Experts show how Vietnamese businesses can 'grow fast without going bust'
Solutions for Vietnamese businesses to develop sustainably were mentioned by experts at the Vietnam CEO forum, on the afternoon of August 8. Mr. Nguyen Manh Hung, former Minister of Science and Technology, Founding Chairman of the Vietnam Institute of Leadership, Governance and Management, raised the issue: "Why does Vietnam have so many successful startups but very few truly large enterprises?".
According to him, Vietnam has hundreds of thousands of small businesses and tens of thousands of medium-sized enterprises, but the number of businesses with revenue over 1,000 billion VND is still small. Many businesses encounter difficulties when their scale increases from 100 to 1,000 billion VND, or from 1,000 to 10,000 billion VND. "That is the period when businesses make a breakthrough, but it is also the most fragile period," he said.
Many businesses increase revenue very quickly but profits do not increase, revenue increases but cash flow is negative, the market expands but corporate culture is broken, they open more branches but service quality goes down, they increase personnel but labor productivity decreases.
Explaining this statement, he said, when the company was small, the founder could decide most of the work himself. Members sit close together, decisions are transmitted quickly and the organization operates using simple systems. But when the scale increases 5-10 times, this management method is no longer suitable. That's when weaknesses begin to show.
The President of the Vietnam Institute of Leadership, Governance and Management said that it is necessary to distinguish between rapid growth and rapid growth capacity. Growth can come from a good product, favorable market or a business opportunity. Fast growth capacity is the ability of a business to expand many times and still operate well.
According to him, when entering a period of rapid growth, the CEO must not only operate but also build the organization. To grow quickly without disruption, businesses need appropriate strategies; The operating system does not depend on the CEO; have a succession of leaders; Combined with risk management capacity and building a culture of growth.
"The biggest role of a CEO is not to generate revenue, nor to maximize profits each year, but to build an organization that can grow continuously over many generations," he emphasized.
Agreeing with the above statement, Prof. Dr. Vu Minh Khuong, Lee Kuan Yew School of Public Policy, said that rapid growth and success are two different issues. Businesses that want to grow must at the same time build a management foundation to avoid being disrupted by the speed of expansion.
According to him, three problems often appear when businesses grow rapidly: leadership capacity cannot keep up, the scale and complexity of the organization increases, while staff capacity, technology and other factors are not correspondingly increased. This is a "capacity trap", Mr. Khuong said.
Sharing his perspective, Professor Khuong said that "fast growth is not just about doing better in the old house", businesses must create higher value, develop technology, train personnel and change management methods.
Meanwhile, Dr. Le Quang Dam, General Director of Marvell Vietnam, led the business's own development journey to illustrate changes in management as scale increases.
From 5 employees when founded in 2013, Marvell Vietnam now has more than 650 people and is the third largest R&D center of the group. According to Mr. Dam, the problem is not only to expand the team but also to increase efficiency and productivity, and at the same time build good enough processes so that the organization can grow without losing speed.
According to Dr. Le Quang Dam, in order to "grow without breaking", businesses should not only find ways to manage growth but must proactively build capacity for future scale, because growth is also a test for the organization. "Growth doesn't change the business, it reveals the business," he said, adding that strengths will be greater, but weaknesses will also quickly reveal themselves.
As the team grows from a few people to hundreds, businesses need more rigorous processes. The goal of the process is not to control people, but to help them control their work and be productive. "Good processes help create more freedom and better creativity," Dr. Dam said.
Trong Dat