what was being transferred. Some perceive that it has been the product that was transferred. Others refused to accept or have failed to appreciate the definition of product offered by the evaluation (see Table 1 above), and defined the product in terms of the conventional definition of the 'case material'. At the other end of the extreme (the position taken by present sbi operators) was that 'what' was being transferred was much more than just the product. Other aspects of operations such as the culture, management systems, ethos, corporate vision etc were involved. Deeper still is the belief that many of these are grounded in the cumulative experience, tradition and history of the project to date. As the number of transfers have increased the variety of interpretations of 'what' is and should be transferred has increased. The absence of a rigid franchise-style codification of rules, and the encouragement of local decision making discretion, has increased the pressures for localities to use differing operational definitions of the 'what', even if publicly they had signed up' to the accepted definition. There appears a need for clarity on what the local centres can change and what comes to them 'fixed'. There is a need for clarity of description and understanding in relation to what is being transferred. Ownership and Control A successful project has a by-product of magnetically drawing in the hearts and minds of those who work closely on it. A successful project of 2 years maturity will therefore have generated a core of staff who own the project and have controlled its destiny. They will have shaped it to date, sharing in the joy of the successes and the pains of the failures. On transfer, the new people coming into the project have not shared in this bonding process. It is debateable as to whether they can really even 'own' what others have created. (See Sanger 1994). There has been observed a need by new comers to achieve a sense of ownership on the project and this is often done by an attempt to create their own operating milieu. The consequence of this is that the authodoxy and the accepted practice is amended. This often occurs under the auspices of meeting local needs! This behaviour has been observed by the project managers and the presenters. The managers main behaviour is reflected the act of changing the programme. The presenters have been observed to want to bend' the programme to meet what they 'usually do'. This could be explained by the need for presenters to operate within their comfort zone, and if the product challenges their perceptions of usual (therefore good) practice they revert back to their usual practice and blame inadequacies in the material.

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There appears a need for new people joining the project to shape and create the destiny of the project and their role in it. By allowing this they feel a sense of ownership of and control over the project. There are dangers, of course, in that this process could lead to the lessons of the past not being passed to the future. Local Politics Business support networks have organisations discharged with the responsibility of providing training to small businesses. Successful new products offered from outside the local network present a potential threat to the local providers. At present in the UK there is significant change occurring in local support with the introduction of the Business Link network. The role and future of the support agencies in local areas is at present very uncertain, and it is with this background that sbi has been transferred. In a need to support local agencies, programmes transferred in can be seen as 'external'. In one case example the threat of having a quality programme bought in was sufficient to galvanise local support agencies to unite against the programme and decide to go their own way. The transfer of projects needs to take into account the tensions and the perceptions of those agencies who will be affected by the introduction of the project. Global and Local Integration The sbi project has the support of many parties. They in affect make up a portfolio of stakeholders, e.g. the host organisation (business link), the banks, the provider, the presenters, the customers, government etc. Each of these stakeholders come with a different agenda and differing priorities as to the key issues that need to be addressed. Often these agendas and priorities have proved to be covert. It has been noted that within a stakeholder group and within an organisation these perceptions and priorities differ. E.g. the position taken over the project may differ across the banks and also laterally and vertically within a bank, with different statements as to the support that a particular bank is prepared to give to the project conflicting even though statements are issued simultaneously. Hence there appears a need to integrate the project into the local and global agenda of each of the stakeholders and where these are at variance with the interests of the project, to align them. Embedding and Culture

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The culture of the project has been seen as a crucial ingredient to the success of sbi. In the context of origin in Norfolk, the project has been able to create its own culture within a College, since it has been allowed to develop as a stand-alone unit. On transfer the project has to be transplanted into a new host. It is important that the host accepts the implant. However the culture of the host is likely to be different to that where the project was developed. A key issue, yet to be resolved, is how much the culture, which has been a contributor to operational success can be sacrificed as the project is embedded into new hosts. Managing Transfer Paradoxes There are coming to light a number of transfer paradoxes. Transfer has proved to be a turbulent and complex process, and as our understanding of it grows, paradoxes begin to reveal themselves. (See Handy 1994). Two of these have already been identified: Firstly, quality to date has been based on giving a high degree of discretion to local managers, with low central control, allowing them to develop, a small business culture. However, if this is done in new localities the danger is that people will choose not to do things in the best practice way hence reducing quality. Secondly, the more stakeholders who support the programme the greater the success possibilities. However, each new stakeholder needs to add value to the whole, to amend best practice, and thereby watering it down. There are likely to be other paradoxes identified as the project matures. These need to be managed if they are to enhance the chances of success and not become forces contributing to failure. Nature of Management The behaviour of those managing the project has varied across the localities. In a complex dynamic situation where the roles themselves are evolving, specifying the management approach that is needed is difficult. Following the success of specifying the core qualities of the presenter, a core qualities model has been developed for the manager to date. These qualities are: manager of network relationships; manager of resources; small business person; flexible thinker; leader. However, as the programme moves from development into implementation phase, is not clear as to whether these mix of qualities will be appropriate for the future. It's dangerous to assume that the management mix (or work roles from Mintzberg 1992) of the past will be relevant for the future.

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Unless these roles are specified it is clear that managers may go their own way and specify their own sub-optimal mix of roles. It is only corruption to specify can pass. successful

with a clear understanding of the pressures for and change on transfer, can a model be built that seeks a transfer bridge, over which the successful formula Failure to address these issues could lead to projects in their birth contexts breaking up on transfer. CONCLUSIONS

A breakthrough in the research of "success in the small business training field" has been hampered historically by two obstacles. Firstly the lack of focus of the training, and secondly the lack of focus of the research. Breakthroughs are only possible if we embrace innovation in both delivery and evaluation. By adopting an alternative conceptual approach to small business research, the barriers to successful training can be illuminated and then dismantled. In this way the evaluation becomes a contributor to success and not merely a measure of it. Training providers can then ground their management decisions in quality research information. Initial work indicates that 'transferring success' appears a very different process than of 'creating success'. If successful projects are to breakout and make a contribution to national or international policy debate, then understanding the transfer process and the obstacles to success transfer will be critical. REFERENCES Bushell AL

(1992) Small Business Management Training Project Stage 1: A Study of Investigating Accountants' Reports CARMET, City College Norwich

Cambridge Small Business Research Centre

(1992) The State of British Enterprise Department of Applied Economics, University of Cambridge

Confederation of British Industry

(1993) Finance for Growth: Meeting the Financing Needs of Small and Medium Enterprises CBI, London

Cushion N

(1995) How to succeed in small business training: a break through. The first evaluation report of the small business initiative. CARMET, City College Norwich.

Downward P and Philpott T

(1995) A Methodological Assessment of the Small Business Literature: what is the 'reality' of small business and enterprise? Small Business and

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Enterprise Development Conference paper 1995. Handy C

(1994) The Empty Raincoat Arrow Business Books

Marshall JN et al

(1993) The impact of Government-assisted Management Training and Development on Small and Medium Sized Enterprises in Britain, Environment and Planning C: Government and Policy Vol.11 pp 331-48

McCann A

(1993) The UK Enterprise Population 1979-91, The NatWest Review of Small Business Trends, Vol.3, No. 1, June, pp.5-13.

Midland Bank

(1993) The Changing Financial Requirements of Smaller Companies, Midland Bank, London

Mintzberg H

(1990) Controversies in Management by a BerkeleyThomas Routledge, London

Noxon J

(1973) Hume's Philosophical Development, Oxford, Clarendon Press

Peters T

(1994) Tom Peters seminar: Crazy ways for crazy days Published in USA.

Sanger J

(1994) Emancipation, Empowerment or Authorship? Mass Action Research World Congress 3 on Action Learning, Action Research and Process Management Bath, England

Sanger J

(1995) Educational Action Research, Vol.3, No. 1, 1995

Small Business Bureau

(1993) Enhanced Loan Guarantee Scheme Support Small Business Bureau, London

Storey DJ

(1994) Understanding the Small Business Sector Routledge Publishing, London

Storey D & Westhead P

(1995) Management Training and Small Firm Performance: A Critical Review, Warwick Business School SME Centre, Working Paper No. 18

Weal RC

(1993) nsbi initial market research (unpublished) The Norfolk Small Business Initiative, City College Norwich.

Wynarczyk P et al

(1993) The Managerial Labour Market in Small and Medium Sized Enterprises, Routledge Publishing,

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London

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