Technology is deeply ingrained in our personal lives. We use our phones, tablets, and laptops to communicate, shop, bank, track our fitness, watch movies, play games, book holidays, buy groceries, get the news, search for information and more.
While small business owners may have embraced new digital habits in their personal lives, they often are not as quick to adopt the same digital mindset for their businesses.
According to a survey by the SME Association of Malaysia, only a quarter of SME respondents planned to go digital as a pandemic recovery strategy, with roughly the same proportion (27 percent) intending to continue with business as usual.
Digitalisation remains low despite support in place for SMEs to start reaping the benefits of digital technology. Earlier this year, the government launched the Malaysian Digital Economy Blueprint to strengthen SMEs’ digital adoption. Meanwhile, the SME Digitalisation Grant, led by Bank Simpanan Nasional (BSN), offers to match grants of up to RM5,000 to help SMEs adopt digital services that improve productivity.
To uncover what might be holding small businesses back from adopting digital technology, Xero recently commissioned the One Step Study, backed by behavioural science. According to the findings, the first barrier that SMEs face globally is resistance to change. The overwhelming majority of small businesses would rather not change what they are doing despite recognising that adopting new technology could benefit them. This resistance typically comes from a lack of confidence or excitement about technology.
The second barrier is relative judgement, or the perception of making decisions with limited knowledge of the field and an inability to assess and rank options qualitatively. Without reliable reference points, 39 percent of SME owners globally report feeling confused when comparing different technology options and, as a result, are less confident about making decisions.
Another challenge that small businesses face is ambiguity and uncertainty. Eight in ten small business leaders report desiring predictability when making decisions around technology. SMEs tend to stick to technology they are familiar with as gaining clarity about new solutions can be difficult when faced with an ever-expanding range of options and choices.
Technology providers and policy makers can encourage small businesses by using language that reframes the adoption process as a series of small, incremental steps rather than large-scale change management. In that same vein, technology providers and policy makers should focus their communications to SMEs on processes and outcomes rather than statistics and features.
There are tools that SME owners can use to better assess their technology options. A decision matrix, for example, can aid with visualising pros and cons against specific criteria. Another option is a pre-mortem, which starts with the desired end result and works backwards, creating a list of potential points of failure for both current and alternative solutions. Lastly, there is the power of community. Speaking to fellow SME owners is a great way to share learnings and get recommendations.
While we continue to face uncertainty with regards to Covid-19 and the economy, Malaysian SMEs can prepare themselves to meet the challenges head-on. As consumers, they have come to rely on technology for convenience. As business owners, they can benefit from digital tools to support all kinds of business processes. With government funding available to adopt these technologies, the only thing left to overcome is helping SME owners make the mental shift.
