SMEs and Innovation
Published on : Friday 06-12-2019
S Ravishankar enumerates five simple steps to build an innovative work culture based on personal experience, observations and learning experience.
Employing close to 40% of India's workforce and contributing 45% to India's manufacturing output, SMEs play a critical role in generating millions of jobs, especially at the low-skill level. The country's 1.3 million SMEs account for 40% of India's total exports. However, the SMEs in India, due to their low scale and poor adoption of technology, have very poor productivity. Although they employ 40% of India's workforce, they only contribute 17% to the Indian GDP.
In order for an SME to improve its productivity, a key factor is innovation.
While the Oxford Dictionary, defines ‘Innovation’ as, ‘A new method, idea, product, etc.’, in an industrial world, ‘Innovation’ is primarily associated with the concept of ‘New Product Development’. As a result, the SMEs who are generally associated with job-work, ignore innovation believing that innovation is not within their grasp.
The limited view of the term ‘Innovation’ has resulted in a restrictive growth of productivity in the industry. The concept of innovation is not only limited to developing a new product but also includes a new method or a new idea. This broad perspective of considering a new approach/method or new process should be explored by SMEs. Accordingly, an important step for an SME would be to redefine its course to include ‘Innovation’ in its journey and make the industry more productive.
Despite some of the SMEs being aware of the need for innovation, they often tend to ignore it for several reasons. As the existence and survival of SMEs are dependent on numerous factors such as, regular order inflows, working capital management and labour management. The emphasis and focus on these factors result in SMEs ignoring action towards innovation. Additionally, time and cost constraints also restrict the SMEs from investing in actions towards innovation. On the contrary innovative approach can help to overcome the cost constraints and lead to profitability.
To embrace the path of innovation is not at all difficult. It doesn’t cost money. It only requires the will to be innovative. Once you take up the path of innovation organisation’s work culture will turn to be innovative and further this will lead new ideas, methods and innovative ways to fulfill customer requirements in a cost effective manner, thereby improving the productivity and profitability of the organisation.
I recently had the opportunity to go through the Bharat Fritz Werner Coffee Table Book called Wheels of Progress which talks about 26 first Generation Change Makers (Business Leaders) and about their successful companies. It was no surprise that most of these companies have attributed Innovation and Technology Implementation as their business mantra or as their value system. Twelve of these twenty six companies have specifically mentioned innovation as their core business/value system. To name a few, Ashok Iron Group, Belgaum, Kharagpur Metals, MT Autocraft, Nucon Group, Raghuvamsi Machine Tools, Ramakrishna Forgings, RSB Group, Sadhu Forgings, Samarth Engineering, SPM Auto Component Systems, Tamboli Engineers Pvt Ltd, etc. One thing common with all these successful companies is that they have all had a small and humble beginning and with their continued innovative and sustained efforts overcame the daily challenges to grow big and make a mark in the industry. There are several more companies to this list of achievers and I hope this article will help create many more such successful companies.
Based on my observations and learning experience, given below are the Five Simple Steps to build an Innovative work culture.
1. Lead by self example
Most of the SMEs are Entrepreneur/Owner Driven and people below observe and follow the owner in his acts and deeds. The organisation culture is set/defined by the owner. Therefore, first the entrepreneur/owner has to get an innovative mindset. This means he should constantly challenge the existing methods processes and think how they can be improved.
2. 5S – Clean environment prompts innovation
A clean and neat working place helps the mid to work clutter free and allows the mind to look for improvements. It is said the parson on the work knows the most and is the right person to suggest improvements. For this if the person doing the work is occupied most of the time in searching for the jobs, tools papers, etc. He cannot find free time to think about improvements. Hence 5S or clean work space is a prerequisite for innovative work culture.
3. Trust and teamwork
It is a common practice that a person is either rewarded or punished for his work. An employee always tries to maximise his rewards and tries to avoid punishments. An Employee-Employer relationship based on trust and teamwork will eliminate the carrot and stick way of working. The employee has to develop confidence to communicate the exact happening and not to overplay or underplay the same. Often it requires a team effort to make changes happen.
4. Learning organisation – Regular trainings
To innovate one needs to understand the existing process/procedure/way of working, challenge the same and think of new ways or how it can be improved. Continuous learning will help the employees to understand the existing process better and also to learn what happens in similar industries across the globe. This will set in/trigger the innovative mindset. Regular trainings by internal staff/employees, external training by other faculties, participation in exhibitions and seminars, etc.
5. Working with SMART Goals
As mentioned earlier, innovative work culture requires challenging and changing the existing ways of working. We know any change is painful and takes time to implement. If not monitored regularly, often slips back to the old culture. Therefore it is essential to work with SMART goals.
Specific
- Well defined
- Clear to anyone that has a basic knowledge of the project
Measurable
- Know if the goal is obtainable and how far away completion is
- Find out when you have achieved your goal
Agreed Upon
- Agreement with all the stakeholders what the goals should be
Realistic
- Within the availability of resources, knowledge and time
Time-Based
- Enough time to achieve the goal
- Not too much time, which can affect project performance
Conclusion
These five steps do not need any addition costs to implement but if implemented these steps (to be implemented in the same order) can lead to progress and improve profitability of the SME. It is said that “Practice what you Preach”. Hence I had started consulting to few SMEs to understand their true issues and pain points and the outcome is “ToolKart” a B2B Market portal to mainly help SMEs to get better technical support using the Digital Technology Platform.
S Ravishankar is Co-Founder – ToolKart, a B2B market place focused on supplying quality cutting tools to the metal cutting industry especially for the MSMEs. Ravishankar has rich experience of the machine tool industry in leadership roles with global majors, most recent ones as Managing Director of DMG Mori India Pvt Ltd and Walter Tools India Pvt Ltd.
