MSMEs: Surviving, Thriving & Driving the Markets

Many a times we have heard entrepreneurs lament – ‘the government says that MSMEs have been offered loans and support – but I have not got anything.’  Samir Sathe EVP, Wadhwani Foundation Samir spearheads the MSME program at Wadhwani (which has both grant program called Sahayata and a mentoring program – Advantage SME) had a very candid say on this! Any money is not to delay a certain death but to give a renewed lease of life. And the two are very different. The former alludes to the owners, that latter to their entire ecosystem.

The Wadhwani Foundation is a philanthropic organization founded by Dr. Romesh Wadhwani, whose mission it is to “accelerate economic development in India and other emerging economies.” The Wadhwani Foundation principally works through partnerships with like-minded individuals, organizations, corporations, and governments.

Growth is the base survival plan!

Einstein once remarked, so long as you are on the bicycle and pedaling, it will continue to be stable and will move, but the moment you stop pedaling it is a matter of time when it topples over. MSMEs’ need of the hour is not just cash alone but growth. Today SMSEs seemed to be needing money for keeping themselves afloat. This increases a big risk of them getting into a debt trap. Simultaneous shoring up of local demand is equally important. In short, growth is the base survival plan and if the plan is in cutting costs or managing cash alone, then it is a very risky plan.

Disruption needs to be managed across Industry, Firm, Individual

Headwinds for MSMEs need to be managed at three levels and each of the three will need differing interventions. If an entire Industry segment is facing disruption, for example travel or hospitality, or is slowly limping back e.g. cab aggregators or dining, then the problem needs to be solved at the systemic levels. Firms from such specific industries needs to be handled collectively e.g. peer learning sessions across firms at the entire ecosystem level needs to be catalyzed. Learning from each other becomes critical as success elsewhere can and should be rapidly replicated.

If a specific firm has been disrupted, then there could multiple reasons for it – whether it was competitive or not, the behavior of employees within the firm – whether they lacked collaboration or were hoarding critical resources, or they just lacked skills to manage the current crisis.

Many a times it is the individual who needs to ‘unskill’ and reskill and in those cases attitude counts. Focus is to build on very specific roles and skills in the immediate future for the needs of the firm. Hence a 360 view has been adopted by Wadwani Foundation to support the Industry across levels.

Layoffs – good, bad or ugly

Can layoffs be avoided in the short run? The unfortunate answer is, no! In facts layoffs provide managed reset. About 30-40 million people will either get laid off or will have their value that they command, get diluted. To overcome the poor impact of layoffs in the short run 

  • Unskilling and upskilling will be required
  • Survival Anxiety, which we are all going through today, accelerates learning. This thus seems to be the is the best time for employees to learn.
  • This also is a catalyst for people to perform tasks and undertake responsibility beyond their current roles and grades making organizational platform more stable.

The truth is that these are tough times and It is quite fine to focus on those employees who the firms believe are good for their organization and look at a spring cleaning those who don’t make the cut.

Innovation is equally critical.

With shrinking employee base, firms tend to focus on their short term needs and immediate problems. Entrepreneurs need to have a bifocal vision – to look at immediate term for sure, but also set aside a small modicum for innovation or investing in the future. Entrepreneurs sometimes get limited by their view of

  • They know it all.
  • Not asking for help. In-fact asking for help makes them smarter and tougher; it is like playing cricket and in the interdependence of the team mates lies the key to success.

Finally, who will be the winners in MSMEs? Likely those who have already built their trauma centres before this crisis descended. The trauma centre demands quick and clinical decisions. Entrepreneurs treat their businesses as children and hence are less likely to take clinical decisions.  Thus, the centre needs experts surrounding the entrepreneur. Entrepreneurs must thus have complementary skills in their teams, they themselves don’t have. For example, most can spot opportunities but may not be adept at spotting risks.

The hungry, inspired, ethical and committed takes it all!

Impromptu creativity within broader economic rules creates winners because responses need to be quick and lie partly in deterministic domain and partly ‘exploristic’ based on gut. Musicians and vocalists do this so often! Entrepreneur usually display growth mindset looking out constantly for silver linings during any crisis situation.

So, who can get help from Samir at Wadhwani Foundation? Entrepreneurs who are 

  • Hungry, inspirational, committed to the process of transformation and ethical.
  • Believe on a 5x or 10x growth (not 10% growth)
  • And never say die!

India does more of such people.

For the full interview, click here..

– Alok Sinha

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