Customer choice models for business counselling
Support of companies, particularly small and medium-sized enterprises (SMEs), is provided in many different ways both on a national level and in the scope of international cooperation. However, it is difficult to obtain a cohesive view of the existence of customer choice in business counselling in other countries because of the lack of common definitions and statistics.
The Ministry of Enterprise, Energy and Communications has commissioned the Swedish Agency for Growth Policy Analysis (Growth Analysis) to prepare a knowledge base concerning customer choice models in two parts. This report constitutes the first part and, in accordance with the assignment, comprises three components: Component one shows examples of countries or regions that have chosen public business counselling models or efforts that encompass some type of customer choice component, such as the use of procurement proceedings or checks. Component two shows examples of various types of customer choice models in other areas. Component three briefly describes the business counselling system’s general characteristics in the UK, Denmark, Finland and the U.S. In the second part, Growth Analysis will present proposals no later than 15 November 2009 on how work on a holistic evaluation of the business counselling system could be conducted.
The conclusions in this report state that:
- Customer choice in business counselling constitutes an interesting complement to other state efforts in the area. It is difficult, however, to assess how common the phenomenon is internationally.
- The debate in Sweden concerning customer choice solutions in business counselling appears to have come relatively far from an international perspective.
- The trend is to try to link together business and academia. An instrument for achieving this is “innovation checks”, which are relatively common. These are often limited geographically and limited to research institutions certified in advance. However, the future trend is for the checks to increasingly be able to be used for the purchase of knowledge from private consultants as well.
- Consequently, the work under way in the European Commission concerning the innovation check concept is valuable.
- The concept regarding e.g. consulting checks differs between countries and there are no common definitions. Certification of providers is common, but freedom of choice also exists. An example of a consulting check that can also be used for innovation is the “SME wallet” in the Belgian Flanders region.
- A common denominator for the successful examples is in most cases use of the Internet for e.g. applications and reporting.
- The objective of introducing a customer choice model in other areas in Sweden has often been to subject both public and private operations to competition to improve efficiency. In this context, it is interesting that subjecting the market to competition in the majority of the foreign examples is not given as the main reason for the introduction of a customer choice-like system. Instead, the aim is often to provide SMEs a broader palette of support in order to increase the region’s or country’s employment and growth on the long term.
- The procurement of business counselling also does not appear to be common internationally. However, an interesting exception is the British Business Link network.
- The majority of the foreign examples discussed in the report proved to have been evaluated. The results indicate that the customer choice systems are appreciated by virtually all involved parties.
- A factor common to the business counselling systems in the UK, Denmark and Finland is that consolidation is taking place and the trend is to combine the public actors’ services. They also strive to include private actors in various ways.
- Business counselling in the U.S. is characterised by decentralisation in that much of the implementation of the federal policy has been delegated to the regional and local level. The large role played by volunteer work is also characteristic. The question one may ask is if this would work in the same way in Sweden where elements of volunteer work are found less often.
- Some advantages of introducing a customer choice system could be more efficient activities, greater freedom of choice for the user and greater establishment opportunities for SMEs. Disadvantages may conceivably include a risk of more administration on the part of public bodies and higher requirements on quality assurance.
- Interesting experiences from implemented customer choice can be found in Swedish sectors such as schools and the home-help services, where private companies compete for the funding allocated by public bodies. In contrast to independent schools, giving participants marks is not of interest in business counselling, however. On the other hand, there may be other similar ways of competing, such as by giving the impression that the company will make a large profit, which could lead to greater risk taking. The public sector has a responsibility here as a market creator for guaranteeing the quality of the services and compliance to legislation and ethical guidelines. Information must also be publicly available so that the consumers can make informed choices.
- Upon the introduction of customer choice models, consideration must be made to realities such as population size and business density, particularly in a sparsely populated country like Sweden. It may simply be difficult to obtain diversity among companies, especially in small regions, which could threaten the efficiency of the customer choice model.