We are in an SME world!
I love the irony of the Pyramid. The IT industry profits and makes its juicy margins from the bottom of its resource pyramid. CK Prahalad made waves when he gave Lifebuoy a worldwide status by giving it a mention in his famous book about the bottom of the pyramid. It is definitely ironic and is for me a key insight about how you could turn the topic on its head and suddenly see a whole new world. Don’t look at the size of poverty but look at the size of its potential, don’t ignore the juniorest of engineers but invest in them, and don’t look at how bad conditions are but look at how good the opportunities could be. The proverbial half empty vs. the half full glass takes on amazing meanings when looked at in this context.
It’s a delightful take on the size and proportions!
Let’s now look at the SMEs, the small and medium enterprises, the many industries in the by lanes and industrial areas, the thousands of garages that are staffed anywhere from 1 to a 50 strong workforce. They are actually the prime movers of any country and typically generate statistics that are staggering by any measure in any country. When you actually begin looking at the numbers, one couldn’t be any more amazed. Then you look deeper and suddenly you see that they are actually everywhere and getting the attention of a big chunk of the industry. I was recently in Germany at the airport and suddenly I was noticing that banks, investors, corporates were all wooing the SMEs with adverts. Banking institutions claiming to be the biggest supporters of the Mittelstand (The German SME/MSMEs), funds wanting the best for their SMEs and suddenly it all made perfect sense. These small guys are actually very BIG.
Amazing statistics for you!
So what could possibly be not going well?
The flip side of the enormous quantum of SMEs is also the competitive and commodity size of the story. SMEs are always under increasing demand for cost cutting, productivity increases, higher quality outputs and reduced production times. These demands introduce high pressure on the financial conditions of the organization and therefore the ability to invest, to spend, to be on par with technology becomes a challenge. This causes a catch-22 situation where the SME is caught between the demands of the digital age and the challenges of investments into technology.
What should the SME do?
Priorities! The key decision to be taken boils down to a very simple choice of input vs. output. What is the best investment to derive maximum returns over the shortest possible frame of time? There are many possible options: Investments into experience, brand new machines, expensive productivity software or some basic but high impact productivity tools.
Management Mantra – What you cannot measure cannot be controlled!
This is common sense. One of the key parameters for continuous improvement is the ability to conduct continuous monitoring of metrics. Metrics MUST be the core of any SME, the basis for decision making, the basis for improvement measures, the basis for investments and of course the basis for evaluations within the organization. Metrics are classified under three core categories of Quality, Cost and Delivery. Quality is definitely controlling the other two parameters. Cost has a large element of productivity built into it. Productivity is a an enormous animal with quite a few elements thrown into it. Machine productivity, people productivity, part availability, planning, machine maintenance and so on and so forth.
How do we do this?
Stay tuned to the next blog where I introduce you to The Phantom!!