Transformation in SMEs: Why values determine success or failure
Small and medium-sized enterprises (SMEs) form the backbone of the German economy.
At the same time, they face one of the greatest challenges in their history: holding their own in an environment characterised by uncertainty, rapid change and complexity.
Digitalisation, skills shortages, new market demands and increasing pressure to innovate are forcing companies to evolve continuously. Transformation is no longer just a project – it is a permanent state of affairs.
And yet the success of many transformation initiatives remains limited.
A widely cited study by McKinsey shows that around 70 per cent of all transformations fail to achieve their goals. This figure is no outlier. It has been confirmed by various studies over the years.
The key question, therefore, is no longer whether companies need to change, but why they so often fail to do so.
A practical example: Wuppertal as a barometer of small and medium-sized enterprises
An interesting perspective on this question emerged recently at the VDI conference on Value Analysis in Practice
This event primarily brings together engineers, project managers and executives from technology-driven organisations – in other words, precisely the target group that plays a key role in shaping Germany’s SME sector.
What stood out was not so much what was discussed, but rather what is often overlooked.
The participants demonstrated a high level of expertise in the analysis and optimisation of processes, structures and technical solutions. This is precisely where one of the great strengths of SMEs lies.
However, it became clear that:
Engagement with the underlying values – that is, with the question of what actually drives behaviour – takes place much less frequently and is often less systematic.
And this is precisely where a crucial lever for successful transformation lies.
Why values are not a ‘soft issue’
In many organisations, values are still viewed as a cultural afterthought – something that is ‘nice to have’ but not crucial to business success.
This view is not only narrow-minded – it is dangerous.
For years, the Gallup Engagement Index has shown that only a small proportion of employees feel a strong emotional connection to their company. The key factor influencing this is not primarily the structure or the salary, but the experience of purpose, trust and appreciation in day-to-day work. In other words: values put into practice.
Amy Edmondson’s research on psychological safety takes this a step further. It shows that teams perform particularly well when there is an environment in which people feel confident to address mistakes, ask questions and take risks. This, too, is not a matter of methodology, but a result of lived values.
The Deloitte Human Capital Report confirms this link at an organisational level: a clear, lived corporate culture is one of the most important success factors for transformation.
In summary, it can be said:
Values do not have an indirect effect. They have a direct impact on behaviour, decisions and, consequently, on the performance of teams and organisations.
The structural advantage – and the cultural risk in small and medium-sized enterprises
Small and medium-sized enterprises possess characteristics that fundamentally facilitate transformation:
short decision-making processes
a strong focus on implementation
close collaboration between management and teams
At the same time, these strengths also give rise to risks.
In many small and medium-sized enterprises, structures have evolved over time. Collaboration is often based on tacit knowledge, experience and well-established patterns. Much of it simply ‘works’, without being explicitly defined.
This applies in particular to the value base.
Values exist – but are rarely clearly articulated, agreed upon or consciously managed.
As long as the environment is stable, this implicit system works surprisingly well.
In transformation processes, however, this is precisely where the problem lies.
