Smart and Nimble: MSMEs are masters of adaptation

June 27, 2019 12:10 AM

With increasing automation, their need of the hour is not how to standardise—but how to remain flexible, and yet, more efficient.

msme, technologyThe variety of businesses are themselves endless. And within each of them, the way people run them are again endless.

By Bharat Goenka

Treading the path of meaningful and successful automation for an MSME is a precarious one. Few understand, and even fewer appreciate, the fundamental drivers of their business, and their need for enormous flexibility. Ask anyone to visualise a micro, small, or medium enterprise. Everyone will have a different one. Some will think of a basket weaver, some a paan wala, some a kirana store, some a store in a Mall, some an injection moulding company, some a leather goods exporter.

The variety of businesses are themselves endless. And within each of them, the way people run them are again endless. Go to ten kirana stores in any town or city, and each of them follow their own way of working. These are people who literally learnt-on-the-job. Who decided to start without knowing how. Who discovered, through the journey, what it takes to run their business.

They form the unsung backbone of every country’s economy—being amongst the largest employers, and a massive value-adder to the GDP of a country. The success of individual businesses drives the motivation for others to take the plunge. When MSMEs falter, they evaporate the entrepreneurial spirit of a nation. And yet, they are often treated with some amount of disdain. By being labelled as the ‘unorganised’ and even ‘disorganised’ sector.

The reality is, that they are masters of adaptation. They are not large enough to command terms with their suppliers, their customers, their lenders, and definitely not with the government. Therefore, they need to conform to the terms imposed on them by each of their suppliers, customers, lenders, and the government. They cannot refuse a single sale on the pretext that ‘it is against our policy or process’. They cannot forego a good deal with the excuse that ‘my systems do not allow this process’.

Their ability to respond to ‘whatever my supplier or customer needs’ is remarkable. So you will find a given business having multiple sales processes, and multiple purchase processes—something that large organisations treat as anathema.

With increasing automation, their need of the hour is not ‘how to standardise’—but ‘how to remain flexible, and yet, more efficient’. Countless MSMEs have fallen into the error of attempting to standardise, when they have no ability to control the demands of their ecosystem, and then fallen back to their so-called ‘disorganised’ way of working.

The trust deficit with the government aggravates their problem, since their adaptation to customer and supplier demands are treated with suspicion. This leads to tight and complex laws, increasing the friction with which an MSME operates. Paradoxically, this is a vicious downward spiral, since these complexities prevent complete compliance, which increases the suspicion, leading to even tighter and more complex laws, leading to reduced compliance!

When thinking of a modern India, one wishes to imagine highly efficient MSMEs, capable of responding to any and all demands of their customers, suppliers, lenders, and the government. One imagines them focusing on the core of their business, which is managing the relationships with all of them, and finding new customers and suppliers, rather than coping with transactions. One imagines their transparency eliminating the trust deficit, such that laws and processes become simpler, leading to an upward spiral of compliance. One imagines the transparency giving them greater access to capital for their growth.

Importantly, one imagines them growing—not just as businesses—but as individuals. Creating a more conducive home environment, due to the quality time they are able to spend with their family.
After all—we have only one life.

The writer is vice chairperson, Tally Solutions

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