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Remaining Competitive: Strategies for Small Medium Enterprises
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Remaining Competitive: Strategies for Small Medium Enterprises

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This was a presentation I made at the India Strategy Forum. I was invited to be a presenter at the forum and the topic was given to me. I use SAGE as an example of change, change management, …

This was a presentation I made at the India Strategy Forum. I was invited to be a presenter at the forum and the topic was given to me. I use SAGE as an example of change, change management, innovation, growth and most of all a centre of excellence. The numbers refer to March 2011. The story is even better today.

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  • 1. Los Angeles | London | New Delhi Singapore | Washington DC India Strategy Forum 2011 - Remaining competitive: possible strategies for SMEs Vivek Mehra Managing Director and CEO SAGE Publications India Pvt Ltd
  • 2. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC What is SMEs’ true value to Brand India? ● Contribution • 45% of industrial output • 40% of exports • Employing 60 million • Creating 1.3 million jobs every year • Produce more than 8000 quality products
  • 3. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – Global Perceptions ● Bureaucratic and corrupt ● Outsourcing hub for computer software ● Cheap destination for outbound calling ● Questionable quality of products ● Low skill base for technical products ● Culturally incompatible
  • 4. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – Fabled domestic market ● Fragmented across segments ● Low accountability – • Will save tax and forego product warranty • High cash spend and hence true income suppressed
  • 5. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – Fabled domestic market ● Access to global markets ● High aspirational levels especially of Gen X and Gen Y ● High costs of living – housing, food and transportation (to work) consume 80% of income
  • 6. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – For SMEs: a challenge or opportunity? ● A challenging opportunity ● Extremely price sensitive across all segments • Except the very creamy layer ● Savings based on perceived value not real value (Rs. 2 per sachet is perceived to be cheaper than the bottle) ● SMEs not small enough to survive on local clients (except in remote rural areas) ● Not large enough to get economies of scale
  • 7. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC What constitutes good competitive strategy? My top 2 Internal structure and company spirit Brand building leading to product innovation
  • 8. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: (Internal structure and spirit) Illustration using SAGE (2006) ● 98 employees ● Middle single digit operating profit ● Revenue that of a large SSI (small ME) ● Decision making highly centralized – (resting with the MD) ● Attrition rate 40% ● Average spend per employee (non salary) Rs. 1500
  • 9. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC ● Managers with no real empowerment ● No agenda for training and developing individuals ● Office located in a house – aggressive sealing drive ● Low aspiration among employees ● MD not easily accessible to employees Competitive strategy1: (Internal structure and spirit) Illustration using SAGE (2006)
  • 10. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: basic re- structuring ● Empowering managers – decision making decentralized ● Building processes (automation) ● Documenting knowledge (internal) ● Building (manpower) redundancy within departments
  • 11. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: HR redefined (the CEO’s agenda) ● Open door policy ● Providing anonymous access ● Creating open forums for discussions (Monthly Staff Meetings) ● Departmental outings to build stronger teams
  • 12. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: HR redefined (the CEO’s agenda) ● Interdepartmental conflict resolution procedures defined tightly ● Direct involvement in the appraisal and annual increment process • Charting every employee’s career path
  • 13. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy – 1 HR redefined (the employee is the first customer) ● Profit sharing with employees down to the grass-root level ● Sharing company performance with employees ● Documenting hiring processes ● HR policies made employee oriented and not merely legally compliant ● Advertising for candidates repurposed
  • 14. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: HR redefined (the employee is the first customer) ● Including families in medical insurance policies ● CEO actively overruling policies in favour of genuine employee problems • Extension of maternity leave • Extending financial help beyond basic medical insurance
  • 15. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 2: (brand building leading to product innovation) ● Relocating from a house to a professionally laid out open plan office ● Ensuring consistent branding across products and activities ● Building visibility across core markets ● Strategic partnerships with key stakeholders
  • 16. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 2: (brand building leading to product innovation) ● Strengthening product lines, increasing output (60 to 100 books, 16 to 50 journals) ● Adding product lines (swimming against the current) • Legends in Marketing • SAGE Impact • SAGE Law
  • 17. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Strategic Tie-ups
  • 18. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Report Card 2011 vs 2006 ● 227 employees ● Revenue up 5x ● Double digit operating profit; growth 4.5x ● Attrition = 10% (industry standard 18%) ● Average spend per employee (non salary) = Rs. 20,000 ● Average print run • Academic 1200 units (industry standard 300) • Retail 3300 (industry standard 1600)
  • 19. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Sneak peek ● Legends in … ● SAGE e-veda ● Journals 50 to ??? ● Project Aristotle ??? ● …???
  • 20. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Two rules to live by A CEO doesn’t live in an ivory tower, he lives in a glass house. Break the mould.
  • 21. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Thank you Vivek Mehra vivek.mehra@sagepub.in contactceo@sagepub.in