GE Capital (one of our clients) recently hosted a very successful event about midmarket businesses in the UK called ‘Leading From The Middle: The Untold Story of British Business’. The speeches (including one from Vince Cable) and panel discussions focused on how we can strengthen the UK’s mid-sized businesses that are currently providing much of the UK’s economic growth but still not performing to their full potential.
One interesting point raised was the impact of having no clear label or brand for mid-sized companies in the UK. This is unlike Germany where Mittelstand has become a globally recognised term for more than three million firms known for their family ownership, market niches and high-quality products.
In the UK the closest term we have is SMEs (Small and Medium Enterprises) but this is much more associated with small or even micro businesses rather than the €20m-€1bn turnover companies in the midmarket. We also have much clearer terms for larger businesses such as ‘multinational’ which again most of the population would recognise and be able to describe the characteristics of such a business.
Why do we not have a commonly accepted term for midmarket companies and does it matter?
One reason for the lack of a term may be that the whole notion of being ‘middle’ has little instantly apparent positive attributes. Whilst small may be beautiful and might is right, being middle is just, well, distinctly average. Add to this the slightly pejorative use of the term ‘Middle Britain’ and it’s perhaps unlikely that any use of the ‘middle’ label will catch on.
Another reason for the lack of a brand may be that midmarket firms themselves have a bit of an identity crisis. They seem much more likely to identify with their sector than their peers. A midmarket engineering firm, for example, is much more likely to think of itself as manufacturing business than a midmarket one. The owner of a hairdresser, however, will likely readily identify him or herself as a running a small businesses. This may be one reason why there is a Federation of Small Businesses in the UK but not a Federation of Medium Businesses.
But these explanations assume that for a brand or label to successfully apply to a group of individual entities, the entities themselves need to at least recognise the label as applying to them and also want to identify themselves as such. This is clearly not the case as there are numerous examples of labels being applied to people or organisations that would not necessarily recognise the label as applying to them.
What I believe is clearer, is that a lack of a brand does make a difference for midmarket firms and creating one could bring benefits.
What’s your BRIC strategy?
Perhaps the most successful label to have been created in recent years has been BRIC, which was coined by Jim O’Neill from Goldman Sachs. In little over 10 years, the acronym for Brazil, Russia, India and China has not just defined a group of countries but a whole outlook on the global economy and politics. As Gillian Tett wrote in an article about origins and influence of the BRIC label, it “has become a near ubiquitous financial term, shaping how a generation of investors, financiers and policymakers view the emerging markets.”
Labels may often be too simplistic and downplay the differences between individual entities but they can be very powerful in focusing attention on the importance of the similarities. They not only reflect a current reality but can influence the future as well. How many companies have decided they needed a ‘BRIC strategy’ since the label was created?
Without a midmarket brand name, talking to or about companies as ‘midmarket businesses’ is unlikely to resonate as strongly as it could. If companies do not think of themselves as a midmarket business, then providing midmarket initiatives, strategy or insights is unlikely to affect the change that is needed for them to compete even more effectively on the international stage.
Creating a label
So what label or brand name might work for midmarket businesses? The CBI has clearly recognised the importance of creating one and have used terms such as ‘future champions’ and ‘Gazelles’. The advantage of these terms is they focus on common attributes of the midmarket firms rather than just their size. They are also positive labels which means firms themselves may be more willing to classify themselves as such.
Neither seems likely to become the universally recognised label though as most people would find it hard to identify what makes a ‘future champion’ or ‘Gazelle’ let alone apply it to companies they’ve heard of.
Made in Britain?
One thought is that more should be made of the ‘British’ brand. Many at the GE Capital event believed the ‘Made in Britain’ stamp still has significant value, particularly in developing markets and that perhaps UK businesses are too reticent in exploiting this. There may be a lot of truth in this but the term ‘British’ is unlikely to lead us to our midmarket brand name, not least because many firms, even in the midmarket, are foreign owned. Being British should likely form a key part of some business’s messaging but it is not the unifying label.
Given the increasing focus on midmarket business from the Government, CBI and the media, what is clear is that whoever can successfully coin a term for UK midmarket businesses is likely to make a name for themselves.
I’m afraid I am not that person (although I’m still trying). But perhaps there is a reason for that. Perhaps we aren’t ready for a midmarket brand name yet. As the term BRIC showed, labels only work when they group together common attributes and characteristics- when they define a pattern that people had not necessarily seen before but instantly recognise once they are made aware of it.
Perhaps the biggest problem is that too few midmarket firms are well known enough for there to be common attributes that the public would recognise. Labels work best when they group a certain type of person, country or companies that you know. Even midmarket companies themselves do not know many of their midmarket peers.
So yes let’s work towards creating Mittel-brand. But in the meantime, let’s also focus on creating the right environment for a name to be created organically. We can do this by better publicising midmarket firm success stories and building greater awareness amongst the public. Creating more opportunities for midmarket firms to network with their peers will also be important so they start to recognise how they are similar and share common interests. Who knows, once we can name more midmarket companies and they better know themselves, we may find that a label develops naturally and begins to change the way everyone thinks about this vital element of the British economy.