SME Global Competitiveness: Over the years, while working with SME founders, I have often seen businesses become successful within their local market, industry cluster, or customer segment.
The business is growing. Customers know them. The team is confident about what they have achieved.
That is good.
But sometimes, local success can also become a comfort zone.
“We are one of the best in our region.”
“We are doing well compared to our competitors.”
“We have been supplying this customer for many years.”
There is nothing wrong with being proud of what we have built.
But as the business grows, I believe a founder needs to ask a different question:
Are we comparing ourselves with the businesses around us, or with the best businesses we may have to compete with tomorrow?
Because whether we realise it or not, SMEs are increasingly operating in a globally competitive environment.
Your customer may be in Chennai, Coimbatore, Pune or Ahmedabad.
But the customer’s expectations on quality, cost, delivery, responsiveness and professionalism may already be global.
That changes the question from:
“Are we doing well?”
to:
“Are we capable of competing with the best?”
What does global competitiveness really mean for an SME?
Global competitiveness is often associated with exports.
I see it differently.
An SME does not have to export a large share of its sales to become globally competitive.
For me, SME global competitiveness means building an organisation capable of:
- Delivering consistent quality at demanding standards
- Operating at globally competitive cost levels
- Responding quickly and reliably to customers
- Improving productivity continuously
- Scaling without losing control of profitability
- Building systems that do not depend excessively on a few individuals
In simple terms:
Can we become as good as the best, wherever the best may be?
That requires much more than getting an international customer.
It requires building organisational capability.
1. Start by changing the benchmark
Everything begins with mindset.
I have seen organisations where people genuinely believe they are performing very well because they are comparing themselves with businesses around them.
That can quietly become a limitation.
If the thinking is:
“We are already the best in our industrial cluster.”
there may be very little urgency to improve.
The shift required is from local comparison to global benchmarking.
Instead of asking only:
“How are our competitors doing?”
start asking:
What would a world-class company achieve in this process?
What productivity should this machine deliver?
What rejection level should we be capable of?
What should our delivery reliability be?
How quickly should we respond to a customer?
How much inventory should this business really require?
The benchmark changes the conversation.
And this shift cannot be delegated only to the quality or operations team.
What the founder repeatedly asks, reviews and accepts eventually becomes the organisation’s standard.
2. Understand the gap before investing
Once the ambition changes, the next step is not immediately buying new machines or technology.
First, understand the requirement.
Suppose you want to enter a more demanding customer segment or international market.
What does that market actually expect in terms of:
- Quality and tolerances
- Process consistency
- Delivery reliability
- Traceability
- Productivity and cost
- Documentation and systems
- Response time
Then compare those requirements with your present capability.
Can your existing machines consistently produce to the required tolerance?
Are the processes capable?
Are your quality systems strong enough?
Can your suppliers support the requirement?
Does your team have the required technical capability?
Can the business maintain delivery when volumes increase?
These questions make the capability gap visible.
Only after understanding that gap should you ask about investment.
Some gaps may be closed through better process control, maintenance, training or discipline.
Others may genuinely require new technology, equipment or infrastructure.
Without this clarity, capex can become reactive.
With clarity, investment becomes purposeful.
This is also why I believe founders need to assess whether the organisation is ready before pursuing the next level of business growth. I have discussed this in more detail in Is Your Organisation Really Ready for the Next Stage of Growth?
3. Strengthen process capability, not only infrastructure
Global competitiveness cannot be created by infrastructure alone.
A modern machine inside an unstable process will still produce unstable results.
Core manufacturing capability must become stronger.
This may involve:
- Machine capability and consistency
- Process capability
- Layout and material flow
- Line balancing
- Quality controls
- Preventive maintenance
- Standard work
- Problem-solving discipline
A question I like founders to consider is:
If a demanding global customer walked through our factory today, what would they see?
Not only the building.
Would they see stable processes?
Would they see problems being made visible?
Would operators follow consistent methods?
Would performance be measured?
Would actions from previous reviews actually be closed?
Would the shop floor reflect discipline even when the founder is not present?
That is a much deeper test of capability.
4. Build people capability along with productivity
No organisation can become globally competitive if it only upgrades its machines.
People capability has to grow at the same time.
This includes functional knowledge, problem-solving ability, cross-functional understanding and exposure to better practices.
But there is another capability that I believe many growing manufacturing SMEs underestimate:
Process Engineering / Industrial Engineering.
As volumes increase, productivity cannot depend only on people working harder.
Someone has to keep questioning how the work itself is designed.
Are workplaces designed properly?
Do we have realistic time standards?
Are lines balanced?
Where is the waste?
Can material movement be reduced?
Can the same output be achieved with fewer resources?
Can changeover time be reduced?
These questions gradually build productivity into the organisation.
Moving from NPD to stable production
There is another area where this capability becomes particularly important.
I have seen organisations develop an excellent sample for a new customer and still struggle once regular production begins.
The sample gets approved.
The order comes.
Then the problems start.
Cycle time is higher than expected.
Operators use different methods.
Quality varies between batches.
Production struggles to achieve the planned quantity.
Margins start getting affected.
The problem is not necessarily NPD itself.
The missing link is often converting development learning into a stable production process.
Process Engineering / Industrial Engineering should help convert NPD learning into standard work, realistic time standards, operator training, line balancing and repeatable production.
Without this bridge, the organisation keeps firefighting between development and manufacturing.
5. Build execution discipline
I strongly believe global competitiveness is finally demonstrated through execution.
A strategy presentation cannot compensate for poor delivery.
A new ERP cannot compensate for weak accountability.
A new machine cannot compensate for poor planning.
Execution requires a few fundamentals to work consistently:
- Clear business and functional KPIs
- Structured daily, weekly and monthly reviews
- Visibility of gaps
- Disciplined problem solving
- Ownership of actions
- Cross-functional coordination
One change I repeatedly emphasise in reviews is moving the discussion from status to risks and gaps.
Instead of spending most of the review asking:
“What happened?”
leaders should increasingly ask:
“Where are we likely to miss?”
“What is stopping us?”
“What decision is required?”
“What action will prevent the problem?”
That is a different level of organisational maturity.
A disciplined monthly business review can help the founder and functional heads connect quality, delivery, productivity, profitability, inventory and cash flow instead of reviewing every function in isolation.
The review, however, must lead to action. I have also shared separately why business review meetings often fail to improve execution when discussions do not translate into ownership and closure.
6. Improve productivity without losing sight of profitability
Global competitiveness also requires us to connect operational improvement with business performance.
Productivity improvement is important.
Quality improvement is important.
Reducing inventory is important.
Improving delivery is important.
But these should not remain isolated operational measures.
They should ultimately strengthen the business’s economics.
For example, a business may increase sales while overtime, premium freight, rejection, subcontracting and inventory also increase.
Sales have grown.
But has the business become more competitive?
Has profitability improved?
Has cash flow improved?
This is why I continue to emphasise that profitable growth matters more than sales growth alone.
Similarly, carrying more inventory is not necessarily the answer to poor delivery. I have seen businesses reduce inventory significantly while improving delivery and growing sales when they addressed the underlying planning, flow, and execution issues. I have explained this relationship in Why Do We Have So Much Inventory and Still Miss Deliveries?
Operational excellence becomes meaningful when better execution translates into stronger customer performance and healthier business results.
7. Use technology with a clear purpose
Technology certainly has an important role.
ERP, automation, dashboards, planning tools and digital quality systems can significantly improve a growing organisation.
But technology should solve a business need.
It should not become the objective itself.
For example:
If inventory is the problem, technology should improve visibility and planning.
If delivery reliability is the problem, it should strengthen scheduling and tracking.
If quality traceability is important, technology should make information easier to capture and retrieve.
If management spends hours collecting data before every review, dashboards may speed up decision-making.
The question should therefore not be:
“What technology should we buy?”
It should be:
“What capability are we trying to strengthen?”
Technology then becomes an enabler.
8. Increase the organisation’s exposure
One silent limitation I have observed in many SMEs is a lack of exposure.
When people have seen only one way of working for many years, that naturally becomes their reference point.
They may not even know what is possible.
This is why exposure matters.
- Visit better-performing organisations
- Take functional leaders along
- Attend relevant industry forums
- Study good practices outside your immediate industry
- Bring external perspectives into the organisation
- Encourage managers to benchmark rather than defend current performance
I have always believed:
Exposure creates awareness.
Awareness helps us recognise the gap.
Recognising the gap drives us to improve and close it.
What is the founder’s role?
This is where I believe the founder or business head becomes critical.
Global competitiveness cannot become another improvement project delegated to one functional head.
The founder has to keep the direction alive.
What are we trying to become?
What standards are we benchmarking against?
Where are our capability gaps?
Which gaps matter most?
What are we doing about them?
I have seen leaders who consistently reinforce one clear direction in every interaction.
Over time, something changes.
The team starts understanding what matters.
Managers start taking ownership.
Decisions improve.
The founder needs less follow-up.
The organisation gradually becomes more capable.
Global competitiveness requires stronger business capabilities.
When we look at all these areas together, one thing becomes clear.
Global competitiveness cannot be built through one function or one improvement initiative.
Better machines alone will not do it.
Neither will an ERP, a quality certification, a few productivity projects,s or even winning an international customer.
The organisation itself has to become more capable.
This is where I see a strong connection with the Profitable Growth Capability Framework (PGCF).
The framework looks at four capabilities that need to develop together as an SME grows.
Founder & Business Head Capability
The founder brings clarity and direction, raises the benchmark, makes better decisions and gradually builds an organisation that does not depend on the founder for everything.
Leadership & Organisation Capability
Functional leaders take greater ownership, work across functions, develop their teams and build stronger accountability.
Business Execution Capability
Sales, operations, supply chain and finance work together with stronger processes, performance measures and review discipline.
Scaling & Growth Capability
The organisation builds the market, technology, systems, infrastructure and investment capability required to scale.
This is why I do not see global competitiveness as a separate programme.
It is an outcome of building stronger organisational capabilities while the business grows.
And importantly, those capabilities must translate into better business performance through stronger profitability, delivery reliability, cash flow and sustainable growth.
How can an SME start this journey?
For most SMEs, building global competitiveness is unlikely to be a six-month improvement project.
A more practical horizon could be two to three years.
The journey can broadly move through three phases.
Phase 1: Build clarity
- Understand where the business wants to compete
- Benchmark against the standards required in that market
- Identify the major capability gaps
- Prioritise what really matters
Phase 2: Build capability
- Strengthen critical processes and infrastructure
- Develop people and leadership capability
- Build Process Engineering / Industrial Engineering capability where relevant. nt
- Improve productivity systematically
- Close critical quality and delivery gaps
- Make targeted investments where genuinely required
Phase 3: Build discipline
- Strengthen review mechanisms
- Develop accountability across functions
- Use technology where it improves execution
- Build second-line leadership
- Make continuous improvement part of the way the organisation operates
The sequence may differ from one organisation to another.
But the principle remains the same.
Do not chase global business first and hope the organisation will somehow become globally capable later.
Build the capability to compete.
Then growth becomes more sustainable and profitable.
Building towards global competitiveness
Global competitiveness is not a certificate.
It is not about exports alone.
And it is certainly not one large capex programme.
It results from continuously building stronger capabilities across the organisation.
Many Indian SMEs have immense potential. But as the business grows, relying on the strengths that brought us this far may not be enough to take us to the next level.
The journey requires us to look beyond our current boundaries, benchmark ourselves against the best, understand our capability gaps, and systematically work to close them.
This is also why I believe profitable growth and global competitiveness need to go together.
Growing sales or entering new markets without strengthening the organisation can make the business heavier and increasingly difficult to control.
But when founder capability, leadership, execution and scaling capability grow together, the organisation becomes better prepared to compete, grow and remain profitable.
Financial performance also needs to remain visible throughout this journey. As sales and complexity increase, founders need to understand whether operational improvements are actually translating into margins and cash. My article on using the monthly P&L to improve business profitability explains this connection in more detail.
Global competitiveness is therefore not a destination. It is a continuous journey of building capability and raising the standard of how the organisation operates.
For SME founders who want to understand where their organisation currently stands, the Profitable Growth Capability Framework (PGCF) provides a structured way to assess founder capability, leadership, business execution, and scaling capability, and identify where greater attention may be required for profitable and sustainable growth.
Related insights
- Profitable Growth Capability Framework for SMEs
- Is Your Organisation Really Ready for the Next Stage of Growth?
- Why Profitable Growth Matters More Than Sales Growth
- What Should an SME Founder Review Every Month?
- Why Do We Have So Much Inventory and Still Miss Deliveries?
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