Insight and customer focus are two vital strategic tools that would help in building resilience in the system in the midst of a global slowdown for SMEs, said David Wittenberg, CEO, The Innovation Workgroup in an exclusive interview to SME Times.

How can SMEs incorporate effective strategic management within their organization?
David Wittenberg: Smaller firms can often do a better job of strategic management than their larger colleagues because they face a smaller and simpler set of issues. Therefore, they can monitor the situation more effectively and choose the appropriate strategic response. While the entrepreneur herself may not have all the needful skills, she can call on advisors to round out her strategic team.

Why are SMEs unaware of proper strategic management?
David Wittenberg: Companies that are family-owned or run by first-generation entrepreneurs often have leaders who lack formal training in business administration. They may simply not recognize that strategy is the job of all companies, not only large enterprises. Even if they want to manage strategically, they have not been exposed to the theories and methods of modern strategic planning. This deficit can be addressed in several ways. Entrepreneurs can self-educate through books, white papers and magazine articles; they can attend courses and workshops on strategic planning and management, or they can consult professionals to assist them with strategy formulation and execution.

What are the innovative practices and processes you feel the SME sector should follow in order to stay ahead?
David Wittenberg: We teach our clients the importance of customer focus and insight development. Every business will benefit from increased insight about its customers, particularly if it can do something innovative to attract and keep more customers.

Why do SMEs not have good strategic management & planning?
David Wittenberg: The skills needed for entrepreneurial success are not always the same ones that lead to effective strategic planning and management. The best entrepreneurs are those who can dream up new solutions to market needs and then perform excellently while meeting those needs. Planners, by contrast, are those who gather facts, analyze, and often, respond slowly. So, the temperaments and personalities are different.

In this kind of situation, the entrepreneur usually avoids formal strategic planning until one of two things happen. Either the company grows so big that it is beyond the ability of the owner to manage by himself, or there is a crisis that convinces the owner that a new strategy is required. Then, the entrepreneur will seek competent help to plan strategically.

SMEs are adversely hit by the global slowdown. What kind of predictive strategic tools would help in building resilience in the system?
David Wittenberg: It all goes back to the same two ingredients: insight and customer focus. If you have deep insight about the evolving needs and concerns of customers, you can change your operations to thrive in any business climate. Of course, you have to translate your insights into innovation. The only companies that outperform their competitors significantly during a slowdown are those that do something totally new and different. For example, Google was founded during a recession.

Do you think the top managerial has to play a vital role for the development of an enterprise?
David Wittenberg: You can’t really talk about SMEs without talking about top management. In India, as in many other countries, the personality of the small business is the personality of the man in charge. This is the individual that created the company and led it to its current position. Further development always depends on that person’s decisions.

How important is strategic management in today's business environment?
David Wittenberg: In my forthcoming book, Innovating for the Future: Doing Strategy Right, I warn that in a global economy, Indian companies that fail to plan and manage strategically are at risk from overseas competitors who will do so. There will always be a place in the economy for some tradition-bound companies, but those that survive will almost certainly stay small and local. For SME owners who want to grow, there are only two choices: trust in fate, luck or instinct on the one hand, or look at the business environment objectively and make a fact-based strategic plan on the other.