Small and Medium Companies(SME) and an Indian version of McKinsey

The "India Arrived on the Global Scene" story is everywhere. When an Indian company acquires a foreign company, the news is not raising eyebrows anymore, thanks to some great companies like BharatForge/Tata Coffee. (Steel Mittals added different kind of spice to the India story).Companies like Bharti Telecom are growing very fast and leading the industry. While few of the Indian companies are growing in jet speed, what is happening with other SME (Small and Medium Enterprise) Companies?

What is an SME?
Indian Govt Recent Definition:
Small Company - Those companies which have 1 crores as total capital in plant and machinery.
Medium Company - Those companies which have 1 crores as total capital in plant and machinery.

An European definition has a complex formula considering the revenue, No of employees etc.,

This definition consideres a company which employs about 250 people as an Medium Enterprise and 50 People as Small Enterprise.

This seems to be more logical for me.People count may be easier metric to get.It is enough if you just stand near the gate for 10 minutes around 9:00 AM :-)

Some statistics Gyan From Google:
In India, SME companies account for a 45% of Industrial employment and produce 50% of the industrial output.

What are the major problems faced by them? If we take a closer look, the situation is not very encouraging. In core sectors like manufacturing the problems are aplenty for an SME.

While there are many perspectives about the problems these companies have - from Regulatory issues [Allow more FDI in this sector etc., ] to Lack of Access to Finance, I talk about the organization internals / managerial issues in this post.

I had opportunities to personally see how some of the Small companies (in Chennai) operate [in industries such as manufacturing, publishing and s/w development] - most of them headed by first generation entrepreneurs. Some(or Most?) of the SME Management do not understand that running a company of different sizes (10+ Vs 100+) demands different approaches to the same problems. There is a lot of scope for improvement in every sphere of business- be it recruiting, training, marketing or vendor management.

Some of the problems I observed were in these lines...

a) Lack of vision - Not able to see the bigger picture and prepare the organisation

b) Stone age people practices – “if this guy leaves the company I can get someone else cheaper…”

c) Build everything from scratch mentality – Companies do not partner with other small companies who can provide a niche for a low cost. Vendor relationships are pre-stone age.(how do they call it? Soil Age? )

While Jim Collins talks about how to make a good to company a great one in his book Good To Great, we need (seemingly commonsensical) practices to make a Bad company to Good.
(Will try to provide more info about some of the books I read recently in a follow up post) Effectively using internet / google may itself help these companies a lot.(Forgive me if I believe too much in googling. Blame my job – the ever googling SW Dev!) for identifying business partners or provide access to useful free software tools which may enhance productivity.

[By using better Desktop Publishing software, a publishing company can publish a book faster and cheaper. By using a better Mech Design tool, Mech Product companies can do better prototyping and avoid mistakes early in Product Development Life Cycle]

There is a great scope for collaborating with institutions / other companies who do not have a clash of interest.

Here comes MayaKinsey:
If an Indian version of a McKinsey- [can we call it as MayaKinsey? - Mayan + McKinsey - I think there is a character - Mayan- in Hindu Mythology who architects buildings for Heavenly Gods. If I am wrong, blame my grandma, who told stories from epics, who is now in heaven(hopefully!) ] is started to provide consulting to the small companies - to help the SME to adopt the latest practices in various business spheres.

Some areas where MayaKinsey can operate .....

a) How to use IT to increase the velocity of business / communicate with your suppliers / capture the knowledge using workflow capturing tools etc.,

b) Better practices for People management

c) Global outlook in marketing and new approaches like matching the available skills vs new avenues.(What are all the NC machines you have? Why can't you manufacture Product Y instead of Product X ..blah..blah)

What do you think about MayaKinsey and what are all the challenges MayaKinsey will face[apart from - "Hey! Nobody will allow you to enter the premises of the company? :-) ]?. Comment here...