Globalisation on pause? How scaleups can navigate today's uncertainty9:30 am - 10:30 am
How the internet changed the world
“The internet’s biggest impact on SMEs has been as a great leveller, making it possible for a small firm to be a global company from day one, with the reach and capabilities that once only large companies could possess,” says Charles Roxburgh, a director at the management consultancy McKinsey, which has been researching the impact of the web on the global economy.
“They can reach customers, find suppliers and tap talent on the other side of the world – and also use the internet to provide significant marketing and brand muscle.”
McKinsey’s work suggests the internet has been a hugely powerful enabler for many SMEs: in a survey of more than 4,800 firms in 12 countries around the world, it found that those which use web technologies grew more than twice as quickly as those with little internet presence.
Nor are the benefits that the internet offers available only to online businesses. While the web’s development certainly has spawned thousands of new ventures that could not exist without it, many more conventional businesses are harnessing its power to grow far more quickly than they would ever have dreamed of had they launched in the preinternet world.
The interenet is now making a major contribution at every stage of the value chain, boosting productivity wherever you look. Not only has the web fundamentally changed the way products and services are sold, but it has also revolutionised development, design, production and distribution. Even the smallest businesses now operate with the sort of geographically diversified supply chains and global workforces that until these past few years would have been the preserve of large multinational corporations. There is more to come. McKinsey’s research suggests that on a global scale, the internet is now responsible for 3.4 per cent of GDP (in the UK, it says, the figure is as high as 6 per cent) but will deliver much more. Large companies are part of that story, but it is small and medium sized enterprises for which the internet presents the most exciting opportunities.
Building a community of customers: AFG Media
AFG is the company behind Morphsuits, the all-in-one fancy dress costumes that have become a common sight at stag dos, fancy dress parties and special events all around the UK. Founded in 2009, AFG had revenues of £1.2m in 2010 but has grown astonishingly quickly. This year, sales total £11m and the business is now expanding internationally.
Gregor Lawson, one of the three founding directors of the company, says AFG has social media to thank for its 300 per cent year-on-year growth. “Without Facebook, we simply would not exist in the way we do today,” he explains.
With little to spend on advertising or marketing in its early days, AFG’s strategy was to build a community of customers through its Facebook page – not everyone would buy a costume straight away, Lawson reasoned, but the more they participated in the community, the more likely they would be to spend money when the occasion arose.
“People underestimate the commercial power of Facebook,” says Lawson. “For every one person who does something on our page, another nine will ‘like’ it and another 90 will see what’s been done.”
AFG is scrupulous about engaging with everyone who posts on its page – even complainers become advocates of the business if you engage with them, Lawson argues.
In addition to the ideas its Facebook users come up with – not least a remarkable number of photos of Morphsuit wearers in ridiculous poses – AFG offers plenty of proactive opportunities to engage. It organises competitions and even meet-ups – a flash mob in Trafalgar Square, for example, attracted 200 Morphsuit-wearing fans.
“People think social media is flitty,” Lawson says. “I disagree – if you’re clear about your objectives and your customers, you can deliver real commercial advantages on Facebook.”AFG’s own statistics prove the point – they have 1.1 million Facebook fans and counting. And only a small proportion of those fans need to become customers to sustain AFG’s rapid growth.
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