MEDO
MEDO

MEDO 5-minute workshop: The Bjarke Principle

“If we were a big company, we would own the building, we  would own our own data centre, and we would have enough  professionals to handle our own email centre. But we are small, so we can’t own and therefore we have to  deal with suppliers. Big suppliers.”

Let’s start with a scenario: Buying an  accounting/ERP package. When you  are a big company with hundreds of  employees, you have existed for a while  and are therefore set in your ways of doing  business. Part of you doing your business  a particular way is governance, making  sure that everything is done in time, within  a specific budget and free of corruption  and malpractice. You have streamlined  certain aspects of your business to deliver  faster, or you have implanted certain  technologies to deliver cost-effectively. 


For that reason, when you buy a  accounting or ERP package, you want to  make sure that your package can be fitted  to your business, and not that you have to  fit your business to the way the package  works. If you buy from a large company, they deliver the package in the thousands,  which means they are probably not willing  to change the package to your needs. If  you buy from a smaller company, however;  then the money talks louder, and you can  modify the package to fit your unique  business needs. As a large organisation,  you have the resources to manage this  modification, including project– and  change management and testing the  package properly. You are in control. 


If you are big, buy small. 


If you’re a small company on the other  hand, you are actually looking for ways  of improving governance. So as a small  company you actually want to start  implementing governance by doing it  the way that it is done most successfully.  If you are going to get an accounting/  

ERP package, you want the one that is  sold the most, giving evidence to be the  most successful package. That of course  also means that such a highly successful  package comes form a highly successful  company, that it is by now a large  company. That company will continue to  innovate and find best practice around its  processes to continue improve both their  product and their market share. 


If you buy from a small company, you  cannot safely assume that the product has  the same success behind it, and you most  likely don’t have the resources to manage  it, yet. The smaller company will offer to  implement whatever change you would  like, but as a small company you don’t  know what you want, you just want the  best way of processing business.   

If you are small, buy big. 


This example was based on supply of  a software package, but I found this  principle true with almost every dealings  we have here at MEDO. We used to use a smaller internet company  to host our email server, but the email  server kept being blacklisted, since other  clients of the company used the same  email server for spamming. We considered  to run our own email server, and while we  have our own servers co-located with a  large data centre where we run many of  our own services, we are not yet ready to  tackle the pressure of running an email  server effectively. Today we are using the  world largest email service provider and it  runs like a dream. 

We have one of our incubators  located at a place where the internet  access was advertised as cheap and fast.  It turned out to be a nightmare, not very  cheap and not at all fast. We built the  incubator around the supposition of  cheap and fast internet, so now we can’t  just move it. We can’t even get any of the big internet access providers involved,  including Telkom to save the day as the  building has its own provider with a  monopoly over the location. We went  against our principle and chose to go to  a small landlord using a small internet  provider. It’s a lesson you don’t need to  learn twice, so in Cape Town our landlord  is one of the largest in the country and  our internet access providers are without  a monopoly. We first negotiated with a  smaller landlord, but during the process  our legal council warned us about the  contract being very one sided contract.  There were stipulated clauses in the  contract that the landlord had unilaterally  stricken after the contract was signed,  wherafter we were advised to report them  to the police for fraud.  

If we were a big company, we would own  the building, we would own our own data  centre, and we would have enough professionals to handle our own email  server. But we are small, so we can’t own  our own, and therefore we have to deal  with suppliers. Big suppliers.  


I have many other examples: We used  to rent cars from a small/medium sized  company, that rented out cars for less, but  they eventually turned out to be more  expensive. Today we are AVIS preferred  customers. We used to buy the cheapest  laptops on promotion, today we have  given most of our staff Apple MacBooks.  In our 4K studio, we decide to go for Sony  Professional equipment, instead of the  cheaper Blackmagic Design equipment.  We buy our IT equipment straight from  the large ICT distributors.  We import all  our photo-, video-, and audio gear from  B&H in New York, the world largest in the  field. We import the technology we use in  scale directly from suppliers in China. Our  Magazine is printed by one of the largest  printing houses in Johannesburg. While we do not source products  or services from small suppliers, we  incubate, train, and otherwise deliver  services to small business and train them  how to deliver to large businesses. This  we do as part of the MEDO Supplier Development Programme. 

 

The MEDO Supplier Development Programme 

This programme focuses on the particulars of delivering to large companies; companies as explained above, already have their governance in order, and therefore require some governance from businesses  who delivers to them. This governance includes special documentation, such as BBBEE certification,  compliancy proofs, tax clearance certificates and most of the time a completed set of forms allowing the  supplier to be registered with their client. Understanding how a large company operates when you have  never worked in one or supplied to one, can be difficult. When you supply to a consumer or to a small  company, the payment comes from the owner, and it is easy for the owner to just accept or decline to pay.  But when your payment comes from a large company, the person doing the payment is an employee,  and the money paid is not his or hers. For that reason, there are specific governance in place to make sure  that payment is done correctly, without waste, incorrection or fraud. Understanding this fact will also  make the small supplier understand, that payment can take time and be delayed if the invoice is not 100%  correct. The programme covers many other aspects, such as scalability, just-in-time operation and project management to name a few. Small businesses should buy and sell to large businesses, making them growing faster… Professionally.  

 

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