Effex Business Solutions: Shaping up Indian SMEs

The Indian SME sector contributes to 8% of the GDP whilst employing more than 80 million people. It generates 45% of the total manufacturing output and 40% of exports; definitely not a pie that can be ignored. India today poses to be the next super power and why not? The current political leadership is driving the nation like a professional CEO of a well-established organization. This journey towards becoming the best in the globe will need consistent improvement on many fronts and it will therefore demand excellent leadership and management skills on the part of the entrepreneurs and the managers they hire. The skill that can enable continuous improvement in the organization that leads to quality products at the right time and at the right price.

Easier said than done, if you look closely, there are a billion areas that will need work. So to understand this better let us take a helicopter view. From here it germinates into 4 key areas where every small Indian business must strive for excellence. These are…

1. Financial Excellence
2. Operational Excellence
3. Technological Excellence
4. Human Resource Excellence

There is nothing new, we all know these 4 areas. However, what is important to understand is that all these four areas are interlinked with each other. Any one area cannot be successful in isolation. An organization that is attractive to a financial institution for investments is the way it is for a reason and the reasons are the other three areas. Similarly, one cannot achieve operational excellence without good people working with superlative technology which by the way, needs money and that means the need for financial excellence. This interlinkage between the must win areas, demands leaders and managers to have skills to see the relationships between departments and functions, to see beyond their own functional boundaries and understand how they impact the overall output. It can be very taxing to be able to do this, specially in the SME environment where emotions are attached to the portfolio one is handling and absence of a system that facilitates such cross functional improvements.

So how should one tackle this problem and shape up their Indian small business. I am going to use an analogy to explain this, armies across the globe will tell you for every successful mission, it is important to have three things

• Clear understanding of the objective
• Right formation, designed to achieve the objective
• Determination to not lose sight of things

I choose to talk about army because it cannot get more chaotic in business than what an army faces on the battle ground. So one can be confident of the results coming from adopting principals, they adopt. So first things first, it is important to set an objective which is very clear in the minds of everyone in the organization. The objective must have elements of Finance, Operations, Technology and Human Resources. No, I am not talking about the goal setting here. Goal of an organization could be to grow by 100%. What aspects will help them reach the goal are objectives. Making clear objectives to be achieved, in line with areas that need excellence makes it extremely clear to the people what is to be achieved and how. Coming to formation, any business can be broadly divided into five parts

• Presales/Marketing
• Sales
• Operations
• After Sales
• Support Services like HR, Accounts etc.

In my opinion, departments must be created within these five areas, each having a goal that meets the goal of the vertical as a whole. For example, marketing team may have a creative team with a goal to create collaterals in a certain quantity and quality that helps achieve the pre-sales goal of generating quality leads for the sales team. Every organization must have the right organization structure; the right organization structure means not having too many dotted line reporting. So that people get clear direction from one person. Having enough room for people to grow, whilst keeping the balance right on the number of positions you have. To get the determination one must be able to keep up the morale of people which is directly proportional to the presence of rewards and penalties. Rewards are not only certificates awarded for good performance but also hike in compensation and promotion to a higher role. Each step in the hierarchy must have definite maximum and minimum compensation brackets. This will by design reward a person adequately for the position he is working at and at the same time stop his growth after he reaches the maximum point unless he takes efforts to grow in the hierarchy and take responsibility to add greater value.

To understand and manage such cross functional, interconnected aspects of business, managers must see business as an amalgamation of multiple processes, all talking to each other and then improve the processes which they manage with the intention to improve the communication and flow of information with other processes they talk to. Entrepreneurs need to understand process excellence to be able to drive this well. There are several process excellence systems that one can employ. We have designed a process excellence system that we call ‘Propel’ which employs logic and is suitable for the Indian SME environment.”

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the publication