In recent years, the local SME scene has transformed into a highly-lucrative and booming segment of the overall country’s economic sector. Comprising more than 98.5% of business establishments in Malaysia and contributing to 38.3% (RM521.7 billion) of Malaysia’s GDP for 2018, the SMEs now cover a vast scope of industries ranging from agriculture, services, manufacturing, construction and mining and quarrying.
With the ever-changing demands of consumerism patterns and business transformations, there is a need for SMEs to be more dynamic and versatile in embracing these shifts in business patterns to be competitive with other larger businesses around.
Dr. Sekar Jaganathan, Digital Strategy Director at Kenanga Investments and the Honorary Advisor at Centre of Excellence for Artificial Intelligence for MIMOS firmly believes that in order to stay competitive on the local and global market scene, they would need to fully understand their own business model, as well as customer needs and their experiences.
SMEs have evolved tremendously over the past decade; businesses are no longer limited by geographical constraints. Today, the whole world is one village, connected by the Internet. There is no limitation as to where business ventures can be taken to. It is all thanks to the digitalization and globalization of business models.
Explained Dr. Sekar, “If an SME does not become a digitalized global player, they will lose customers within and beyond their region. It is important for them to expand their market reach and the easiest way to do this is to leverage digitalization.
“The cost of production, packaging and distribution is straight forward and already accounted for. In fact, digital native SMEs start off on a better footing compared to non-digital business operations.”
Dr. Sekar further explained that with consumers having a wider range of services to choose from, it is crucial for SMEs to stay steps ahead so as to catch their attention, and most importantly, retain it. With higher expectations from consumers, business models have become very competitive.
SMEs should begin to know their customer base. They need to make themselves more valuable to consumers and go the extra mile to deliver value. If the customer experience is not efficient and simplified, a consumer simply switches to another provider, even one that is overseas. SMEs are now competing on a global level, with operational efficiency being even more crucial.
He added, “To increase operational efficiency, you need to be agile, simple and have fast delivery. Competition now comes in a fierce manner. Anyone, anywhere can sell the same product at one cent lower and you can lose your clientele. If you know how to survive, you will have rapid growth.”
Being agile, simple and fast are the essential fundamentals of the Industry Revolution 4.0. Dr Sekar stressed, “You cannot use every technology under the IR4.0 gambit. IR 4.0 is agile, simplified and delivered fast. Have a strategic approach to your business model. If you are agile, you would be able to fit in quickly to meet quick-changing demands.
“Enable consumers to connect with you so they may acquire the products and services they desire. Have lean operations, automate any job that has repetitive functions. Fast delivery comes with how quick and resilient you are at adapting to changes in the market, while ensuring customer satisfaction. If you understand these standing principles of IR4.0 for the digitalization of your business model, then you will survive the fierce competition.
“Incorporate each customer’s experiential data to continuously improve your business, it is the key to survival.”
An example of this would be Amazon, which collects data from all customer purchases. It predicts what people will buy in China, produces it in the USA, ships the product to China, and as soon as a customer puts in an order, they will deliver the product within a day. There is no more waiting period for the consumer; and all stocks are ready to be delivered based on demand predictive analysis.
The second fundamental business approach needed is to understand the customer experience journey, all the way from wanting a product, placing an order, to delivery of the product and post-delivery services. The key thing this customer journey needs is to be convenient, so simplifying the process is important.
Dr Sekar continued, “To understand the customer experience, think like a customer, then strategize your business based on that. If the customer wants a table, give them a table. Do not oversell by heaping them with information on how you procured the table.
“Instead, ask them how the table fits into their home. This gives an emotional aspect to your service, which is what customers will remember. Remember, 70% of your clientele are your existing customers, and 30% are new customers. If you are unable to retain your existing customers, you will not be able to expand the business.
“Take for example Uber and Grabcar services. Uber came about to fulfil what was needed by customers. Grabcar, on the other hand, looked at the areas Uber did not address, and addressed those gaps themselves. Every gap analysed was based on the customers’ perspective, not what the company wanted to deliver.”
Besides being an active corporate player, Dr Sekar is also the founder of a mindfulness centre and author of recently-launched book “Making Miracles for the Self: Inspiring you to Live Right” (penned as HH SwamiGuru). Dr. Sekar explains that the biggest hurdle SMEs currently have is facing the fear and phobia of the future. “The book helps you create a positive mindset, an entrepreneurial mindset. With fear removed, you will be able to automatically see opportunities that you were unable to see previously. Change now, this is the best time to change. The world is changing, you have to change NOW, and do it right. Understanding your customers is a must. Do not hold onto a dying product, instead change your business plan and product. It will start to grow. The world population is ever growing. Your business will always have a market.”
Dr. Sekar Jaganathan is the Founder of 7C Life RealiZation Centre (http://www.7clife.org) an organisation that is aimed at teaching people to achieve clarity of mind and live successful lives by practising mindfulness. He is also a person who has his feet firmly planted in the technology and AI, he sees the need for us to stay ahead of the global changes they herald.