Small and medium-sized enterprises (SMEs) represent more than 90% of all companies globally and are the primary drivers of social mobility, creating seven out of 10 jobs. With impact in economic inequality, industrial productivity, and growth, it is imperative that these companies are not left behind in the era of digital technology.

Summary

Small and Medium Sized Enterprises (SME) Futures Network aims to scale a framework of policy tools that governments or industrial associations around the world can use to help lower barriers and encourage adoption of industrial IoT (and related Fourth Industrial Revolution Technology) among small and medium-sized enterprises.

The Challenge

Small and medium-sized enterprises represent the majority of companies globally and are the primary drivers of job creation. Unfortunately, these companies are struggling to embrace the Fourth Industrial Revolution. Larger businesses (over 500 employees) are six times more likely to leverage industrial IoT than SMEs. This worrying trend is exacerbating economic inequality, stifling opportunities for social mobility and dragging down global industrial productivity.

To benefit from the technological advancements of the Fourth Industrial Revolution, SMEs will need to overcome a range of challenges including: a dearth of skilled employees; lack of access to capital and unclear returns on investment; a need to revamp their firm’s infrastructure and processes; a need to update information technology and operational technology; and navigate a nascent technology landscape that is currently poised to serve larger companies.

The Opportunity

Resolving these barriers and bringing SMEs more in line with their larger corporate counterparts could unlock benefits for a broad set of stakeholders, including increased firm profitability, larger addressable markets for technology companies, expanded tax revenue for governments, and improved environmental and social outcomes for the general public.

The World Economic Forum, in partnership with the Ministry of Economy of Brazil and the Brazilian State of São Paulo, co-designed and developed a Policy Protocol aimed at lowering barriers and promoting the adoption of digital technology more people and enterprises, particularly the Industrial Internet of Things, by small and medium‑sized manufacturing businesses. 

The Policy Protocol builds on Brazil’s National Plan for the Internet of Things and Programa Brasil Mais (More Brazil Programme) initiatives, grounding the project in successful national policy frameworks and providing valuable expertise and resources. The effort was co‑designed with the State of Sao Paulo’s aerospace and automotive manufacturing sectors. The state’s leading industrial research institutes – Technological Research Institute of São Paulo (IPT) and Aeronautics Institute of Technology (ITA) – were critical project partners.

The project draws on innovative approaches to agile governance to quickly develop and refine project outcomes. Findings were developed through a series of multistakeholder workshops as well as direct interviews, surveys and factory visits. Initial hypotheses and recommendations were piloted with 130 companies in November 2019. 

Impact

To date, the pilot programme has been scaled up in partnership with federal government initiatives, supporting almost 2,000 small and medium-sized manufacturing companies across Brazil. 

Most importantly, the learnings from this work are applicable well beyond Brazil’s borders. The World Economic Forum's Center for the Fourth industrial Revolution Network is now working with industry leaders and policy‑makers around the world to adapt the findings from Brazil to their own context and deliver on the promise of a more inclusive Fourth Industrial Revolution. Pilot projects are currently being actively implemented in South Africa and Turkey, with several more countries on track to begin implementation in 2022.

This project is led by the Platform for Shaping the Urban Transformation. For more information or to get involved, please email saiful.salihudin@weforum.org