Pressing the digital accelerator: Small firms racing to upgrade

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Small businesses around the world have always been the engine-room of adaptability, change and economic development. As the world deals with the challenges of COVID-19 – the latest OECD report – confirms that this continues to be the case.  While the virus rages outside, our economic engine is being remade: with digital drive.

That is why I am delighted to chair the Digital for SMEs Global Initiative, a joint initiative by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities and Business at OECD, in partnership with leading private sector companies such as Amazon, Facebook, Kakao, Microsoft, Vodafone and Wix. The Initiative has shed new light on the barriers to the digital transition and how different countries are assisting their small business communities to overcome those barriers. 

While the traditional barriers of infrastructure, a digitally skilled workforce, and the need for quality digital business advice remain, the pandemic has catalysed many small businesses to transform almost overnight.  Since the start of the pandemic, up to 70% of SMEs across eight countries have accelerated their digital transition in response. At the height of the first wave of the crisis, a survey of 51 countries across the globe showed that one in four small firms that were closed because of lockdown restrictions were setting up a website or on-line presence.  And in Canada 67% of small businesses now accept online payments: 47% of these only started doing so this year.  Many have innovated to do so – not just implementing remote working and home delivery services, but developing whole new content for online audiences, including e-learning and virtual reality tours.

But the speed of the transition comes with risks. Many businesses will not have had the time needed to plan the transition well – to select the right digital systems, to fully upgrade digital skills, to develop secure digital tools and data protections, nor indeed to fully understand its potential and limits. There are also acute and growing risks of burnout for both employees and staff seeking to draw new lines between work and home. For many this will have been a stressful, frustrating and challenging experience.  It may also have left businesses more vulnerable. Hackers have intensified their efforts during the crisis, targeting SMEs lack of preparedness. The costs for business victims of breaches can be huge, amounting to months of revenue, well beyond available cash reserves.

Forward thinking governments are supporting their SMEs through this transition. Many already provided financial support and advisory services, such as through Denmark’s SME Digital programme or the Australian Small Business Advisory Service, bespoke skill programmes for SMEs, such as in Chile, Israel, Latvia or Spain, or programmes to strengthen data governance and protection in SMEs, like Korea’s Big Data Platform and Network Project. 

In New Zealand, we are working to achieve outcomes in three general areas:

  • Digital Foundations – where we are working to improve connectivity infrastructure, sector regulation, security, digital equity and network resilience;
  • Digital workforce – where we are creating a stronger digital skills baseline through education reforms, retraining for those affected by COVID-19 job losses, digital inclusion efforts and immigration where necessary;
  • Digital ways of working and digital business – where we are transforming the way New Zealand does business through programmes like the Digital Boost for small businesses, e- invoicing, industry transformation plans, growing the tech R&D pipeline, and the development of strategies for the growth of artificial intelligence software.

These types of initiatives happening around the globe are vital.  They provide small businesses around the world with the means to keep ticking over during the pandemic, but they also help deliver the more powerful engine that will drive economic recovery and help all of us to create a more sustainable and resilient world.  I encourage everyone to read the relevant OECD reports and work together to assist our small business communities on their digital journeys.

Minister of Economic and Regional Development at | Website | + posts

Hon Stuart Nash first entered politics in 2008 as a list MP, and was elected Labour MP for Napier in 2014.

In his maiden speech Minister Nash described himself as first and foremost a public servant, employed by the people of New Zealand; and as a social democrat committed to sustainable economic development and growth. In 2017, he was sworn in as Minister of Police, Revenue, Fisheries and for Small Business.

In the 2020 Labour Government, he was given a suite of portfolios focused on supporting economic activity in our regions, as Minister for Economic and Regional Development, Tourism Minister, Forestry Minister and Minister for Small Business.