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How Curve Is Your Business Path?

How Curve Is Your Business Path?

The SMEs Journey Towards Success Can Never Be Straight

Very few companies can excel at innovation and efficiency at the same time. BCG suggests that just 2% of 2,500 public companies analyzed consistently outperform their peers on both growth and profitability during good and bad times. These “2% companies” are able to renew themselves in large part by driving innovation and efficiency simultaneously. All ambitious companies should, in BCG's opinion, strive to become 2% companies, which are positioned to succeed over time and thrive during both turbulent and nonturbulent periods.

Should the SMEs strive to become that 2% companies?  This is similar to asking an athletic whether s/he wanted to become an Olympic champion.   The key fact is only the "2%"  can make they way to the highest achievement, what happens to the rest then? We, 3C, made a study of 1,000 SMEs that remain active more than 10 years in Singapore.  We noticed that 50% SMEs making pretty good income but unable to make a major breakthrough, 40% SMEs are a step to liquidation, 9% SMEs doing fair, and only 1% performing exceptionally well.

Surprisingly, 3C's "1% SMEs" and BCG "2% companies" have many similar traits.

  • First and foremost, these companies are excellent at both exploration and exploitation. They continually rethink and revise their strategies and operating models while improving their current products and operations.
  • Second, they retain an “outside in” focus even when successful. By bringing outside perspectives in, they avoid succumbing to the risks posed by success and growth, which, although they are positive and desired outcomes, tend to increase organizational complicatedness and push companies toward an internal focus. In a rapidly changing environment, any company with too much of an inward gaze will fail to detect fundamental external market changes.
  • Third, the 2% companies embrace necessary disruptions (even if painful). This also implies deprioritizing profitable businesses to bet on future growth areas and build early-mover advantages.
  • Finally, they have a clear model for renewal. Renewal models help to manage the inevitable tradeoffs between short- and long-term objectives. They also fit specific business environments and organizational capabilities. For instance, in industries where disruption is imminent but directionally unclear and when go-to-market capabilities are strong, companies can capitalize on innovation from outside by scanning the market for relevant innovations, bringing them in-house, and commercializing them. This allows them to build an early-mover advantage while avoiding the risk of going full steam in the wrong direction.

3C truly understand what the SMEs want to achieve, the business clinic is designed specifically as the CENTRE of 3C Business Success Framework for the SMEs to "keep fit", "go strong", and able to make the compelling "transformation" to achieve that 1%  SMEs.  The best part of the business clinic is allowing the adopter to remain in 50% SMEs while trying to achieve the 1% status, a rare model that produces All-Wins when apply deligently.

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