SME in India and Growth Matrix for SME
SME1 has been ‘Engine of Growth’ in India and will continue to be so in New India for more than one reasons, i.e. adding to the GDP, employment, consumption, regional growth, suitability, extended organisation as partners to large corporations, … SMEs have certain characteristics and traits, developed & established over years across sectors, across geographies. Interestingly, in true sense, every Startup is no different than any other SME. However, Startups have come up very differently in many ways despite being a SME. Their origin has been backed by extremely different mindset and purpose like innovation & disruption.
To stay focused on SME, it may be appropriate to bring-in the Start-ups reference in given context to drive a given point.
“SME reaching the ecosystem” and “ecosystem reaching the SME” is like a statement for now.
SME is ‘Engine of Growth’ for India and Indian Economy, however what are the engines of growth for SME. May look bit loaded statement, this is a point of deliberation for now among most critical success factors and focus.
A fact check, most SMEs are Promoter’s run and managed. It may be first generation, second generation, or even nth generation; no worries. It may be single-promoter owned & run or set of promoters. All promoters and co-promoters may be fulltime on same business and/or some being fulltime while others engaged in their other businesses. In case of latter, other co-promoters may not be active in micro management of the SME or otherwise. All this matters on case to case basis.
One word of caution, no one case or experience be vastly generalized basis socio-economic-geo-political factors, though may apply across.
In India, even today, majority of large Enterprises and Conglomerate are all promoters-run; Promoters are still active and pretty much stay at top of the affairs. To be noted, most of these large business houses started as SME esp those who are run by first or second-generation promoters. Even among those, run & managed by nth generation promoters – only fittest among them are survivors meaningfully with growth, diversification in more than manner. One simple messaging here, they managed their transition from SME to Corporation by design, keeping their business fundamentals strong, focused on Big picture.
What made them more successful than many in the beginning and vs others later as they entered into new league! No rocket science! Focus and commitment to self certainly among the top most critical success factors. Among others, they learnt the art & science of achieving scale through ‘power of Let Go’, calculated risk-taking with exit options, … and most importantly investment in people.
Post little context setting, to further deep dive on SME, it may be worth to focus on some of the specifics. A statement “Most or majority of SME run by all Promotors 100% is a strength and USP (Unique Selling Proposition) till a point & optimal level2. Beyond that optimal point, this potentially becomes a challenge. There is very fine line to reach, realize, and action the shifting of gears @ such optimal point. It is primarily the science & art of calling out this tipping point by promoters considering company’s and their personal growth & diversification aspirations.
A great word of caution, once missed and/or not actioned appropriate & sufficiently @ tipping point – it is like missed the bus. The SME and promoters possibly enter into vicious circle. Longer one stays in such a state of denial, the challenge becomes like monster; and sometime enters into no-return, unless someone can really go back to drawing board with deep breathe.
To continue with deep dive further, what are the few critical success factors that SMEs shall identify, believe-in as non-negotiable, act with checks & balances with ‘No Return’ policy, institutionalise and move-on. This may appear simple ones, however ‘it is easier said than done’ for equally simple & natural reasons.
Very briefly and from 35000 feet, these few factors are Focus, Commitment, Vision, Believe-in oneself, Dispassionate, Trust, Be Confident, … next logical ask is ‘how does one achieve this’! No Rocket Science, though easier said than done.
Before getting into the ‘simple answer’, it may be critical to look @ some of the factors those will undergo shock therapy. First and foremost, people’s comfort zone & personal equations across levels horizontally & vertically. This is the single most factor that can make or break. There will be all kind of pulls & pushes by all kind of people while Promoters in the midst. This mostly leads to one step forward and two steps backward.
Very briefly, it is all about understanding, belief, commitment and investments in ’People-Process-Technology with Change Management’.
Strategy
SME or Large Conglomerate must have a Strategy. Strategy shall be simple. Focus in everything is key to Strategy. Anything and Everything a Company do; Customer shall be in the midst of Focus. Growing or Grown, Leadership must believe-in Trusted Partnership. Forward & Backward supply chain Partnerships help build capacity, capability, and scale organically and inorganically. In today’s ever-changing world as never before, there is no better way to establish strategic partnership in growth story.
Innovation and Technology are among key differentiators for internal and customer value proposition. Continuous belief and investments in Innovation and Technology is a BIG MUST. Nowadays, Emerging Technologies leads the change 3600 in disruptive manner. Optimal deployment of technology in product, processes, and people shall be the mantra.
A seamless, loosely architected and tightly integrated Business Strategy around Customers, Partners, Employees, Processes, and Technology can deliver future-proof organisation.
Focus, Focus, Focus – invest in Startups appropriately with commitment to create another SME.
IT Companies and Telecom SME are uniquely placed to have a growth strategy around some of fundamentals like Focus about Customers & Portfolio, Partnership, Employee Engagement programs, and optimal adoption of Technology whatever is done. The options are too many, options keep evolving, and all look quite lucrative; to reiterate, all-round Focus remains fundamental.
People
Having right people in the right place @ right time with optimal empowerment & right teams in an organizational structure. If required, build hard and dotted reporting structures. Let everyone in the organisation know optimally, as much as each person needs to know. ‘Clarity over Ambiguity’, ‘Accountability over Conveniences ‘, ‘Objectivity over Subjectivity, ‘Absolute over Relative’, ‘Empowerment over Dependency’ … are some of the mantras, if built in the system for people to perform.
New people joining from outside across levels shall be natural phenomenon. Allow ‘Look Outside – Inside’ as natural process.
To make People storyline smooth and seamless, just make each of them feel important and an integral part of change. Build shared-vision with them such that each & every person becomes Company’s Ambassador and face internally & externally.
Process
Make the organisation System-centric from People-oriented to ensure people are dispensable, empower & insist on processes over people, build & implement non-negotiable process with agility to support business, each process shall be measurable & outcome shall be quantifiable, as far possible – make them SLA (Service Level Agreement) driven, and list can go on. Fundamentally, let processes empower people & teams to build sustainable, growth-oriented, agile organisation.
Define, build, implement, rolling-out, measure, review & revisit continuously organisation-wide processes. Any process certifications shall be implemented & followed in letter & spirit, not another tick.
In the beginning, it is tough; but once done, done for ever; though continuous operational excellence needs to maintained & sustained.
Focus on Business Hygiene and Rhythm as non-negotiable is the Mantra to build Growth-oriented organisation. This, if implemented, can be among the key differentiators with right amount & set of data for all stakeholders. Never underestimate the power of Process over People.
Define, implement, and institutionalise KRA(s)/KPI(s)3 for everyone in the organisation, building from top and rolling it down to nth level, is single most critical success factors among other critical ones.
Define, implement, monitor, review, revisit PROCESSES for each function in the spirit of ‘loosely architected – tightly integrated’. In modern times, everything in the organisation needs to be nimble to continually be able to align with ever-changing business environment changes, as never ever before.
Word of caution, Processes are needed to run the organisation; let processes not be hindrances; let people NOT hide behind processes while performing their tasks, this is very natural phenomenon to beat the change and maintain status-quo.
All it takes to allow organisation to run like a well-oiled, well-greased engine. Lesser the touch points with sufficient checks & balances, better the performance.
Technology
Technology-led Disruptions (on positive note) are leading the all-round transformations in most transformational manner, as never before. Technology helping develop new portfolio, new Go-To-Market, 3600 Innovation in everything an organisation does, build-implement-rollout-monitor-revisit business processes, new business model, …
Optimal deployment and exploitation of technology organisation-wide with continuous process to review & refine makes the difference.
Beware, over-exploitation of technology can be killer.
Change Management
Change Management has to be led from top with absolute commitment to self for growth, diversification, innovation, expansion, and aspiration to be BIG. This is among the zero-tolerance zone. The entire storyline depends on the Change Management strategy, conviction, and implementation.
Communication is one of the most wanted and powerful tools, esp in SME as it is found on low for more than one reasons.
To sum-up for now, it may be interesting to circle back to first or second generational entrepreneurs in India and look at their growth story. Among many-many other things, they all would have done all this BAU (Business As Usual) or by design.
1 Small and Medium Enterprises or Small & Medium Businesses
2 Optimal level, there is NO specific definition and/or measure; it is all very case to case basis depending upon nature of business with socio-economic-geo-political factors.
3 Key Result Areas, Key Performance Indicators
Written by Kumar Bachchan, Co-founder and COO
Niveshan Technologies India Private Limited
