5 Steps to SME Success: Technology Entrepreneurs Share Their Secrets
Omidyar was convinced that, if people could have equal access to information and opportunity, the efficiency of market places could be transformed. To test his hypothesis, he posted an unceremonious listing for a broken laser pointer on the internet. When it sold, Omidyar contacted the bidder immediately, wishing to clarify the fact that the pointer was in fact broken. To this, the buyer responded quite plainly, "I'm a collector of broken laser pointers."
Since then, the company now known as eBay; has grown to become a 60 billion dollar-per-year business, been publicly listed and confirmed Omidyar's belief that everyone has something to contribute, provided they are given the opportunity.
A million would-be inventors must be kicking themselves. eBay is, after all, a relatively straight-forward business model. It almost had to happen... or at least it seems that way in retrospect. Generally, those who succeed in business have spotted trends in nascent stages and attached themselves strategically to the growing swell.
With thousands of newly-unemployed building new business, and others hyper-employed rebuilding old businesses, the topic is hotter than ever: What's next?
The APEC SME Technology Entrepreneur Seminar (Kuala Lumpur, Malaysia, 3 - 5 June) picked the brains of eBay/PayPal, Microsoft, Dell, BYD and other now-major players, each of whom projected visions of the post-crisis business landscape. Their advice: do different, go shopping, talk about it, share and turn that frown upside-down!
1. Do different
According to techie lore, Michael Dell's success can be traced back to a brand new Apple II computer which, at the age of 15, he completely took apart - just to see if he could build it back up again. He could and he did, and then he went on to build something else altogether.
The first thing to bear in mind is that, in an environment of increasing change, the survivors will be those who are able to unlearn and relearn.
It's not about doing less or doing more, explains Terry Erdle, Senior Vice President of Skills Certification at CompTIA, "it's about doing different." When circumstances change again - as inevitably they will - it will be about doing things differently again. Adaptability is everything.
2. Go shopping
When it comes to business, the idea of a "sound investment" does still exist. It seems counter-intuitive to be spending money while the masses sit on their capital, determined to ride out the economic storm. Still, says Director of Corporate Affairs, Choo Hua Wee, Microsoft will invest USD 9 billion in research and development this year - a billion more than last.
In similar acts of faith, companies like Intel, Cisco, and Qualcomm increased R&D spending in the fourth (and arguably the darkest) quarter of 2008, to be prepared for recovery1.
"You need to invest in research so that new products exist when consumers start spending again," explains Robert Kramer, Vice President of Public Policy at ComTIA. "It's also happening at a national level."
Equally counter-intuitive but invaluable in the long-term, investing directly in technology will ultimately save money. Effectiveness, efficiency and the ability to satisfy customer needs are among the most frequent reasons given by companies adopting an emerging technology2.
"We've seen an increased sophistication in the way that SMEs think about technology. They've become much more formalised in the way that they plan for purchases," says Ryan Brock, Vice President of Channels at AMI Partners. "They're looking for ways to achieve their goals with less overhead and less complexity."
Less overhead, greater efficiency and increased productivity lead to higher returns so that "cutting costs" does not mean lapsing into technological paralysis. In fact, it seems to mean the very opposite. According to one recent study3, economies with higher ICT use see seven times more productivity than their low-use peers. And trends suggest that SMEs will be calling the shots. "SMEs create a lot of employment," says Kramer. "Innovators will want to make themselves a cog in the SME machine, to find ways to make themselves invaluable."
3. Talk about it
Starbucks opened its first store in Seattle in1971. But it wasn't until 1983 that it really took off, after Howard Schultz travelled to Italy and was inspired to develop a similar coffee house culture. Exposure to a different perspective - transformed not only a company but actually inspired a consumer movement so devout it could rival any religion.
A 2007 survey4 asked SME decision-makers where they went for information. About 10 percent consulted social networking sites, slightly more consulted websites and just more than 15 percent consulted blogs. The same question was posed just one year later to find that more than 25 percent consult all three mediums... as well as pod casts, video websites and email newsletters.
Love it or hate it, says Brock, "you can see that these emerging social media are having an impact on SMEs... Facebook, LinkedIn, podcasts and even email allow for unbiased peer review."
In addition, he says, to survive the crisis, "SMEs need to foster relationships with customers; to retain the customers they count on, day in and day out, year after year; and also to identify new opportunities and new customers."
Dell's Pang Yee Beng agrees: "Customer feedback is the key to influencing the design and functionality of core products."
Given that it is often cost-free and that it tends to elicit dialogue that is notably frank; when it comes to maintaining open relationships, the social network arena is one big chunk of manna from techie heaven.
4. Share
Starbucks introduced its superpremium ice cream through an alliance with Dreyer's; broke into the bottled-beverage market by partnering with Pepsi-Cola North America to bring bottled Frappuccino to shelves outside its own chain; and expanded its reach to grocery stores across America through a licensing agreement with Kraft Foods. They might have done it alone, but it probably wouldn't have turned out half as well.
Us-Against-Them thinking is incongruous in a world characterised by connectivity. The rule applies right down to the source. Even the most innovative - for whom Intellectual Property laws once served as a veritable suit of armour - are rethinking the concept of ideas-as-commodity.
Now, explains Kramer, "You don't protect ideas so much as you use them as bargaining chips. Ideas are leverage."
Under the old school of thought, companies recruited the best and the brightest, conducted research and development within their own walls and used IP to exclude others. Whoever could get a new product to market first was the winner. But under the new Open Innovation model5, companies recognise that no one can possibly have all the smart people. You need to have ideas inside the company but you also need ideas from external innovators and entrepreneurs. IP is more effectively employed as a tool than as a defence mechanism.
"You can access the best, all the time - even if you don't own it or house it. You can improve your own product by making it compatible with other great products. You can sell [ideas] that are just sitting on the shelf," offers an enthusiastic Wee. (Microsoft works with more than 750,000 partners around the world, which earn an average of $8 in revenue for every $1 earned by Microsoft)6.
Wee draws attention to the equally imperative principle of interoperability: the ability of information technology systems, components and services to exchange data and information or, more succinctly, information plumbing.
"iPod is getting more interoperable now," offers ComTIA's Kramer as an example. "In the EU, customers can copy iPod products onto non-iPod products."
In fact, customers are demanding the freedom to exchange data and information - to be connected, to talk and be understood and to control their data - forcing vendors to build bridges between systems. Interoperability allows customers to choose the best technology for their needs delivering efficiency, new capabilities and helps maximise the return on investment.
According to Microsoft, interoperability makes business sense: "Our partners and customers demand it and the industry as a whole benefits from it."
5. Turn that frown upside-down.
With massive job losses worldwide and global trade predicted to fall 9 percent this year7, the landscape looks bleak for some. But not to others.
Some are finding new ways to keep their doors open: virtually. Since overheads are the definitive albatross, the notion of "free shop space" is more appealing than ever. USD 2000 worth of goods are traded every second on eBay. Director of Government Relations, Steven Liew points out: "1.3 million sellers use eBay as their primary or secondary source of income; and of these sellers, 530,000 operate standalone stores on eBay."
Others see opportunities in tackling the most critical problems the world faces: demographic and climate shifts. Amid concerns over seemingly uncontainable carbon footprints, not to mention the growing traffic pressure on Asian megacities as rural populations stream into urban areas, BYD's General Manager of Auto Exports, Henry Li observes that "In Europe, USA and China, 95 percent of drivers drive less than 100km on an average day." The BYD company, originally established as a producer of small batteries in 1995, is now set to launch the Pure EV-e6 "rechargeable car" in China by the end of 2009. And in May this year, BYD signed a Memorandum of Understanding with Volkswagen to explore the possibility of using BYD-designed batteries in hybrid/electric vehicles of the future.
It may just be that what now looks like crisis will, in fact, reveal the answer to the question asked by entrepreneurs everywhere, What Next?
1 Wall Street Journal, 4, 20 April; 9 May 2009.
2 CompTIA - AMI Study
3 CompTIA
4 AMI-Partners (www.ami-partners.com)
5 Chesbrough, H., Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business School Press, Boston, 2006).
6 Microsoft website: http://www.microsoft.com/opensource/faq.mspx#
7 "WTO sees 9% global trade decline in 2009 as recession strikes", WTO Press Release, 23 March 2009. Available at http://www.wto.org/english/news_e/pres09_e/pr554_e.htm