IIA Newsletter : MSME Growth Strategies

Improving customerretention should be the top strategic priority
Customer retention needs to receive top strategic priority, as retaining customers is critical for an unit's growth. Therefore, gaining better knowledge of, and improving communication with, your key customersmust becomea regular and ongoing practice.Onemust not lose sight of the fact that on many occasions a customer may be quite happy with your product/service; yet, may have a number of unmet needs. Customers, in such cases, in all probability, will be on the look out for alternatives so as to meet their needs in full. It is therefore very important to identify such unmet needs at the earliest, and to work on your product/service in order to meet the user needs more comprehensively and prevent defection. Indeed, new market opportunities can be alluring and should not be missed, butmake sure of your customerbase first.

Many take help of technology to make the needed changes in one's offerings. In doing so the focus should be on the very basic technology related to customer equirement rather than technology prevalent in market. Point to note is, technology is to be for the context rather than for the content. Application of technology is far more important than the structure. Therefore, use the technology which adds value for the customer and which is easy to use. In other words, focus should be on customer centered technology rather than on market centered technology. This, among other things, should help in staying close to customer and away from costs associated with “technology fuss” going around in the market.
Invest in your staff
Your staff is your most important resource which needs to be not only preserved, but be also made more effective. As markets expand labour mobility becomes common. Yet, there are entrepreneurs who are able to hold their staff with them. What makes it possible? No doubt, wages and benefits are important to retain good staff, but so are intangibles like, training, recognition, ability to provide input and responsibility. They say, people do not leave organizations, they leave their bosses. Therefore, the kinds of treatment they receive weigh heavily on their mind. Experienced entrepreneurs know the value of a seasoned staff too well, as such staff members, who work as process owners, are the real innovation drivers. They should, therefore, be given full freedom to innovate. It is well known that product and process innovations can not be executed from management offices; these have to be driven from the shop floor. Hence, the person working on a process should be made the most reliable source of innovation for that process through proper and right empowerment. In so doing you will not only ensure greater retention of staff, but also more purposeful innovation.
Use thepower of knowledge
Increasing competition and globalization, along with need to produce quality products at best prices pose formidable challenge for all organizations, more so for the MSMEs. Customers of today not only want the best, but also want it to be the cheapest, and the fastest. In short, “perfect, free and now” are the key customer imperatives of the present time. To survive and grow in such a scenario calls for effective use of the power of knowledge. It may be noted that knowledge management practices serve as a strong base for innovation. Every organization in the growth process generates knowledge from its day to day experience, interactions and process execution. It is important to use this generated knowledge effectively. Admittedly, motive behind such knowledge management processmay be different for different MSMEs. Depending on type, some may use the knowledge it has generated over decades of innovation in raw material, product development and waste utilization; while another may want to make sure that his product which is predominantly craftsmanship driven, survives over the years and the wisdom of craftsmanship is captured for better utilization in the organization. Be that as it may, having knowledge management practices in place becomesa key necessity for leveraging thepower of knowledge.
Don't count on lowlabour cost indefinitely
Cost efficiency based on low wages is perceived as a competitive advantage of the MSMEs. But wages are already rising and various events and policy measures will only add to the upward pressure. Experience suggests that economic development tends to erode such competitive advantages over time. Therefore, there will be need to constrain wage growth. Side by side, concerted efforts would also be necessary to find savings in the other areas, such as supply chain, to avoid any accelerated erosion of their cost advantage. One must never forget that in today's market-based economy effective cost management has assumed high significance for survival and growth; as the era of cost-led pricing has since given way to price–led costing, in which prices are determined by market place realities forcing organizations to find ways to make products/deliver services at a target cost. Typically, costs are made up of two parts – value andwaste. Careful analysis of every activity - done as a part of the process -
would be necessary to make sure that much of the money spent is towards value adding tasks and the non-value adding activities are reduced to the minimum, desirably eliminated altogether.
Invest in technology, but wisely
Technology is a great enabler, and today's advanced IT systems are quite alluring. Undoubtedly, various IT systems can provide an advantage, but only when utilized effectively. Therefore, don't invest in IT without training staff in how to use it and adapting business processes accordingly. As indicated earlier, quality, flexibility, delivery time etc. are competitive advantages. To build these to your competitive muscle, leverage thepower of technology judiciously.
Focus on getting better, rather than being good
Believing you have the ability to reach your goals is important, so is in believing that you can get the ability. Decades of research suggests that belief in fixed ability, which can not be improved, is completely wrong – abilities of all kinds are profoundly malleable. Accepting the fact that you can change will allow you to make better choices, and reach your fullest potential. Remember, there is no such thing as good or bad luck. The individuals themselves create these conditions within their own
conciousness and develop them into forms by their thoughts and actions.

People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination. Achieving any goal also requires honest and regular monitoring of your progress as you move ahead. If you don't know how well you are doing, you can't adjust your behaviour or your strategies accordingly. Therefore, check your progress frequently to speedily march towards your goal while you enjoy the journey.

End Note
To benefit from the action propositions stated above calls for graduating to the role of a business leader from that of an operating manager. However, when challenged to move beyond their operational specialities and address strategic issues facing overall business, many managers do not immediately grasp that this will involve relational – not
analytical tasks. Nor do they easily understand that exchanges and interactions with diverse array of current and potential stakeholders are not distractions fromtheir “realwork” but are actually at the heart of their new leadership roles. It is hoped that our entrepreneurs, with all their experience, would be able to make the needed transition sooner than later.