Value Constellation in SMEs: The New Frontier of Entrepreneurship

Value Constellation in SMEs: The New Frontier of Entrepreneurship : A Research paper by : Authors : 1) Anil Shastree and 2) ShastreeAnil Arundhati

Abstract

The dye is cast. They are small wonders. They give big push to industrial boom. The SMEs contribution to boom is fairly large. While taking pride in SMEs, one has to be conscious of numerous anxieties faced by promoters. Availability of low cost funds and competition are some of the major growth constraints. In India it takes 30-35 days to export goods to US while Chinese manufacturers are able to ensure that their goods reach within 14-15 days. Thus, Indians are at disadvantage leading to extra cost. The productivity and labor regulation is also a matter of concern. The out put per machine is 15 garments in India while it is 25 garments per machine in Bangladesh. SMEs, small size enable competitive flexibility to beat the ever changing environment; most SMEs are in the need of partners, who could provide them with platforms to augment their competitiveness. The competition is just not local but it is global and they need to take help to compete better. The financial services are improving; the help on technology up gradation, acquisition, and critical infrastructure is available. There are added functions like business and management profile, geographical reach, length of client relationship, trade references where assistance is available and above all, representations for budget provisions are also made to make this sector competitive.

This paper presents the model of 'value constellation’ to maintain the competitive entrepreneurship. Value constellation-customer oriented inter organizational strategy is one of the solutions to remain competitive through knowledge integration i.e. mix of knowledge management activities, in respective areas. The paper deals with formation of supply chain networks, business networks, research networks and satellite networks. Thus there can be purposeful cooperation with other separate judicial identities. It is virtual joint ventures. This new type of competition forces traditionally operating SMEs to team up with each other in a customer-oriented network However, these networking strategies are likely to emerge only when SMEs

get willingness to breakaway from the past traditional patterns of interaction and mental attitude. As they get unlocked from their traditional competencies and their financial and strategic resources they develop interactive strategies covering the entire value system and build atmosphere of trust. The paper identifies difficulties of formation of customer oriented network i.e. two types of value constellations-self generic truce and others based on FDI-foreign direct investment. Above all, this can give substantial capital advantage (lower cost), quick changes in manufacturing processes, higher asset utilization and skill specialization.

It takes clear vision, a steady hand and discipline to avoid quick fix solutions. Indian SMEs that nurture and expand their historically built critical manufacturing competencies have to face the challenge of 1) Mission 2) Competition3) Performance 4) Change to build a competitive and sustainable model. This is possible through knowledge management. Business associations and local institutions may play a crucial role in changing and shaping the emerging network among the SMEs.

Keywords: value constellation, small and medium-sized industry, entrepreneurship, cluster, value chain

Beginning with talent search:

Comparing to Harvard, MIT, and Princeton put together, it is experienced that gaining admission to (IIT) Indian Institute of Technology was more difficult than getting into the best of the Ivy League schools in the US. It accepted 3500 of 1,78,000 applicants in 2003. These talents have been making an impact globally. They are the part of what can broadly be classified as knowledge sector. Looking at the Patent Cooperation treaty (PCT) from developing countries, the top 50 list is created every year by the World Intellectual Property Organization (WIPO) in Geneva. CSIR was tied at thenumber one position along with Samsung in 2002. Some of the Indian Pharma and Biotech companies were also making their presence. There were around a dozen of universities from China, South Korea, Brazil and Singapore in top 50 lists; but not a single Indian University or an Indian Institute of Technology. It was a sad reality. Whither India? Do we understand the meaning of “economics of knowledge?” This does not augur well with our country. Indian talent need to recognize that the traditional factors are less important in comparison with technology. The source of technology is science-rooted in knowledge. World wide knowledge revolution is on. International trades are moving to knowledge intensive goods. The world’s major growth industries-microelectronics, biotechnology, telecommunications, designs and materials-are already knowledge industries. Is India producing the products to fit into the system? Are our educational curriculum spreading wings to fly with entrepreneurship creation in fast pace of the changing knowledge industries? Are our systems designed for creating wealth in line with creating the knowledge base

manpower? We must retrospect. Are our SMEs fostering “I” as Innovation and not as Imitation or Inhabitation? To survive fierce global competition innovative means are to be adopted, inculcated and imbibed right from the beginning through our education system. Our systems should be very objective, focused in creating wealth through the scientific research. So the systems should be based on the objectives of wealth generation through knowledge base and scientific research. Our high caliber manpower and institutes of higher learning can encourage the economic growth through entrepreneurship. This is definitely not a dream but can be a reality. Indian Institute of Science Bangalore and Institutes of technology and management are striving to produce successful entrepreneurs. There is a very interesting report about The University of California. The University has won 42 Nobel prizes so far. At the same time, based on the scientific research done in the University several biotechnology companies have been set up around the campus with their market capitalization reaching a few billion dollars. Over 80% of the employees of these companies are graduates of this university. In general, it is observed that many Nobel Prize winners have acquired a large number of patents. It is obvious that they have understood the wealth creation potential of scientific research. We can bench mark such example. We do have scientists like Dr. G N Ramchandran and our SMEs should look forward for growth through interaction. Is India short of talent? The answer is NO.

In search of success:

If SUCCESS is the game, and then the rules can be decided. There is no universal definition of “success” of business. Every one has their individual vision of what it means to be fulfilled. Success means many things. It is both, a concept and an experience, a moment and an evolution in new economic environment. It is a merging of aspirations with reality, the weaving of hopes and dreams with daily tasks. It is simultaneously tangible and ephemeral and gives the illusion of being universally quantifiable. Success is externally evaluated yet intrinsically experienced; it is both the objective and subjective. The true essence of success, beneath the visible markers and goals lies in own personal sense of satisfaction and fulfillment. The popular cultural definition of success is based primarily on three elements: power, money and fame. It is assumed that if an owner or a manager is in possession of great abundance, has status or power or is recognized as a celebrity then s/he by society’s definition is successful . If s/he has any one of those three requirements s/he qualifies. Knowledge Management has given a new dimension to this story. It makes the focus on the people, multitude of people who are successful in their own right and who define success by entirely different set of standard. These are the people whose bank balances may not be note worthy, who do not brandish significant authority and who are not necessarily recognized when they walk down the streets. But they are the “Knowledge wizards”. They should know how to apply the knowledge to practical reality. Knowledge alone is not enough unless it is put to practical use. Raw materials, in fact have, no value of their own, but acquire value in terms of the future they

represent, i.e., what will be produced at the end of the value-added chain. Exactly on the same line, specialized knowledge has no meaning by itself unless it is put to practical use. This factor is to be added with an element of time. Many small Indian entrepreneurs are competitive; they keep adding greater value than its competitors for the utility of the product keeping in mind the time pacing i.e. at reduced cycle time. Each step in the value-added chain reflects some competency or expertise, applied to the developing product or market. Those competencies are unique or special to a particular company (as distinct from competencies that are general to an industry or to doing business itself) and are central to the value that is added by that company. It sets the rhythm for the company business and they are called core competencies. Just having core competencies is not enough it should be dense. The density decides the make or brake in the dynamic market forces. Market is the intelligent place for testing competencies. They are the drivers of success in high velocity, intensely competitive industries. The specific constellation of core competencies in the value added chain of a given company defines the market identity and competitive advantage of that company over its competitors. It is reinforcement. This puts the concepts into context and shows how theory can be applied in practice to build sustainable competitive advantage and ensure future growth and development. In present Indian vibrant and increasingly competitive market SMEs are forced to innovate to remain competitive. This means constantly searching for ways in which to improve products and services, developing new offerings and introducing improved working methods. This ability to adapt to changing business environments is crucial for economic success. The solution is in the individual contribution to growth of the organization. In SMEs every employee has to share his expertise and create organizational knowledge which in turn helps to create genuine, sustainable competitive advantage. Managers or decision takers have to cope with the changing business environment while time pacing is the critical to success. The difference between those companies that flourish and those fail is often a matter of structure and its strategy. Capturing value requires new organizational model based on knowledge and relationships or organization’s competencies and customers. It is about placing company on value chain i.e. positioning company in the right place with right business, right products and right value added activities. Supply Chain Management (SCM) has emerged as one of the most powerful business improvement tools. Suppliers, manufacturers, retailers and host of service organizations have discovered that they must either transform their operations and tactics or be beaten by competitors. It is reported that SCM influences about 64% of all costs in a manufacturing company. In India such cost would be around 70-80% of turnover. This means that there is potential for savings and at the same time improving competitiveness, process efficiency and enhancing effectiveness of the system. It is the need of SMEs.

Areas of joint working:

The important area where in the SME looses the value is when the expert within leaves the organization. There is a risk and loss of knowledge when key employee

departs. There is a need to protect from this risk. It is the culture of watering the plant to grow that helps to minimize this risk. But the risk can not be avoided. The SMEs in our survey have usually adopted the path of job satisfaction for such experts but monetary incentive is found to be lacking. To enhance the monetary gain some unique solution was adopted by some small scale organizations. It was observed that more than two companies had pulled their requirements needing the synergic expertise and thus share the time of the expert. These companies are the members of their supply chain unit. To explain further, a common welding engineer is employed for the specialized job of stainless steel welding by three SMEs together and the engineer shuttles to these near by industries. Companies preferred to hire this expert compared to consultant as they have full control over the employee. They can get the services for required time particularly during the development stage of the product. The gain is found to be more than the investment. The philosophy was that of just not the technology transfer but that of knowledge transfer. The knowledge levels of the concerned employees varied in three organizations. There was need of tacit knowledge in one organization, while in other two organizations there was need of explicit knowledge (hard technology).There is a relationship between the need for tacit knowledge transfer and the explicit knowledge transfer See Fig 1. Obviously as the economic development progresses the need for tacit knowledge increases.

Figure 1

Based on the figure it is concluded that the desire to obtain more tacit knowledge increases and the desire to obtain more explicit knowledge decreases with the levels of economic development. In the small scale owner driven companies, the owner is thirstier for explicit or hard knowledge such as specific technology to manufacture a product that enables people to survive than for tacit or soft knowledge so that they have sustainable growth. The second example is that of office administration and personal function. In second example, the legal expert manages the personal department of one company and handles the company legal matters of the other

associated companies. The function of company secretary is managed by some one of the consultancy firm. The firm manages the show for many companies and thus same expertise is available for all the group of companies. Thus, quality legal services are availed as and when required by the companies and the expert is also monetarily compensated. There is a constellation of companies on one side while there is job satisfaction and economic benefit on the other to the expert. In the area of manufacturing, the new production methods implementation related to lean manufacturing was observed in Industries association. There were seven companies who were participating in this programme. A common consultant was hired jointly and exposure was given to senior officials through class room teaching. The companies were manufacturing different products but all belonged to mechanical engineering. A common programme was drawn for all companies and help was sought from educational institutions for conducting the project work through students. The students were the beneficiary, the companies were fully benefited and consultant’s time was gainfully utilized. The pulling of companies reduced the monetary burden also. These companies had realized that the emphasis must be on “finish line” i.e. demand rather than the starting point i.e. supply. These companies’ managers usually don’t give up on themselves and don’t give up easily on subordinates either. The next area was the structured access to data, information, knowledge and expertise held by individual employees. As observed in the survey, most of the SMEs have adopted computer in their routine working while the software updates and some change in the requirements is essentially handled by them through educational institutions. Companies have applied information technologies to gain an advantage over slower reacting networks. Despite many pitfalls these companies have made substantial improvements. The students are put on the projects and the problem is assigned in generalized way. A general solution is obtained and then it is applied to the specific situation. It was also observed that they use ware house concept for data storage; particularly for the old products. There is a need to have trust and sincerity of efforts among the participants. These companies had realized that it takes far more energy to improve from incompetence to mediocrity than to improve from first-rate performance to excellence. They join hands with big companies and learn from them to be competitive. Big companies like Escorts, Larsen & Toubro Limited etc. have always hired international consultants to get competitiveness in business. Only what to do knowledge is not enough; but what is needed is the change of mind set. Mahindra started with Sahyog programme as a part of constellation working with dealer but later it became the responsibility of dealers as the sales mindset continued to be traditional and kept them away from implementation. Other example is Telco. They established external relationship with suppliers and distributors. They applied e-sourcing for the procurement of raw materials and build long term relationships with vendors. M&M for a long time was looking out for a solution which enables it to enhance its business process of communicating or transacting business documents with its suppliers. The objective was that the solution would enable M&M and its suppliers to plan efficiently to achieve “Just in time” supplies which would in turn

reduce the high cost of inventory for both M&M and the suppliers. The solution was applied in e-busines. The site MahindraSuppliers.Com permits exchange of information on business documents such as purchase orders, amendments, delivery schedules and payment details. This solution integrates the supplier side with the existing SAP based system there by avoiding double entry of data. It has a single window for suppliers to get all related information across all M&M plants of both Farm Equipment Sector (FES) and the Automotive Sector (AS). A single login is given to every supplier even though he may be supplying to either or both plants. It is seen that the suppliers have to change the fundamental approach- DNA. The teaching–learning is the best process as observed with SMEs. The DNA has a couple of key components: the global mind set, relentless focus on growth and strong belief that leaders are teachers. The site is currently in the process of automating the procurement of raw materials and extending the benefits of SAP to the vendors through the internet. The site uses the same technology as MahindraKisanMitra.com. It is seen that SMEs behave according to how they are treated. They have high regards for their teachers.

Implications of joint working and practices:

It can be said that knowledge transfer is positively affected by the levels of economic development of the recipients. Usually constellations are preferred by the Small organizations as there is more of flexibility, less of financial burden, less of individual commitment and more of economic gain. They are more agile i.e. they are delivering value to customer, they are ready to change, they value human knowledge and skills and finally they are forming virtual partnership. In addition, the thinking of the constellation participants is that they are with Market, at least partially. Constellation is the preferred vehicle for technology transfer also. It was noted that Japanese car companies design and make as 30% of the items that go into their cars. American from 30% to 70% . So automobile is a one of the big sectors where technology transfer to knowledge transfer is taking place in SMEs. Japanese companies are firmly involved in the infrastructure supply chain. They make a surprisingly large fraction of their own key manufacturing equipment and write much of their software. In India the trend is not much different. There is good scope to form the constellation and be competitive in this auto field but the issue involved is systematic creation of decomposable subsystems and careful description of the requirements. The issue then becomes coordinating the different organizations and companies whose job is to deliver those requirements manufacturing is merely one of those requirements. It is reasonable to say that Industrial associations should initiate the group formation for technology transfer and change is the choice of individual. It is not possible to transfer the knowledge if there is too big gap in terms of economic development between giver and recipient. The actual knowledge needed by SMEs was that ofmanagement know how in tacit form though in certain cases explicit knowledge is also in demand for sustainable advantage. The main channel of explicit knowledge was meetings followed by demonstrations. The training of the employees is preferred with on job

working under the expert supervision. One of the main influencing factors which help the knowledge transfer was language of communication. So long as expert can convey in the language which is used by the shop, it is very clearly understood but with English as the language of communication, it was observed that the local workers had little problem in understanding and leave alone the implementation. Local language is the best tool. Common objective continues to be the main influencing factor in knowledge transfer while culture takes the next place. Mutual benefit rules as a primary motivating factor to work for and work with while primary success factor is cooperation. Mutual respect is the next factor. It is observed that there was spirit of togetherness during any high price order processing particularly when that order was in competition with any multinational. This helped in resolving the principal factor QUALITY. The frame work for effective knowledge transfer is given in Figure2.

Figure2

Frame work for effective knowledge transfer:

What makes change happen? The answer is willingness to learn to change for growth; the shift from “how” manual to “why” manual. Why person approaches work as he or she does? It opens up the assumptions, beliefs and experiences to colleagues, bosses, and subordinates. This process takes time and intensive work to happen. The survival of constellation based on authors experience includes the four basic building blocks: 1) Idea of Innovation 2) The value system and culture 3) the organizational values 4) growth orientation with uniqueness. The idea of innovation lays out person’s theory about organizational success in terms of products or services, distribution channel customer segments etc. It states the set of assumptions and beliefs the person holds about what will make a company profitable in the market place. The value section of

thinking encompasses an individual’s personal ideology such as strong belief in honesty, integrity and of course the values he or she endorses in supporting business goals. The approach usually is that of openness, transparency and functional loyalty. They look for ideas all over and map our business. The next point is motivational aspects. There is no room for demotivation. Usually people are motivated when they understand the competitive context of the work and further they are expected to deliver results. The basic belief is energy is contagious. The faster and wider we roll out an initiative the more the electricity spreads. This also involves individual thought process to take decisions. There is no room for unethical actions. The last point is learning which makes people better leaders. In competitiveness, implicit knowledge becomes explicit and can be questioned, refined and honed. This also includes the critical developing task. Typically, leaders develop other leaders. The influence of one person’s expectations on another’s behavior is by no means a business discovery. The uniqueness gives leaders an explicit body of knowledge to import It helps them to construct a framework for their own ideas which help others to build knowledge. In Indian context it is important to foster innovation or knowledge creation to SMEs; they are also involved in innovating new processes and products. The main source continues to be the parent company for which they manufacture parts. The knowledge edge is also through educational institutions. It is necessary to create the strong environment through the curriculum so that SMEs are supported for knowledge creation.

Work pattern for interaction: basis for constellation formation:

If a company does not have specific core competencies needed to establish market identity and competitive advantage that are durable and robust, that company will need to buy or create those competencies that are missing, or will need to develop alliances to provide them. Any consideration of the true worth of a company must take into account not only the usual array of assets and liabilities and its hidden assets (intangible but real factors such as R & D, labor relations, leadership, vision, etc.), but also an assessment of its core competencies, its value added. This helps in resolving the dilemma of how fast to move further and how much. Of course, more opportunities also mean more uncertainty and greater risk. In dynamic market, strategy no longer has a matter of positioning a fixed set of activities along value chain. The focus is value creating system. Every member of the chain has to create value or co produce value. This can lead to reconfiguration of roles, realignment of relationships, inviting new players if need be and improving fit between competencies and customers. The family based organizations have felt the need to join the constellation particularly for technology up date. It was found that technology moves faster than the mind set change. The change of mind set has usually taken more time than the time taken by new technology to set in. It takes years may be a generation for change in mind set while technology change is much faster. Thus up gradation is essentially required for family run business. Those small companies who had half heartedly participated in change have not done much progress and did not form team

member of constellation. There was resistance to form constellation with foreign team while Indian partner is preferred by these companies. Constellation revolves round two factors 1) economic growth and 2) technology. The technology consists of four closely linked elements viz. 1) technique, 2) knowledge, 3) organization and 4) product while knowledge contributes the major part of technology. Other elements which contribute to constellation formation are: culture, infrastructure, people relationship and mutual respect, geography, process, framework for managing knowledge. The constellation exists on all or some of these factors. The companies based on their core competencies decide their partners to get placed on the value stream while maintaining their competitive knowledge edge. This gives emphasis on market eco system. This encompasses creation incubation, dissemination, protection, renewal, monetization of knowledge in market. It includes institutions to do all this. This results in more efficient way of doing business and saving in cost. This also means moving away from rote learning. This takes the organization to new level of growth as there is knowledge sharing. Specific type of cluster formation has its own advantages and disadvantages. Thus constellation is also used as a tool for the survival in SMEs. The sense of belonging or connectedness is an important element, for there is a basic human need to feel that we belong, to feel accepted and supported by others. This sense of belonging is of great significance since feeling rejected by others is perhaps the greatest detriment to self-esteem. We all want to feel that we belong, to feel accepted and supported by others. We need to feel that we are part of a group of peers or an organization that is larger than ourselves. Being a member of a winning team or a special organization is one way of providing this feeling. The uniqueness element is related to developing the sense of personal competence. This is a critical aspect of self-esteem and motivation. Personal competence comes about as individuals make progress toward their goals. Managers as teachers can assist in this step by pointing out options and possible ways of achieving the goals that have been set and allowing members to select the means they feel would be most effective for them. As they begin to make decisions for themselves and learn how to use resources available to them to achieve their goals and successfully accomplish what they set out to do, they grow in the sense of personal competence. Throughout this process the managers’ role is to help members evaluate the choices they have made, provide encouragement, support and feedback. Mangers understand that indifference says to subordinates,” don’t think much of you.” The experience indicates that the alliance influences the competitiveness towards higher side. Each alliance has to be self sustainable. This leads to win-win situation. Relationships provide the foundations for the business activities and it should not be beyond capability to develop CUGs-currently useful generalizations. In other words, Companies can only time pace as fast as their internal capabilities will allow them to move. It takes days to produce something, weeks to develop a new marketing promotion, months to hire and train new people years to develop new products nurture management talent and build reputation for quality all these processes interact continually. The real leverage in most management situations lies in understanding dynamic complexity and not detail

complexity. Developing a profitable mix of price product or service quality, design and availability that makes a strong market position is a dynamic problem. Improving quality, lowering costs, satisfying customers in a sustainable manner is a dynamic problem. The essence of discipline of system of systems thinking lies in a shift of mind: 1) seeing interrelationships rather than linear cause effect chain and 2) seeing processes of chain rather than snapshots. This will help to build learning to recognize types of structures that recur again and again. This will help to see the deeper patterns lying behind the events and the details.

The art of living with JVs in India:

Can SMEs follow the path of their big brother? Certainly NOT. But JVs do help in making a joint to the world till it is live. SMEs have to “make hey when sun shines”. SMEs are the integral part of the main /parent industry and in JVs the business conditions are created by the parent company for SMEs. India Inc’s tryst with joint ventures hasn’t been encouraging but there is always something to learn from them till they last. There are two dilemmas that rattle the human beings: how do you hang on to some one who won’t stay? Second, how do you get rid of some one who won’t go? This is a discomfort in the clutches of partners. Three recent high profile JV’s that seem to all the trappings of a bitter marriage are Britannia Industries in which the Wadia group and Groupe Danone of France are equal partners Hutchison -Essar the partnership between Hong Kong based conglomerate and Ruias and HDFC-Chubb an insurance JV in which the partners appear to have different strategic vision. There is a clash of ideologies and culture. Partners may see the benefits of going alone. This is not all. Godrej-Proctor & Gamble joint venture came apart in 1996. More recent is Tata-- Birla partnership in Idea cellular. Finally one can conclude that JVs in India last for short time. The reason for getting into JV may be an advantage that one does not posses. Indian company gets a chance to know the working of MNC while for MNC it is a presence in India. Why JVs fail. The analysis indicates the following: 1) Change of strategy-India ceases to be a prime market for outside company. 2) Regulatory changes-This is beyond control. This could work against JV when either the limit on FDI has not being hiked in time or it has to be reduced. Insurance has been a sector where the 26 percentage FDI limit for some time now has not gone down too well with the foreign partners. 3) JV doing very well. If JV is on very good wicket, one of the partners becomes very keen on increasing its holding which is not acceptable to other partner. Suddenly a scenario like 50:50 JV becomes hard to manage. 4) The partners decide to do it alone sometimes having partner can hamper growth prospects. In case of Tata Telecom the Tatas decided to sell their holdings to other partner Avaya Inc. It worked well for both. 5) Lack of transparency. It is very important that the ground rules are laid down well in advance. If information is withheld it can cause considerable levels of mistrust among partners. There is a case of Hutchinson_Essar JV where lack of transparency was one of the key reasons for current state of affairs. JVs are back in fashion in NEW INDIA. Tata Motors-Fiat, Mahindra-Renault, Kalyani Group-Singapore technologies Kinetics,

Pantaloon-Alpha group, etc. What makes this happen? The investigation revels the following 1) Technology-The foreign partner can bring high level technology while Indian partner has good understanding of Indian market. 2) Geography, this could be a case where a foreign player has a presence in many key markets and India is necessary to complete the story. Insurance is the relevant example where large global players are there.3) Regulation- This is normally a case when highly regulated sector opens up. Insurance which for a long time was closed to foreign investment today allows up to 26% equity participation. This has seen a flow of foreign players with players like Bajaj and ICICI being the Indian partners. 4) Sharing of risk and capital, this includes sectors like heavy engineering that require large amount of capital apart from technical expertise. Here both the partners look for a scenario where risks can be equally shared. 5) Intellectual exchange, here a sector like legal business could serve as an example. Though there is no clear cut law on entry of foreign firms the intellectual advantage at both ends is hard to ignore.

SME Constellation - tomorrow’s winner in India:

Learning has to take place on organizational level while working with constellation formation. It refers to the organization as an identity, as a joint system by itself above the workgroup and therefore to something that is characteristic or important across individuals and workgroups. Just as individuals can be replaced in a work group by someone else who carries out the same function, so the workgroup can be replaced by one that is functionally isomorphic- i. e. one which functions in the same way-without affecting the way in which the organizations functions. Learning on organizational levels refers to what is “remembered” by the organization rather than by individuals, although it must be in forming that is amenable to or accessible by each person. Levels of joint systems at work are shown in the Figure 3

.

Figure3

Levels of joint systems at work:

Control takes place on different system levels.

A regulator is required to ensure the proper functioning of constellation which is based on single loop and double learning as shown in Figure4.

Figure 4

Single and double loop learning

The learning is counter checked by PRISMA model.

Prevention and Recovery Information System for Monitoring and Analysis (PRISMA)

1

Detection

Usually on the basis of voluntary reporting by employees

2

Selection

Filtering of those reports with the highest informative value

3

Description

Details of selected events, by means of qualitative fault tree techniques

4

Classification

Description of each of the many basic causes according to the system failure model

5

Computation

Statistical analysis of large data base of incidents

6

Interpretation and implementation

Translational of the statistical results to come to theoretically supported suggestions for management actions

7

Evaluation

Analyze the effectiveness of such implemented actions by means of an explicit feedback loop

The ability to respond to new customer needs and seize market opportunities as they arise is crucial. SMEs today have recognized that a high level of interaction and coordination along the value chain will be the key ingredient to their continued success.

The conceptual frame work of knowledge based SMEs constellation will consists of

? Organizational frame work, Value chain

? Organizational culture & strategy

? Technology acquisition & development

? Human resources

? Directives based on vision

? Knowledge assets and method of assessment

? Knowledge transfer performance

? Contribution to the productivity and growth of enterprise’s knowledge capital

In most successes, besides a new idea or new technology, four critical forces must confer:

? Right funding sources

? Right human capital

? Right customer insight

? Right organizational architecture

Integrating these four factors is a challenge. Engineering Indian SMEs have to grow to meet the challenge successfully. To form the constellation, every small and medium enterprise must identify the best sources and means of meeting its knowledge needs as defined by the process of knowledge needs assessment. The sources are internal or

external and the choice depends on several factors including strategic importance of knowledge, level of knowledge available at the enterprise and feasibility of outsourcing the options. The table indicates the questions the enterprise has to check for. They are

Finding answers to questions

1

Does innovation matter to the enterprise?

2

What human capital development programs are in the enterprise to meet human capital objective?

3

Does enterprise have all the knowledge it needs to meet its operational and strategic needs? What is the strategy for acquiring new knowledge?

4

Is enterprise knowledge-technology strategy effectively integrated with Information and enterprise’s strategy?

5

Is contribution to the productivity and growth of enterprise’s knowledge capital a performance criterion?

6

Is there any assessment of effectiveness of knowledge management? How?

Conclusion:

Overall, Indian business in engineering is leveraging INDIAN ness by associating with global process and technology licensors and globalizing presence in the world. As the markets are shifting, technology is proliferating, competitors are multiplying, product cycles are becoming short, successful organizations are those that consistently create new knowledge, disseminate it widely throughout the organization and quickly embody it in new technologies and products. To create new knowledge means quite literately to re-create the company and every one in it is in a non stop process of personal and organizational self renewal. In a knowledge creating company, inventing new knowledge is not a specialized activity. It is a way of behaving in which every one is a knowledge worker-entrepreneur. New knowledge always begins with Individual. Obviously, the associates-data, information, knowledge and wisdom are the pillars of constellation which are important in wealth generation. It is the Mission, Competition, Performance and CHANGE which is associated with the learning of economies of knowledge through constellation formation. There is a shift from “Knowledge” to “Knowledges”. Our education system also should move with the pace to meet the focused objective of KMS and should impart the knowledge which should lead to resource generation and wealth creation. It is then Saraswati and Lakshmi seem to co exist happily here. This is the base for constellation growth of SMEs.

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