What small business has to learn from large enterprises?

Time and again some of the scholars have written and documented what large enterprises have to learn from the small businesses; especially the flexibility, agility, entrepreneurial zeal and ability to manage things with lean systems. The emphasis is especially on the fact that ‘small is beautiful’. This is true, an enterprise of any size needs to be flexible and fast enough to respond to the market changes and small enterprise where the decision making is fast surely has an edge over others.

In this line of thinking, I wish to focus on certain areas where the small business has to learn from the large enterprises. The first thing what a small business has to learn from large enterprise is the process orientation. It is found that small businesses lack this orientation and this puts a limit on the scalability of the organization. Business activities and processes which are standardized helps in many ways to a small business. Small businesses needs to put the systems and processes in place and with decreasing cost of certain technology this is possible and feasible.

Another thing which is essentially needed for enterprise of any size and mainly small business is the strategic thinking. Small businesses need to learn the strategic thinking and strategic management processes from the large enterprises. Talent management is another area which demands attention of small businesses nowadays and especially in knowledge based industries. It is seen that small businesses have need based man management system, rather than a strategic view of talent management. This is one more thing which small business has to learn from large enterprise. Not only this if the entrepreneurs wish to professionalize their operations then they might have to adopt objective way of managing people and their performance.

Focus on branding and marketing is another aspect of business, which is often ignored by small businesses and this, is the area where the large enterprises score well. My argument is not to spent huge money on advertising and promotion, but a consistent and careful approach in crafting the value proposition and focused marketing. What is needed for small businesses is to learn from large enterprises ‘outside in’ approach and outward thinking. In line with large enterprises, small businesses should look at developing and building the platforms and not just the products.

Scalability is another thing which a small business should learn from the large enterprises. However, if the points mentioned are considered, it would be easy for small businesses to scale up. And finally, the financial discipline is another thing which small businesses need to learn from large enterprises. Absence of centralized budgeting systems and annual financial plans often leads to inconsistent decisions related with finance in small enterprises.

Small is surely beautiful. It is observed in the recent past that large enterprises are burdened by their weight. In such scenario, large enterprises have become inefficient and very expensive to manage. However, small businesses have a lot to learn from large enterprises.

Dr. Rajiv Joshi

Associate Sr. Faculty, EDI

Giving For Those Little Shoeless Feet

I found interesting story about TOMS and Mr. Blake Mycoskie. Blake is from Los Angeles, and is the Founder of TOMS (www.toms.com). TOMS represents “Shoes for a Better Tomorrow”, and not any Mr. Tom. Blake is an entrepreneur. Before starting TOMS company, he has started five ventures, one of those has been a very successful national campus laundry service. TOMS makes shoes and eyewear for young men, women, and children. But style and designs are not just two things for which TOMS exists.

With One for One movement, TOMS has really Started Something That Matters. Under One for One movement, for every pair of shoes purchased by the customers of TOMS, one pair of new shoes is given to a child, who is in a need to protect his or her feet but can’t afford to buy on his/her own. This simple looking shoelessness problem is the reason behind Anemia, Podoconiosis, Jiggers, Tetanus, and other soil-transmitted diseases, injuries, and infections in many developing countries such as Argentina. Shoes are a compulsory part of school uniform. When children don’t have shoes, they are not part of the education. In 2006, Blake Mycoskie saw the children growing up barefoot in Argentina. He saw the need. As of 2010, TOMS has shoes production units in 3 countries and needy children from 23 countries have benefitted from One for One. While Giving, TOMS take care of two factors while Giving: first - no child labor exists during making and distributing the shoes, and secondly - local and small shoes manufactures do not suffer economically. TOMS enters into partnerships all over the world, with the organizations working with a humanity approach.

As of September 2010, TOMS has helped with more than 1 million pairs of new shoes to the needy children all over the world. TOMS has received prestigious People’s Design Award from Smithsonian Institution’s the Cooper-Hewitt National Design Museum, and the Secretary of State’s 2009 Award for Corporate Excellence. Blake Mycoskie inspires to make Giving a part of everything we do and to make a better tomorrow. On TOMS appeals, all over the world, more than 250,000 people went without shoes in April 2010 to create awareness those millions of children who are growing barefoot in the world today and how people can change life of these children tomorrow by giving something today.

By Chaitanya Vyas

Faculty EDI

Strategic Thinking for Entrepreneurs

German philosopher Friedrich Wilhelm Nietzsche wrote, ‘He who has a why to live for can bear with almost any how.’ I would add ‘what’ in addition to why to live or what should be done apart from why it should be done; the ‘how’ part can be discovered surely. The question is about the direction; the question is all about what to do and what not to do; the question is about the strategic thinking in decision making. Entrepreneurs are portrayed as passionate people who relentlessly pursue their dream or whatever they believe in. Some literature also talks about the speed of doing things and making things happen. However, an entrepreneur will have to decide about the speed as well as direction. Higher speed in the wrong direction could be fatal for the new enterprise. Strategic thinking in terms of direction and what to do and what not to do takes the front seat over the speed. This is the point where the doing and being part of entrepreneurship should be combined with the thinking part of business.

The question is how do entrepreneurs develop the strategic thinking and work in the right direction. How entrepreneurs think about the platforms and not just the products? How entrepreneurs develop the sense of urgency or speed coupled with the sense of direction? Especially, during the start up phase of any enterprise it is often said, that entrepreneurs should not think about the strategic part of the business; whereas, in reality it is completely different. Limited resources make it imperative to make the most of whatever the entrepreneurs have. In such situation what matters is the direction- the strategic thinking.

Taking the base from Harvard Management Update ‘Corporate Strategy: A Manager’s Guide’, three questions for a strategist are: Where should we put our efforts (and why)? What do we bring to the table? And the third question, do our capabilities suit our position? These same three questions even entrepreneurs also need to ask themselves. Strategic thinking is not about the complexity. It is all about the clarity in thinking about what an entrepreneur is proposing to do and what he would abstain from doing. And if think about very basic but important matter like value creation process, the underlying strategic thinking needed is; who am I? (What is my value proposition?), for whom am I? (The segment or the beneficiaries) and why am I and not others? (Competition and differentiation). Even this basic strategic thinking also has potential to shape the other strategic part in the business.

Dr. Rajiv Joshi

Associate Sr. Faculty, EDI

Entrepreneurs as Salespeople

Entrepreneurs have long been seen as innovators, inventors, those who add value and to a great extent those who orchestrate the factors of production. Well, the value creation part in the process of surely important but what is needed is to market and sell this value proposition in the market to the prospective buyers. It is highly recommended that entrepreneurs should accept the fact in early stages of the entrepreneurship process that they are primarily salespersons. Sooner they accept this fact, better it is for them to succeed in their ventures. The fact is very simple, if someone is in business, he/she is in sales. Unquestionably, there are many secrets of succeeding in small business in the initial phase of the start up, but the selling knowledge and selling skills is at the top of this list of secrets.

Some of the selling skills required are: sales presentations, selling skills, objection handling and negotiation. One can not forget importance of timely follow-ups and courtesy calls which are essential part of relationship building in sales and business. It is worth time spending on this activity, especially if the entrepreneur is in the B2B business. Ability to generate references also helps entrepreneurs to generate more business. Referral business does not incur more of sales and marketing expenses and surely references changes the way customer profitability looks. This skill becomes utmost important during the downturns and recessionary situations, since the buyers want to be sure of what they are buying and also confident about from whom they are buying. There are many ways to succeed and sell more in small business. Some of them are pretty simple to do and practice on daily basis. These tactics not only improve the visibility of the small business but also increase the opportunities for new business.

One of the easiest and cost effective ways is to hand over at least three to five business cards to the potential customers or may be to those who can give the references in future. Business cards look better in the card folder of customers and not in an entrepreneur’s card holder. Second way to market the business is to call at least five individuals every day; this people could be the existing customers, friends, potential references or the prospects. The friendly talk leads to some of the sales leads and finally new opportunities are discovered in this way. For those who can not reach the existing customers or prospective customers, e-mails work well; provided there is something to share with them which is of use and interest to them, may be new product launch, may be new schemes, or simply the awards and accolades received in the past. Writing a personal note with some thoughtful gift as a token of appreciation and a thank you to an existing customer also has great impact. Finally, meeting one person per day and discussing with him about what business you are in and what you do, how you do and how your customers appreciate your efforts creates a group of advocates and canvassers for your small business with a better credibility. Ultimately, relationship is what matters in the business, marketing and sales.

Dr. Rajiv Joshi

Associate Sr. Faculty, EDI

Communication Skills for Entrepreneurs

It is said that you are what you communicate and how you communicate. The way an individual communicates reveals a lot about his/her personality. Though, it looks like a cliché that a good communication matters because it is the ability to communicate the idea that decides whether the idea is good or bad, it needs to be reemphasized. Especially, for start ups and entrepreneurs communication matters a lot, since in the initial years of the start up, it is the communication of an individual which becomes decisive in many aspects of entrepreneurial process, be it souring finance, getting new customers for business, convincing the bankers or venture capitalists or roping in talent to manage the business.

Well, what is needed in terms of learning about business communication for entrepreneurs is beyond writing reports, memos or the summaries. What is truly needed for the entrepreneurs in communication is how to make an effective argument in the business setting? How to identify key points for effective communication? And very important how to create and deliver engaging presentations that create impact? There is a need to develop communication skills to engage an audience that could be distracted, busy or may not pay attention to what the person wants to say. Without these skills, it becomes very difficult to sell the initial ideas or project to an entrepreneur.

The skill needed is the ability to communicate and present a complex argument or proposition in a concise and succinct manner. The ability to manage both planned and unplanned presentation and discussions comes very handy to the entrepreneurs in different situations, especially in the initial days of start up phase. Ability to communicate with people at all levels and also the flair to adjust the communication style to suit the situation is one of the most important skills for entrepreneurs. However, it is very important to structure and compose ideas before they are presented. KISS principle – keep it short and simple surely helps, but one can also look at other basic principles like; be brief and to the point, prioritize the points, use persuasive and convincing language and finally ensure that the communication has enough flexibility to absorb any kind of change needed in the delivery. However, in a business setting, the most important principle for effective communication is the sequencing of the thought process or the arrangement of ideas; be it a power point presentation, a covering letter, an introductory letter or a proposal.

The sequencing of the ideas and creating the arguments to support the principal idea is what separates an effective communication from the ineffective and so the effective entrepreneurs from the ineffective entrepreneurs. Some people have found Minto Pyramid principle developed by Barabara Minto very useful for effective communication. The Minto Pyramid model of the communication is based on the foundation that there should be a main theme in any communication at the top, that can be supported by the group of ideas and finally it should be reinforced by the facts, data and other logical arguments and thus any communication would have three tier approach and making it like a pyramid. Using this simple yet very effective way, entrepreneurs can surely develop any communication a project proposal or a power point presentation, both written as well as verbal for enhancing their effectiveness.

Leading entrepreneurship education, research and training institutes like Entrepreneurship Development Institute, India have always understood the importance of developing such skills and it has been included in the mainstream curriculum for long duration programs. Besides communication skills, other important business skills like negotiation skills are considered as key business skill at Entrepreneurship Development Institute, India.

Dr. Rajiv Joshi

Associate Sr. Faculty, EDI

EDIOTS Make To the Semi-Finals of IIT – Bombay Business Plan Competition

Gaurav Kanabar and Maulik Vora, the second year students of PGDM-BE at EDI Ahmedabad, have made into the semi-finals of Eureka! – IIT – Bombay’s business plan competition. Eureka! is an International Business Plan Competition which aims at encouraging people from across the globe to flesh out their ideas and form global enterprises that combine technology, vision and business acumen. It has been independently recognised as Asia’s largest Business Plan Competition by Thomson Reuters and CNN.

Eureka! got 3300 entries in the initial round, out of which only 50 entries were selected for the semi-finals. Gaurav and Maulik belong to one of those 50 teams which are now being mentored by IIT – Bombay. The sessions addressed key issues like pricing strategies, cash needed to start a business, financial projections, sources of funding, marketing aspects, selling skills, sales and distribution strategy and public relations for start-ups.

Participants also learned ways to pitch their plan to potential investors. “The participants had great ideas but they were lacking in business potential. They were trained on ways to convert the ideas into good and saleable products. Participants were asked to pitch their idea in 60 seconds. We gave them feedback on what to focus on, voice modulation and presentation techniques,” said Amit Grover from Nurture Talent Academy, who mentored the participants.

Final b-plan submission is by December 17, 2011. We wish our students all the very best and hope that they get selected in final round.

Significance of skills in the Indian employment scenario

In India, unlike in industrialized countries or even in China, the demographic trends are quite favourable with almost 59 per cent population in the working age of 15 to 59 years and close to 20% in the age group of 15-24 years. The population below the age of 15 years accounts for almost 33 per cent. However, while the numbers and proportions might favour the Indian economy, the cause of concern is the quality of the workforce in terms of skill levels. A skilled young population in an environment where investment is expanding vis-à-vis the industrial world wherein the ageing population is an issue could be a major advantage. It is important to realize, however, that we can reap this demographic dividend only if we invest in human resource development and skill formation in a massive way and create productive employment for our relatively young working population.

The skill shortages have emerged in almost all areas be it manufacturing or services. NASSCOM-McKinsey Report 2005 projections indicate that there was a likely shortfall of about 500,000 suitable professionals (representing an opportunity cost of US$ 10 bn) by the end of the decade. Besides being a possible dampener to growth, the skill gap could hold back employment since employers might be forced to adopt capital-intensive technologies due to such labour shortages. Besides, there is an acute shortage of masons, plumbers, carpenters, mechanics of various electrical and electronic consumer durables, automobile repair mechanics and so on. There is a serious mismatch between the skills sets in demand and the skills available (or mostly lack of such skills) with the teeming unemployed poor. Most poor do not possess marketable skills as they have hardly any access to formal skill formation systems like ITIs and vocational training centers as they, by and large, do not fulfill entry conditions to these centers.

Going by the estimate of the Ministry of Labour and Employment, Government of India, only 5 per cent of the Indian Labour Force in the age group of 20-24 years has obtained vocational skills through formal means where as the percentage in industrialized countries varies between 60 per cent and 96 per cent. Also, about 63 per cent of the school students drop out at different stages, before reaching Class X. Data from the 61st round of NSS shows that only 3 per cent of the rural youth (15-29 years) and 6 per cent of the urban youth have gone through any kind of vocational training. The current set up for skill formation and upgradation is woefully inadequate. For inclusive growth, it is vital to enhance the productivity of labour in the unorganized sector.

The present capacity of our vocational education system is close to three (3) million. While 17 Union Ministries, all the State Directorates of Technical and Vocational Education, a number of NGOs and industry trade associations are engaged in this task, to reach this figure of about three million, it needs to be augmented to cover at least eight million new entrants to the labour force. As of now, in the formal vocational training and education stream, we have 6843 Industrial Training Institutes (ITIs) and Industrial Training Centers (under the Ministry of Labour) and about 7000 Vocational Schools (under the Ministry of HRD). Compared to these numbers, China has about 5,00,000 Secondary Vocational Schools. This calls for some innovative mechanism to reach out and train the large number of resource poor unemployable youth so that they are able to earn their livelihood.

Also, what goes hand-in-hand with this training is a good grounding in intrapreneurial skills so that these skilled people also get armed with the right skills, knowledge and attitude to maximise the results within the existing resources.

Besides the limited capacity of the system, vocational education in India is characterised by outdated, structurally defined, centralized syllabi and low knowledge base teachers without much idea of market conditions or of imparting multi-skills. A good part of this is due to the fact that regular (academic) education and vocational training are perceived as mutually exclusive and alternate categories, not as an integrated system of education. Because of this, there is a perception among most people in the country that vocational education, as it exists in India, is for the “second class” citizens, not preferred and often not considered dignified enough. It may also be added that non-formal, in-house, on-the-job skill training is considered to be far superior than the formal ones.

Therefore, the Approach Paper to the 11th Plan rightly argued that there is a need to devise innovative ways of modernizing the ITIs and increasing their numbers substantially. Concerned with this phenomenon, the Prime Minister of India, in his address to the nation on this year's Independence Day (15 August 2007) announced that the government will endeavour to set up 50,000 skill training centres to meet the skill deficit of the country. This would mean around a ten fold increase in the number of training centres and an unprecedented scope to bridge the gap between unemployment and shortage of skilled labour. This would of course require development of suitable training material as well as a very large number of quality trainers/instructors.

In this respect, a UNDP supported SKILLS Project, implemented under the National Science and Technology Entrepreneurship Board of the Department of Science and Technology; Government of India, a few years back, should be studied in greater detail and should be replicated. The innovative components of the Project like e.portal based skill training, public private partnership model to impart skill, involving private sector, and a large number of competency based skill training modules are worth replicating. The nodal institutions of this Project may be entrusted to play the role of mentoring, monitoring and accreditation.

Industries and industry associations will have to be involved as stakeholders in running them so that the scope and content of the training provided in these institutions is relevant to the needs of the industry and the job market, like in Germany. The number of skills for which training is provided also needs to be expanded to include new skills particularly in the informal sector. It will also require regular periodic surveys of the labour market.

In the above background, skill development along with other supportive measures for the informal sector is of vital importance and requires fast solutions with broad impacts in close cooperation among government, NGOs and private Sector.

To conclude, if one wants to transfer bad jobs to good and more productive jobs, improve current jobs by productivity growth, the only way to achieve these goals will be to enhance skills. Therefore, it is of paramount importance that 'skill formation and upgradation' is assigned high priority in the matrix of employment creation, poverty alleviation and inclusive growth.

-Dr. Dinesh Awasthi