How creativity can solve SMEs' woes

This is a season where much focus is placed on SMEs again. At SME events and through the media, we hear various ministers speak of plans to help SMEs. Besides monetary assistance through the Budget, what do SMEs really need to raise productivity and value?

What strikes me is this – the productivity problems raised by various ministers, from a business strategy point of view, represents great opportunity for SMEs to become world beaters. However, the fact that even our ministers view these problems as problems and not as opportunities, could in fact reflect a deeper problem – that we as a nation, from top to bottom, are not thinking out of the box and simply following the crowd. It could be a national problem we are facing here.

One of the phrases I heard during one of these events with national level leaders is this: 'When it is a problem for everyone, it is not a problem anymore.'

Really?

We should say that if it is a problem for everybody, it is a perfect opportunity to be different. When oil prices were low for everyone, John D Rockefeller thought out of the box and bought the company that controlled the construction of oil barrels. Oil, no matter how cheap, needs to be shipped and stored.

Why believe that you must suffer the same fate as everybody else? To accept that fate is the problem, not the problem of the business itself. Like Rockefeller, we need to play a different game, but how?

At the same session, another leader raised the issue that productivity is the hardest to raise for service sectors. He asked a question to illustrate his point. Using the spa industry as an example, he asked, 'How can a masseur massage three people at the same time?'

Is this impossible, or unprecedented? Is it a case where just because it is never done before, therefore it is impossible? When that minister raised this example, I reflected on another question asked many years before: 'Can a surgeon operate on more than one person within the same theatre with no lost of lag time in between surgeries without compromising quality and safety and at a price so low that even the poor in India could afford?'

The answer is yes. The answer is found in the Aravind Eye Hospital in India. This eye hospital was founded by a visionary retired doctor who wanted to help the poor. Without huge financial backing, he started the hospital with his pension.

The humble hospital started by his family members, whom he roped in to help since 1976 till today, has done more than 3.6 million surgeries, treated 29 million patients for eye disease, won several awards, and became a case study for Harvard Business Review on a business model that is both sustainable financially and socially powerful (Their annual revenue is close to $20 million with almost a 40 percent profit).

Today, about 300 hospitals emulate their system. They also run one of the largest cataract replacement lens manufacturers in the world, beating the manufacturers in Western countries in terms of price and quality.

All this without financial backing and the latest productivity grants from the government.

The founder, fondly known as Dr V, was asked how he created a system that could offer unprecedented healthcare to the poor without incurring high cost and compromising safety and efficiency.

His answer – creativity. He thought out of the traditional medical services box and looked to McDonalds for inspiration – how could a system that provided millions of meals of the same quality across the world be adapted for medicine?

People laughed at him initially, saying that eye surgery is much more complex than selling burgers, but the determined doctor, driven by a passion to eradicate cataract among the poor, studied the fast-food model and applied it to his hospital. The rest is history. He created a medical phenomenon in the world. Who would have imagined that top medical institutions from the West would come to learn how a poor Indian doctor revolutionised eye care?

The unprecedented is not the impossible and we should not confuse the two, lest we stop looking outside the box.

In one of the news reports, a national leader, in explaining the Budget, raised the point that productivity needs to be raised to pay high wages. I agree, but I would like to take the point further that in matured, first-world economies like Singapore's perhaps we need to stretch our mindsets to look beyond productivity as the only game, but to change the game from productivity to hyper-value creation.

Can we pivot products or services from one level of value to another?

An engineer working for Nissan named Ng took the humble rubber band and turned it into an $80 million business by re-orienting its use to become the loom band. What made the loom band so popular is not because rubber bands can be used to make things, but it became a social activity for family and friends to make objects out of the loom bands and give them to each other.

It started with Ng making things with his children using rubber bands, but he found his hands too big to manipulate the bands, so he created some tools that enabled adults to make objects out of these bands so that parents and children can do this together. Then he started to video how certain items are made and put them onto social media to inspire people to make gifts. It took off!

People started to buy the loom bands to enjoy the experience of making something nice together and for one another. As Ng says, the secret of magnifying the value of the loom band was found in turning a humble product into an enriching experience.

By combining concepts like family time and the humble, low-value rubber band together, he was able to re-engineer a simple, almost worthless product into a $80 million global business selling family and social bonding experiences.

My daughter loves the loom bands. The loom bands created an opportunity for her to make gifts with her friends and selling the items they made – it is the experience that made the difference. Who would have imagined that hyper-value across the world could have been created out of a simple rubber band, something that had existed for a long time as a near worthless product?

So how do we help SMEs develop the mindset of creativity that will allow them to look at their industry, products, and services from a different angle? Can it be taught? Should it be funded? Or must it be caught?

Perhaps we can learn from an Italian SME boss in the cashmere textile business. Brunello Cucinelli runs a cashmere business in a small town called Solomeo in Italy. Cucinelli runs his business with an interesting philosophy; he believes that his business is a humanist enterprise i.e. it is focused on the traits that make us human.

Cucinelli believes that creativity is the heart of a business that creates beautiful textiles, and he reflects that belief in a curious way. He pays his staff and their families to attend cultural events like concerts, art exhibitions, etc., because he believes that 'creativity is where beauty is'. He therefore invests in his employees' creativity by encouraging them to open their mind through art. He calls it a 'cultural allowance'.

Is Cucinelli being frivolous? I would imagine Singapore frowning on this as a 'waste of money' because creativity cannot be measured by KPIs or by an annual report or by a checklist to satisfy the grant disbursers. Singapore would probably fall back on using pragmatism to justify why we can't invest in creativity.

But Cucinelli has been in business since 1978, and has grown his business to a respectable revenue size of US$473 million. Amidst all the economic turbulence and the general decline in manufacturing of textiles in developed countries, in 2015 the business grew a very credible 16 percent.

Perhaps there is some wisdom in taking a 'humanist' approach to solve SME problems after all.

Creativity as a weapon to boost productivity and value for our SMEs needs to be developed first by changing the way we look at our businesses. But if we lock ourselves in by looking at what was unprecedented and declaring that it is therefore impossible, we stop finding solutions.

If we approach creativity as something that must be pragmatically measured and calculated through reports, then we miss the forest for the trees. Unless we accept that investing in creativity is, like all investments, risky, we will lose sight of an important skill set that could alter our SME productivity woes.