The Future of Work Podcast

Hello, and welcome to this edition of the ILO's Future of Work podcast.

I'm Isabel Piquer at the ILO in Geneva,

and today, we're going to talk about how micro and small enterprises,

MSEs, can go digital,

how can they do it, and how can they afford it.

Over the past decades, markets have become more interconnected,

digital products and services have mushroomed around the world,

and digital innovations have helped to improve

productivity and competitiveness,

but a significant segment of the global economy

has remained largely excluded

from the benefits of the digital revolution.

Micro and small enterprises, MSEs,

tend to be under digitalized and may struggle

to fully exploit the opportunities afforded by digitalization.

This is a problem given that MSEs play a critical role as creators of jobs

and because digitalization is an important driver of growth.

To talk about this, our guest today is Dr. Sandy Chong,

who has a long track record of helping small enterprises with digitalization.

She runs her own consultancy firm based in Singapore and Australia,

Verity Consulting.

Hello Sandy, and thank you for being with us today.

-Hello Isabel, lucky to be here.

-Sandy, the biggest challenge for many firms seems to be the first step.

When companies come to you for advice, what is the first thing they say?

-There are lots of factors,

usually they tend to be either internal or external or both.

Internal factors that are propelling them to ditigize

because they feel like they are losing competitiveness,

they need more efficiency,

they need better productivity.

External factors could be the fact that they've read somewhere

or they've heard somewhere that they are some incentives,

particularly doing this over time.

The government is giving incentives like programs

or even having some consultancy fees

or even some of the technology transition cost

to help companies to step up or to advance a little bit.

They are a combination of a few things, whether it's something

that the owner has been wanting to do for a long time,

or hasn't got the time to explore it,

or maybe do not have the skills within to explore it,

or it could be the fact that the landscape is moving so fast,

it's so competitive,

if you are not doing it, then you're going to lose out.

Those are the two compelling reasons why people come to us.

-What's the entry point for the digital transition,

what's the first thing they do?

-In the beginning, it's always about wanting to reduce cost

or expand their revenue, so they want to reach out to more people.

Particularly at Verity Consulting,

a lot of the work that we do with governments

are to help companies grow internationally.

The kind of clients that come through to us

could be people who wanted to sell their products overseas

or look for a worthy partner to partner up with

so that their products can then be disputed in those markets,

but they're wondering how should they do it.

The most basic thing is to have a website,

but even having a website

like an international calling card is not good enough.

Can people interact with you?

Can people find out more information about not just your products and prices,

but your company's ethos, your company's vision,

whether you are a good corporate citizen and all sorts of things?

That's just the entry point.

That's the beginning of everything.

They wanted to originally come in and say,

"We wanted to expand our market

and then having a look at the internal system.

Like, oh, actually I need to have better database management

or maybe even more sophisticated as in like we have so many suppliers,

and we have so many just-in-time inventory system,

procurement, and also production,

we need SAP."

Those are just some of the common questions

or common need when people come to us.

-What do you tell them?

Can they do it on their own

or do they have to go through another company?

-Basically, when they've been sent to us,

most likely they actually made some inquiry through the government.

For example, in Singapore,

all consultants have to be accredited by the government

in order to help SMEs responsibly.

Most SMEs will go to the government for advice,

and then they then have access

to a list of consultants who can help them.

Some inquiries are very technical-related.

What system do they need to have?

What training do they require to something slightly more strategic?

How do we prepare ourselves from overseas?

Are our current system efficient enough?

What do we require in terms of digitizing?

Say, for example, if you are a transportation company

that transport kids from zone A to zone B

different schools.

It could be something simple as, look, I no longer want to have any more fleets

because I want to make it more environmentally friendly,

but I would like to be able to manage these fleets by having my own app.

It could be something as simple as, look,

I would like to sell my products now overseas,

how do I have an e-commerce platform?

A lot of times, our company will help clients

to identify why are they doing this?

Who are they up against?

What are the markets they're trying to enter?

How can we use e-commerce or digitization to help them achieve that?

-In this analysis, I imagine that the COVID-19 crisis

has been a big game-changer, right?

-Yes. -Because accelerating digitalization

because suddenly they found themselves

not being able to do the work they did on a regular basis.

-Yes, definitely.

In fact, we see, in my consultancy,

both in Australia and Singapore, we're seeing this massive surge of people

really needing help and trying to get assistance to step up.

Even for Singapore,

the Singapore government for the last two years

have been giving out a lot of grants, a lot of financial assistance.

Same thing here in Australia too.

I see that time and time again,

the biggest challenge that SMEs are facing is,

how do we finance this digitalization?

Some of them are aware that they need to get this sorted out

by say the end of the year or beginning of the year,

but they have no idea that there are these financial assistances,

these grants available out there.

Even if they are, they don't know what it encompasses.

Some of them were even very skeptical.

For example,

the Office of Multicultural Interest

in the Western Australian government,

I think in June 2020, was giving out grants to help migrants' community.

People who couldn't speak English really, but wanting to reach out to the world

and basically sell their products a little bit better

across states or outside the borders.

That particular package is entirely free,

so people can come

and they can get the training on how do you actually set up

a website and more importantly, what should you be updating?

What are kind of information that people like to see

during these really challenging times?

After that, it is followed by say a two-hour coaching session,

free of charge, all paid for by the government.

A lot of these SMEs that signed up, they went to the training

and they weren't sure if the consultancy bit was paid.

They were worried like, do I have to pay for your advice?

I said, "No, it's covered by the government.

Take advantage of it.

Show me your website and show me any kind of challenges

that you have with regards to digitizing, and then we can advise you from there."

The lack of knowledge is one thing, the lack of knowledge of options out there

is another thing.

Of course, this is not just the financial assistance.

A lot of it has also got to do with internal,

as I mentioned before.

The owner has to be ready for it.

They have to also have the right culture to transit.

Also, the customers that require now ordering online,

receiving the products online,

and basically getting reorders online.

Have you considered all that?

I think these are really interesting things

for people to consider when they want to look at digitization.

Some people have no idea how to build their shop.

Then they were saying that, look, I can't just depend on domestic market.

How do I attract buyers from overseas?

How can I engage my customers online more effectively?

If I sell services,

what if my clients are B2B,

how am I going to do that effectively online?

How do I drive sales?

How do I get all these reviews and share this socially?

How do I track success online?

All these are some of the key questions

that needs addressing

before people can then move forward and say, "Okay, this is what I need to do,

this is where I need to get data,

this is where I need to get marketing,

and this is where I need to get the right platform

and backend support."

-We're talking more than digitalization,

we're talking about a complete change of the culture of the company?

-Yes.

-Also, there is economic burden,

so how much it's going to cost, and how to access those help.

There's also the challenge of training the employees to new technology.

-Absolutely, because otherwise, it's going to be very resistant.

I've seen this time and time again with a lot of my clients,

whether they're a childcare service company,

or a transportation company, or a chocolate manufacturing firm.

Obviously, as a CEO, you're always trying to balance revenue and cost

and you can definitely see the efficiency and the sustainability factor

when you digitize.

The problem is, what if you have employees who have been with you for over 20 years?

They're loyal, they're good at what they do,

but they're just resistant using new technologies.

What do you do with that?

A lot of people couldn't get their heads around it

and that's why conflicts happen.

Another key challenge is also

because technology is very much sometimes associated with jargons

like big data, digital marketplace, platforms,

Industry 4.0,

online marketing, internet things,

and all these are just really overwhelming for people to understand what it means.

-Yes, it can be a little scary

-for these companies. -Exactly,

but when you narrow it down or when you try and filter it down

to what this means for us and what this means for people,

how can we actually accommodate our changing needs

and customers changing needs

and how can we see this as a new business model,

then it will be easier for your employees to buy into this.

They're not going to say, "Oh, my God, this is another tech thing,

another fad.

It's going to change next year, why should I adopt it?"

I think the human factor is something people really need to be aware of

when it comes to digitalization.

For consultants and for the employers or the owners, it's straightforward.

You want to get better returns,

you want to make the process a lot more streamlined,

technology is the answer,

but the people who are going to deploy this,

the people who are going to handle your customers straight ahead,

and people who are going to do day-in-day-out operations

are going to be employees.

Educating them about this transition is actually extremely important

and key to success.

-You don't want to change too much who you are

because that might precisely be your entry point

into a market where everything is the same.

It's difficult balance there.

-You're mentioning Singapore and Australia,

so you're talking about countries that are aware of what's happening

and they give aid.

What about if you want to digitalize in countries

where there's not good infrastructure, particularly high-speed broadband?

This is almost impossible, right?

-This is a real issue as well for developing countries.

Then basically SMEs or even chambers of commerce

or larger industry bodies, they to be able to lobby,

or they need to be able to feedback this information to the government.

Simple things like agriculture in Malaysia at the Cameron Highlands,

during the COVID crisis, during the lockdown,

the farmers were unable to sell their products

because of all these restrictions in logistics and transportation.

Then they had to dump all their produce due to the storage constraint.

In Singapore, we import a lot of these produce to our country

because, again, Singapore doesn't have a lot of land, natural resources.

What these farmers did

was they turned to all these e-commerce platform

and they sold 70 tons of produce online within three weeks.

-Wow.

-In many ways, a lot of businesses

who are not even in the tech sector,

who had never thought of digitization,

who never thought that e-commerce can really apply to them,

are starting to realize that it was something

that they need to look into more seriously.

If, say, for example, you're the body of agriculture

or primary industry feedbacking that information to the government

and also to the industry chambers is very important

so that they can then do something about the infrastructure

because the infrastructure is extremely important

in order for people to move goods around,

in order for people to move and exchange information promptly.

-Basically you are in or you don't exist.

It's not even a choice right now.

-Yes. Absolutely.

For example, I give you another example for Singapore.

For the longest time,

I don't know if you've been to Singapore,

but we have lots of food courts and hawker centers.

It's like one of the charms of being in Singapore,

food is amazing and you can get them really accessibly

and very cheaply in Asia.

These hawkers, these people who sell these amazing Asian food,

before that, there was only 2,000 of them that accept e-payment,

all of them just wanted to accept cash.

Because of this COVID thing,

suddenly there's an explosion of these hawkers

adopting e-payment because of contactless payment,

which is good and clean,

and more importantly, they don't go out of business.

Whether people are eating there or taking away,

they can now allow people to just buy the stuff and pay online.

About 10,000 store holders in Singapore actually went into this online payment,

before that it was only 2,000.

There was clearly a big jump and it worked

-It worked. -Exactly.

-They were happy about it.

-Yes, absolutely. [chuckles] -[chuckles]

-The thing is that once you've started going digital

you have to keep on going digital.

You have to keep up, you have to upgrade

like we all do with our computers.

That also is another dimension of the problem

because you always have to be there and you don't always have the knowledge.

That's another problem for them.

-With infrastructure as well, people can be very creative.

If you are not interested in e-commerce,

look at mobile commerce.

Everyone has a mobile phone.

Even before like 10 years ago,

there may be restricted landlines in Vietnam

because of all the landmines

but average Vietnamese would have access to mobile phones.

If you can tap into that where you have a population

that has a lot of access on social media

and they use mobile phone 24/7,

then it's a very good way of encouraging people to use these apps

and exchange information, pay online,

or get your accountings sorted online,

issuing invoices online.

All that can be done now at our palms using mobile phones. Yes, absolutely.

-It seems that between COVID and new technologies

like 5Gs and so on, it's going faster and faster, right?

-Absolutely. There's definitely a high uptake of mobile internet access

in some of these countries.

The partnerships is another good way of overcoming some these challenges.

During this COVID thing, it's all about

trying to encourage people to go into partnership,

sometimes maybe even with your competitors or with your value chain partners.

Another way of doing these kind of partnership

is to look at the government and see

are there any platforms out there that requires participation?

Can the industry or the chamber of commerce

go to the government and say, look,

why don't we co-create some sort of platform

to make it easier for people to exchange goods and services?

Those are just some of the ideas that can trial and error.

I think most important thing is

for the government to listen and to consult

some of these industry bodies or networks

so that they understand

what needs to be done to help their businesses

to take up digitization and to stay relevant.

-As we were saying before, it's about going into mainstream

and digitalize yourself, but not losing yourself.

You'd have to change the culture of your company,

but still be who you are, which is also challenging.

-Yes, very challenging. Extremely challenging.

-Thank you very much for your time.

Our guest today was Sandy Chong, principal consultant of Verity Consulting.

Please join us again for another edition of the ILO Future of Work Podcast.

Goodbye.

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