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SMEs need to embrace soft skills for greater innovation

SMEs need to embrace soft skills for greater innovation

  • 1 August 2023
  • By OCBC Business Banking
  • 10 mins read

For a business to not just survive but thrive in an ever-changing world, business innovation is the key to stay ahead of competitors. Job-specific skills are often prioritised in SMEs, as it is their business nature to provide solutions to specific problems. While hard skills may solve technical problems, it is soft skills that are required when crises or unexpected situations arise.

Soft skills are attributes relating to the emotional and interpersonal side, and they enable us to perform our job more effectively. Based on a 2017 study by Boston University, Harvard University and the University of Michigan, workers who received soft skills training had a 12% increase in productivity, leading to a 256% net return on investment. These intangible qualities may be hard to quantify, but they too have an impact on the bottom line.

Here are six essential soft skills that can help shape SMEs to be innovative and for them to use to nurture personal success for their staff.

1. Creativity

This is a skill that enables members of the organisation to come up with new ideas or approaches when faced with a problem. Whether it is to find ways to cut costs, come out with a new marketing strategy, or invent a new product, creativity is often the root of innovation. As SMEs generally do not have a wide variety of products and services, creativity is important to help make the business distinct from others.

2. Critical Thinking

This is the ability to think clearly and rationally, and to see a comprehensive view of any situation. Critical thinking enables the understanding of logical connections, and helps foster creative ideas into feasible actions. Both the creativity and critical thinking capacities determine a person’s problem-solving skills. This process of thinking could also introduce ideas that expand opportunities, as well as predict obstacles on the horizon. By promoting critical thinking within the workforce, teamwork and productivity will increase as employees become more engaged.

3. Time Management

This skill refers to the efficient use of time for increasing production. The success in managing time is especially important in SMEs, where employees may have to pivot and take on many roles. Compared to big corporations, a mistake in the time schedule has higher chances of causing heavy consequences. Apart from being productive, to be timely also shows professional accountability and strong work ethic to external stakeholders.

4. Communication

The ability to communicate effectively is to reach the right people in the right way. To communicate information in a clear manner can build relationships and help employees come to mutually agreeable consensus. It also helps to set clear instructions and expectations on the job, allowing for better collaboration and teamwork. Developing this skill in the business is important as business operations often include negotiation and interactions with employees, suppliers, customers and investors. In Malaysia, both cultural and language barriers have to also be taken into account when dealing with employees and customer from different races.

5. Adaptability

This is the ability of individuals and the organisation as a whole to change their behaviours and actions to suit new situations. Being a forward-thinker is useful in the competitive SME sector, as businesses would need to constantly adapt to changing markets and give customers what they need and want. The current COVID-19 pandemic has also shown the importance of adaptability by pushing businesses to embrace digitalisation, and also challenging them to keep employees’ motivation high when interaction is limited.

6. Empathy

Empathy is the ability to understand one another, and to consider the complexity of issues behind another person’s perspective. Being empathetic in the workplace leads to the opening of new ideas, as employees are encouraged to share their views and opinions. Businesses that are empathic also allow for employees to make mistakes and learn, allowing the team to become more confident and comfortable in sharing their ideas. This is especially important for SMEs as managers and employees are expected to have more proximity and collaboration.

So how can SMEs develop these soft skills?

An innovative business requires human resources with the necessary competences. Whether it is the business owner or managers within the organisation, SMEs should have a leader with an inspiring vision. Leaders that are both participative and supportive are able to stimulate critical thinking and drive innovation among the members of the organisation. If the leadership is absent, business owners could seek out coaching or training programmes for the employees.

Business owners or managers should observe the employees while they are on the job, and identify the soft skills which they possess that adds value to the business, then inspire the other employees to learn and follow. To further evaluate and improve the soft skills of the workforce, business owners could identify the strong and weak points via tools to measure personality, such as the Myers Briggs Personality Indicator, Big Five personality test, and the Predictive Index Behavioural Assessment. These can help to identify areas to capitalise or improve on.

The thing is, soft skills are recognised to be harder to teach, which is why hiring employees with well-developed soft skills is critical. SMEs could implement a soft skills-focused hiring process by structuring job interviews with soft skills competencies. SMEs could obtain insights into the soft skills possessed by candidates through behaviour-based interview questions, and see if they match with the soft skills required by the business. In the bigger picture, SMEs should build a friendly office culture that encourages creative thinking and active engagement embedded with a positive attitude. Apart from inspiring employees to develop themselves further, an inclusive culture that values innovation could help attract and retain talents.

In sum, innovation promotes business prosperity and growth by increasing productivity or by creating unique products and services. It also fosters sustainability as innovative businesses have the creative capacity and competitive edge over its competitors. As such it is vital to identify and understand the essential soft skills for the business to push towards innovative results. Hard skills are what you do, and soft skills are how you do it; developing these competencies in a combined way could nurture a business that is capable of facing most challenges in the world.

Do mull over the 6 steps to incorporate better soft skills for your SME business growth! All the best.


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