A small study has provided some insights into how agility and growth mindsets can help SMEs stay competitive against large corporations.
How have enterprises in South-east Asia (SEA) being coping with the challenges of the past 12 months?
How has digital transformation—whether instituted suddenly or fast-tracked—helped businesses cash in on pockets of opportunities and weather challenges in supply chains and talent shortages?
In a small regional survey of 600 senior executives (including 400 from small- and medium-sized enterprises [SMEs] with less than US$500 million in revenue) across Singapore, Malaysia, Thailand, Vietnam, Indonesia, and the Philippines, the following trends were discerned:
- Respondents faced significant challenges in the areas of talent attraction and retention, cloud adoption, and data intelligence, but have identified customer experience (CX) as a strategic imperative for survival and growth, with 35% saying service excellence was now their primary source of value and differentiation.
- Positive CX has also become the foremost strategic consideration for businesses in the region, with key factors being personalization for the customer (59%), providing high-quality products and/or services (55%), ensuring data protection and privacy (53%) and offering competitive pricing (51%).
- Set against their larger counterparts, SMEs in the region found it increasingly challenging to keep pace with uncertainties and external challenges in the current business environment, citing difficulty adapting to a rapidly changing marketplace (40%, vs 29% of larger enterprises); keeping up with changing customer wants and needs (38% vs 43%), and difficulty retaining customers or driving repeat business (34% vs 30%) as top challenges to meeting their strategic priorities.
- Automation and digital technologies were most believed to support business goals by increasing process efficiency and reducing error, risk and cost (56%). This was followed by reducing overhead costs (45%), allowing employees to focus on higher-level business tasks (39%), and increasing productivity through transformation and intelligent process automation (37%).
- Respondents cited difficulty competing with larger organizations (50%), lack of technology for analytics (43%), lack of a capable and motivated workforce (40%), lack of adequate data (38%), and difficulty scaling for growth (33%).
- To secure quick growth, respondents were employing short-term actions to improve CX, with many investing in user-friendly digital experiences (39% made this change across the organization), reducing prices (38%) and increasing after-sales maintenance (37%). Some 58% said they made at least moderate progress towards digital transformation. About 45% said they had made moderate progress towards transformation.
- Along with technology, respondents understood their workforce is crucial to driving success. In line with this, 74% expected moderate growth over next three years in employee productivity (74%); 71% in customer loyalty and satisfaction, and 71% in market share .
- 35% of respondents cited upskilling talent as the top internal challenge to meet strategic goals and evolving organizational and customer needs. 29% faced the inability to gain insights into the employee.
- 29% improved employee experience during this time by streamlining organisational processes, 38% invested in employee training and development, 25% finetuned flexible work policies.
- In spite of challenges, responding SMEs saw their nimbleness and ability to build trust with customers as their inherent competitive advantage against larger competitors, which can give them the strong foundation they need to securely experiment with new technologies and business models.
The survey was conducted via computer-assisted telephone interviewing and online links between December 2020 and January 2021, involving participants who were senior executives (director and above) from retail, financial services, manufacturing, high tech, wholesale distribution, engineering, construction, logistics and the public sector.
Said Verena Siow, President and Managing Director, SAP (South East Asia), the firm that commissioned the survey: “Having gotten a foothold on the pandemic’s disruption, businesses across South-east Asia are at a crucial transformative point to achieve long-term competitive growth. Regardless of industry, businesses must embrace true business transformation into intelligent enterprises while keeping in mind that customers are the lifeline to survival and sustainable growth.”
According to Siow, enterprises that adapt the quickest are the ones that are thriving in the pandemic. “Flexibility is a crucial ingredient of success today, (coupled with) the flexibility to accelerate the speed of digital transformation and excel in the diverse operating environment—wherever they are on the digitalization spectrum,” Siow said.