SMEs need to take risks to survive

MUMBAI, INDIA: Successful companies don't see different things. They see the same things differently.

They think outside the box and see opportunity in chaos. A book released by James Champy, chairman, consulting practices, Perot System, gives a few pointers to the pattern of success among successful SME's in the US, which has achieved double-digit growth over the last few years.

Champy is recognized worldwide for his work on leadership and management issues and on organizational change and business reengineering.

His first book, Reengineering the Corporation: A Manifesto for Business Revolution the Mandate for New Leadership has sold more than 2,500,000 copies and was on the New York Times bestseller list for more than a year.

"These companies didn't follow the traditional path. They saw what others didn't. They thought outside the box, took risks and saw opportunity in chaotic markets," Champy said at the Nasscom India Leadership Summit 2008 here.

Drawing an example from Shutterfly, an Internet-based personal publishing service company that enables consumers to share, print and store photos, Champy said though the company has a simple photo publishing business, it branded itself as a social networking platform to share memories.

"The company has double digit growth by promoting itself, as a social networking platform and not a photo finishing one," said Champy.

One constant thread that is common in these companies is the ability to take risk on the face of adversities.

"These companies take risks. They also analyze things, have management information systems in place, but don't delay the decision-making process."

"I would advise companies to not to go public, for it takes off your freedom to innovate, to take risk and ultimately to make it big," he added.

Champy also saw another constant in these companies.

"All these companies have passionate leaders. Leaders who are transparent and willing to take the risk and have `just do' attitude.”

He also cited the example of Part Search, a US-based firm that delivers industry standard Master Parts Catalog with over eight million unique parts, across hundreds of major brands and multiple product categories.

"The automobile market in the US is already crowded, but where the company focused was to provide parts to the consumers and tap a virgin market."

Since its inception in 2001, Partsearch has grown at a CAGR of 85 per cent, and now serves major retail partners such as Best Buy and Circuit City, warranty administrators like GE Warranty, and operates its own direct brand at its website.

And these companies had one more common aspect: The corporate culture is kept simple. "No heavy HR teams," Champy added.