“I begin with an idea, and then it becomes something else”- Picasso. Picasso’s words are proving to be true for every entrepreneur who has a dream larger than his life. Any big undertaking starts with a small idea which gradually gets nurtured by the zeal and effort of some innovative individuals. Either you take an example of presently booming 21st-century technology firms like Google, Facebook, Apple or 20th-century sector agnostic firms General Electric, Reliance, they all had humble beginnings. They either started as small partnerships or a small enterprise incubated in somebody’s garage, but made big on the back of people who pushed the envelope with their entrepreneurial talent.
Every generation witnesses a bunch of these enterprises flourishing into the business screen and changing the future forever. While people, in general, remember few popular firms, there were and are many who change human lives forever with their innovative services and products. Historical studies have indicated that major innovations of the 20th century came from smaller firms, though the ultimate commercialization in many cases depended on larger firms. The entrepreneurs who run these firms have to face loads of challenges ranging from ensuring cash flow to marketing. Those who are enterprising and can innovate with time overcome these challenges and emerge as leaders. These business leaders, in turn, continue to inspire a newer set of entrepreneurs.
To understand why the micro, small and medium enterprises (MSME) are more innovative, enterprising and continue to attract strong talent, it’s important to understand their approach and the environment they operate in.
MSMEs, are mostly new entrants to the market, and have the advantage of being able to assess a problem from the fresh perspective. Take for example the case of electric cars. In 2013, Toyota Chairman Takeshi Uchiyamada said “We do not believe there is a market to accept it,” and 4 years later there are more than half a million reservations for the Model 3 of Tesla. The success of Tesla has proved industry giants’ completely wrong and interesting point to note is that the founders of Tesla were influenced to start the company after GM recalled all its EV1 electric cars in 2003 and then destroyed them.
MSMEs are more approachable and agile to the shifting business environment. While larger firms have an established product, connected customers, and high ranked business units, this also limits their innovation to their R&D department. In contrast, MSMEs sense the changes fast and can quickly move to new projects with full throttle.
Take the case of Youtube, founded in 2005, YouTube began as a video dating site called “Tune In Hook Up,” similar to HotOrNot.com. When the site failed to gain traction, the founders argued with the idea, and instead focused on simply sharing videos online.
Later when it was taken over by Google for around $1.65 billion in stock, YouTube got a boost at present; users are uploading over 35 hours of video per minute.
Micro, small and medium enterprises (MSME) understand that they can stand in a market only if their product is significantly better than the industry standard. For this, they pour in all of their resources to understand the market and the demand. Knowing what the current offering is, they always try to create something that adds more value. Take the case of Spotify, which arrived much later to the on-demand music streaming service scene, but with an improved model. Spotify understood that the online world is getting accustomed to free music, and they created a better tool to fit this appetite. Spotify’s free service attracted a larger audience who became familiar with the platform, later encouraged to upgrade to the premium service with additional features.
To nurture the entrepreneurial talent and transform them into future leaders, few important points need to be considered by micro, small and medium enterprises (MSME)
Firms have to work consciously towards developing a culture that encourages the sense of ownership among its talent. Talented individuals look to be more than a cog in the wheel. And this comes from a view of the contribution they are making to the business and its growth. There is a famous comment by a former Google executive “If you give people freedom, they will amaze you.” It is very important that talented individuals are enabled to take ownership of projects. This will inculcate the value of ownership and allow individuals to rise and push the boundaries of their potential
Firms need to institute a strong mentorship programme that makes the talented individuals feel invested. The new generation of millennial likes to be guided to continually push the boundaries. Only having mentors is also not enough, it’s important to have quality in the mentorship program and many at times, having only one mentor is also not enough. So, it’s important for firms to reach out to accelerators, academicians or senior people in other firms and make them part of the programme.
A research by Endeavor, a non-profitable research organization, that supports high-impact entrepreneurs across the world, revealed that entrepreneurs of many successful firms have strong mentoring relationships with the founders of other successful companies. A very interesting example is of Facebook founder Mark Zuckerburg , who noted that the Apple founder Steve Jobs had been an invaluable mentor.
A flat organizational hierarchy reinforces a sense of empowerment, which in turn encourages proactive participation and contribution to company growth. It is also important to maintain information asymmetry in this of kind of structure. Every firm member must understand firm’s vision, mission, and strategy in short and long-term. This allows them a high degree of autonomy and also maintains similarity in approach to challenges of the firm. Gumroad, a platform where people can sell their own digital creations from books to art to music, has maintained a flat structure with constant internal communication. The talent at Gumroad is encouraged to use open forms of communication like HipChat and Asana instead of relying on emails. This ensures that information flows within firms rather than getting trapped in inboxes.