Building competitiveness through digital
transformation for Indian MSMEs.
Photo by Peter Herrmann on Unsplash
In today's rapidly evolving digital landscape, digital transformation has emerged as the
linchpin for the success of Micro, Small, and Medium Enterprises (MSMEs) in achieving
and sustaining global competitiveness.
-A business guide by Lakshmi Moorthy, CEO, nicheBrains
The contribution of MSMEs to India's growth is undeniably central, with the sector accounting for nearly
30% of the GDP and 49% of exports, with manufacturing alone contributing 33%. A staggering 63 million
MSMEs employing over 100 million individuals form the backbone of this sector, presenting a tremendous
opportunity to create millions of new employment opportunities and significantly contribute to India's
envisioned $5 trillion economy.
Impressive figures and statistics, indeed. However, a closer look reveals that many MSMEs struggle to
break free from their small-scale operations. Hampered by legacy processes and systems, MSME leaders
often find themselves preoccupied with addressing day-to-day challenges, preventing them from realizing
their full potential.
The Two-Fold Challenge
Today, MSMEs face a twofold challenge. The first challenge lies in accessing capital. While the government
has introduced numerous initiatives, such as incentives, access to credit through the OCEN network, bank
loans, and credit from private financial institutions, the inherent risks and uncertainties in the due
diligence process make accessing capital a complex and protracted affair. Even when MSMEs manage to
navigate this challenge to a certain extent, addressing the second challenge becomes imperative for a
robust solution.
hoto by Ahsanization ッ on Unsplash
The second challenge revolves around accessing expertise. MSMEs often lack internal talent, struggle to
stay abreast of new skills and capabilities, face difficulties in accessing new markets, and cling to outdated
practices that yield poor financial results and hinder their competitiveness. This creates a vicious circle
where only companies successful in adopting new practices can build the competitiveness necessary to
offer products or services that meet quality standards and provide adequate returns.
Reimagining the “How” of Businesses
This line of thought brings us to the fundamental essence of business. Why do businesses exist? They exist
to solve customer problems and, in the process, generate profits. The "what" of business—solving
customer problems and acquiring customers while keeping costs to a minimum—remains constant
regardless of time or transformation. However, the "how" of achieving these goals continually evolves.
Throughout history, each transformation has brought about new preferences and needs, necessitating the
introduction of enhanced products or services to address these changes. Companies have adapted by
exploring new ways to acquire customers, expanding from local to regional, national, and even global
markets. They have optimized costs through process innovation, thus ensuring a continuous evolution in
their operations.
Looking through this lens, it becomes clear that digital transformation is ultimately about driving business
growth and success through technology. It entails discovering new and innovative ways to deliver value to
customers while maintaining a competitive edge. Equipped with the right tools, strategies, and mindset,
MSMEs can emerge stronger and more competitive than ever before.
But Why Digital Transformation?
One common question that MSME leaders often pose is: "Why should I consider digital transformation
when we are doing fine as a small company?" The answer lies in the indicators that suggest the need for
transformation: declining revenues and profits, emerging new business models, the emergence of new
players in the market, the repeated mention of new technology buzzwords, or the desire to break free
from the cycle of underperformance and drive growth. Reimagining every aspect of business and
embracing digital transformation becomes the key priority under such circumstances.
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In today's business environment, globalization, technological advancements such as 5G, data analytics,
artificial intelligence (AI), 3D printing, and government policies are reshaping the way MSMEs conduct
business. In this digitally connected world, MSMEs must adopt new technologies to remain relevant,
delivering personalized products or services that are faster, better, and more affordable.
Road to a Global Stage
Global competitiveness, in the connected world, requires MSMEs to compete not only in local or regional
markets but also on the international stage. They must possess the necessary capabilities, strategies, and
technologies to excel in a globalized digital economy.
Photo by Denys Nevozhai on Unsplash
Digital transformation plays a pivotal role in enhancing competitiveness and enabling MSMEs to achieve
global competitiveness. Firstly, it increases operational efficiency and productivity, enabling MSMEs to
optimize their processes and resources. This enhanced efficiency empowers them to compete effectively
in terms of price, quality, and delivery speed, thereby enhancing their competitiveness in both local and
global markets. Secondly, digital transformation empowers MSMEs to elevate their customer experience
and engagement, a crucial driver of competitiveness in the digital era. By leveraging digital channels,
MSMEs can provide personalized and seamless experiences to their customers, fostering loyalty and
differentiation.
The Four Dimensions of Digital Transformation
Understanding the industry, customers, and emerging trends is crucial for MSMEs to introduce new
products, disrupt existing markets, and break free from the cycle of underperformance. Successful digital
transformation can help MSMEs outperform their competition by more than 26%.
It is important to note that digital transformation is not a one-time project or solution; it is a journey. It
must be approached from four dimensions: strategy and leadership, business operations, technology
adoption, and skills and capabilities. Digital transformation must start with a deep understanding of the
business environment and the value chain within the industry. Identifying new potential value creation
opportunities and assessing the impact of technology are essential initial steps. By envisioning the
company's future roadmap for the next five years, leaders can set the stage for transformation.
Secondly, business operations must be thoroughly examined. Outdated processes no longer provide a
competitive advantage. Breaking down strategic goals into operational goals and diagnosing current
operational challenges provide insights into how things can be done differently and what new initiatives
should be prioritized based on their impact and execution capabilities.
Technology adoption is the next crucial step. Technologies such as cloud computing, enterprise resource
planning (ERP), customer relationship management (CRM), and emerging technologies should be
leveraged to achieve operational effectiveness and realize the company's vision.
Lastly, building new skills and capabilities within the organization or accessing them on-demand is
paramount. MSMEs must invest in upskilling and reskilling their workforce to navigate the digital
landscape. Training programs, workshops, and partnerships with educational institutions can equip
MSMEs with the necessary digital skills and expertise to embrace digital transformation and compete
globally.
Understanding where an organization stands on the transformation journey is the first step before
launching any initiatives. Every company is at a different stage of transformation, from legacy to siloed,
strategic, and future-ready. In the realm of digital transformation, there is no one-size-fits-all approach or
standard template. Based on experience and engagements, organizations can be classified into these four
stages, ranging from being digitally naive to digitally native.
Driving Competitiveness Through nicheBrains
At nicheBrains, we recognize the pivotal role digital transformation plays in enhancing competitiveness
and achieving global competitiveness for MSMEs in the digital era. nicheBrains has a robust network
comprising over 1500 esteemed industry experts, each possessing knowledge and expertise in cuttingedge domains such as artificial intelligence, data analytics, cloud computing, IoT, automation, and more.
Through their unparalleled industry acumen, these experts consistently deliver value by driving
innovation, shaping industry trends, and propelling businesses towards success. Our extensive customer
network comprises over 100 dynamic MSMEs which is growing every day. These forward-thinking
organizations recognize the immense value of leveraging nicheBrains' expertise to drive their process
improvement initiatives. Collaborating with our network of experts, these MSMEs harness their
specialized knowledge to optimize critical areas such as supply chain operations, digital marketing
strategies, and overall business operations. By capitalizing on the insights and guidance offered by our
experts, these MSMEs position themselves for sustainable growth, enhanced efficiency, and increased
competitiveness.
Through embracing digital technologies, optimizing operations, improving customer experiences,
expanding market reach, leveraging data analytics, and adopting new business models, MSMEs can
position themselves as formidable players in the global marketplace. Let us embark on this transformative
journey together and unleash the true potential of MSMEs in the digital age.