Innovation or ruin

    Innovation is not every innovation or innovation, but only one that seriously increases the efficiency of the current system.
    Miloslavsky I. “Novelty with Consequences”

    I sit and look at the work plan that I created for the client 3.5 years ago. Volumetric plan, 116 points, affecting all aspects of the company’s work: from corporate identity and handouts to contextual advertising and business processes. By decision of the company’s management, the plan was never implemented, even partially. And I remembered him today because I received information that the company for which he was created at one time is now "dying" ...

    Why do companies refuse to change?
    Only 2 days after I sent this plan to the management, the project was completed and we parted. Why? Because the owners of the company were afraid of the costs associated with the implementation of my proposals. At that time, I had already completed a project on business automation, and the company leaders at that moment felt that the implementation of my proposals was too long and expensive.

    It has been 2 years since our first collaboration. The management decided on the changes, and they ordered me some of the points of the same plan that they had long forgotten about. The simplest and most understandable: site modernization, landing page development, implementation of a CRM system and newsletters.

    Why did they think about such things? The crisis came, devaluation occurred, and the prices of their products (and the company is engaged in the resale of imported goods) increased by 2.5-2 times. Customers began to refuse them, finding more affordable options.

    We successfully completed the entire list of works that was ordered, but, as it turned out, it was already too late at that time. And the death of the company was predetermined. Of course, my actions gave a certain effect, and the situation in the company improved slightly. But all this was a temporary phenomenon. And in the conditions of a new crisis in the economy, all the shortcomings that I saw back then, 3.5 years ago, became “thin spots”, which led to a sad result.

    I understand that if the measures were taken in a timely manner, if the entire list of my plan was worked out, today the situation in the company could be much better.

    If the company decided on reforms in a timely manner, it would now have successfully worked and had not lost the market.

    As a result of the difficulties that have arisen, processes have begun that are practically impossible to reverse. Not only customers, but also employees of the company began to leave. The director quit as management set an unrealistic sales plan.

    In fact, the sales plan remained the same in euros. But in rubles, the amount of this plan has doubled! It is clear that it is impossible to quickly double sales, and even more so in a crisis, and in the absence of such important tools as advertising, it is practically impossible. Naturally, this affected the salary.

    Following the director, the company lost two leading sales managers. There were only 4 managers in the company who worked with clients, and two of them, experienced and successful, quit one after another. Of course, newcomers were taken in their place in a short time, but they could not work as successfully as the specialists who left the company.

    And today, as a person subscribed to the company’s newsletter, I received a letter informing about the sale of goods. This is the last scream.

    My experience says, and I wrote about this in the article “Increasing sales. Practical advice of a business consultantthat a sale is an indicator indicating that a company that operates in the B2B sector (this company belongs to this sector) is in decline. Therefore, I look at this letter and understand that the finale has come. And the market is about to become one less company.

    Why did I decide to write this article?

    In fact, the factor that influenced my decision to write an article about innovations and their sad alternative was not only the sad story that I told above. Yes, companies are dying. And this is far from the first and not the last case of the death of a business that I observe.

    Right now, during a period of recession and significant changes in many sectors of the economy, any company, even the most successful, faces a choice: innovation or death.

    In addition, the situation with the reluctance to introduce innovations in a timely manner is also not unique in my practice. And almost always, such stories end sadly.

    I recently had a conversation with two business owners. Their company is one of the leaders in the region in the field of equipment repair and maintenance services. On the one hand, today the company is working successfully. On the other hand, the crisis affected them too, and people thought about what will happen tomorrow. That is why they asked me for a consultation.

    But when I started talking about change, about innovation, it turned out that business owners are not ready for change. I talked with fairly young people who are no more than 35 years old, and because of their inertness and resistance to any changes, I got the feeling that in front of me are old people. They were ready to buy a program or equipment, but this was limited to their understanding of change. I told them directly that their inertness could lead to sad results.

    And today, after reading the letter from the "dying" company, I realized that this issue must be solved and as detailed as possible.

    Moreover, over the years I have accumulated enough information to warn business owners and employees of various companies that right now is the time to introduce innovations.

    Today, in many areas of business, this is exactly so: innovation or destruction!

    The vast majority of modern business in Russia is built on resales. The most common scheme: the company purchases imported goods (clothing, equipment or any other product), often in China, and sells them on the domestic market of Russia.

    But it is important to understand that now any company that is not a manufacturer or cannot offer its customers some unique service is in a vulnerable position.

    Today, in connection with the developed crisis in the economy, all attention is paid to it, and companies associate all their problems with the crisis, forgetting about the many other threats that I would divide into external and internal. And their number will only increase over time.

    External threats. Development of markets and aggregators.

    Many business owners do not associate the decline in their sales with the development of markets and aggregators, which are now conducting an active offensive, being a powerful external threat to small and medium-sized businesses.

    If you trade a certain product, then any platform that can offer customers service, products or knowledge in an adjacent area will replace you over time.

    AliExpress, Yandex. Market, Amazon, OZON, other online platforms and large offline networks are becoming direct threats to the business associated with the resale of goods. These sites and enterprises will very easily replace small and medium-sized business trading companies.

    What does a company work process look like? There is some kind of warehouse, in China goods are purchased for this warehouse, then there are applications from customers for certain items, the goods are shipped from the warehouse. It would seem that all is well, you are trading in foreign goods that the client cannot buy in Russia. Up to a certain point, this was exactly how it was. And the buyers could really get the goods that you offer only from you or your competitors who work according to the same scheme.

    Now everything has changed. Foreign companies enter the domestic market directly. For example, through the AliExpress service or the like. The volume of such services is not comparable with yours, respectively, they can get the best discount on purchases and sell cheaper. Many companies open their virtual offices on AliExpress and sell goods directly to your customers. Of course, far from all buyers are aware of such opportunities. But progress does not stand still, advertising for these services is much more powerful than yours. And similar services begin to crowd you out.

    Sometimes, as a counterargument, I hear: "We occupy first places in search engines, and therefore we are still the best." In fact, this is a temporary phenomenon, soon large services will also force you out of the TOP of search results, technologically they are much more developed than you. We will talk more about this below.

    It is important to understand that large, technically advanced competitors will be able to replace you in the market very quickly. They can offer the best prices and the best service, respond more quickly to customer requests and do not leave the ordinary seller who works according to the usual schemes, any competitive advantages.

    More recently, among the advantages of small companies was the ability to work on credit. But in connection with the crisis, this advantage has disappeared. Who is now ready to provide goods on credit? Almost no one. And without this advantage, the attractiveness of large trading floors is only growing.

    I am now witnessing this picture: for many, sales are falling, they are falling simply dramatically. But why? Where are the clients going? They have no money? It is not true. Yes, there may be less money, but not enough to stop buying goods. And the thing is that they find other channels for purchasing goods, many sites are getting closer to the client, much closer than they were before.

    AliExpress, Yandex.Market, Amazon, OZON - all of them, due to their volumes, can buy goods at a much higher discount, the assortment there is much richer. And the same wholesaler can buy there all the necessary goods with delivery, with all documents and certificates, with convenient service, on a convenient site, at a convenient time. But many Russian wholesalers do not even have normal sites where their client could place an order. They live in large numbers "yesterday", and this is losing customers.

    So, aggregator sites attract customers:

    • Assortment;
    • More favorable price;
    • Convenience;
    • Possession of big data, i.e. a lot of information, a large amount of data, as well as tools for their analysis.

    In principle, many wholesale companies also have a fairly large amount of data, they know the market, receive information about orders, but they do not have analysis methods, and they do not want to do this work.

    The situation in business is now, as throughout today's Russia: we live on gold, but we cannot use it, but others can use it. And quite successfully.

    Large platforms and aggregators have an array of information and a ready-made technique, and actively apply their knowledge in practice. Now it is very noticeable, as they crowd out many competitors.

    At the same time, a significant part of the companies I know continues to naively hope that this will not affect them all, and continue to live in the past.

    Internal threats.

    If you do not introduce new technologies, do not move forward, then internal threats await you, which, in turn, lead to the collapse of the company.

    If sales fall, “stars” leave the company, those same experienced and successful employees, on whom practically all the work of the sales department was supported.

    The best of your employees are well aware that if you do not move forward, do not introduce innovations, live off the power of customers and cold calls, then the situation in the company will worsen over time, and therefore the “stars” try to find another place in advance, which also accelerates the process of the collapse of the company.

    So, “stars” leave - sales fall. Sales are falling - the remaining specialists are leaving. And so the chain of the company dies.

    I observed this process in many companies that I had to consult recently. By the time they turned to me, they were already left without their "stars". There is an owner who still drives a Land Rover or another executive car that can still afford to fly on holiday to the Alps or somewhere else. And the company as such, in fact, is no longer there. She breaks up before her eyes.

    About vain hopes.

    Over the past year, I have had approximately 250 - 300 calls from various businessmen. In addition to working with projects, I also consult, communicate with businessmen, and help with advice. They often find me through search engines, through the site and articles, and therefore they read me, write me, ask questions.

    And many times we discussed with clients and businessmen who asked questions, situations similar to those described above. And I came across objections that I call vain hopes.

    We are the first in search engines at our request.

    Of course, this may be so today. But very soon all this will be in the past. Many of my clients already two years ago lost their first places in Google’s issuance, but so far they hang in Yandex, but they will soon lose these places too. Why? Because for the promotion of a company’s website, they often use “black” promotion methods, one of which is, for example, non-thematic link exchange.

    For example, if you open the site, then in the basement you will see strange and incomprehensible advertisements for some tights, shoes or other directions that are not related to the theme of the site.

    It would seem that the site is very well visited, ranks first in the search, and if there is a link to your site, that’s good. But in fact, users of the site do not need this non-thematic advertisement at all. And search engines are constantly improving the analysis of site content, and the value of what is on the pages of a resource is very important for them.

    Any “information junk” is a flaw in the eyes of Google and Yandex search robots.

    As a result, so many sites are starting to lose ground. How do they deal with this situation? A lot of people are starting to make high bets on low-frequency queries. But, unfortunately, no matter how much the “low-frequency” people praise, they cannot become a panacea and save the situation.

    Advertising in Yandex.Direct and Google AdSense for these requests also does not produce results. Attendance from search results is still falling. Moreover, large companies and aggregators also begin to work out and block low-frequency requests, simply because it is very easy.

    There is one more minus that I observed in practice. Most likely, by the time you learn to work with low-frequency queries in your field, they will lose their value.

    In general, the use of Yandex.Direct and similar systems sometimes resembles a race on steam locomotives using money as fuel. Each throws bundles of money into the furnace in the hope of overtaking the other.

    In order for such requests to work and bring a sufficient number of buyers, there must be a lot of them. As a result, the total mass of requests becomes expensive. In addition, your competitors work with the same requests, so the price of each request is constantly increasing.

    In reality, I watched two competing companies that fought each other for low-frequency queries. At that time I worked in parallel with both companies, advising them, however, not in the field of SEO. But still, he monitored the situation, including, watched their successes in search promotion and work with contextual advertising, and therefore saw how they interrupted each other’s request rate in real time.

    Some companies are starting to create aggregator sites on their own.They take information from suppliers, try to make a similar resource for usefulness and convenience. I even received applications for such sites.

    But I honestly say: “Gentlemen, if someone is already selling this, your competitor, wholesaler or distributor, then how will you sell it? Your site will not be your competitive advantage. ”

    I had a case when I nevertheless decided to make such sites. By order of customers, we created a site that has become a “mirror” of other sites that provide information on a particular group of products. And in practice, we were convinced with these customers: this does not work.

    Search engines pessimize such sites, and your information will either simply not be shown, or it will be shown in the SERP significantly lower than you would like. Just because such information is already on other sites, because the sites where you draw information are older, and the information itself appears earlier.

    In addition, distributors often may not provide information on time or even misrepresent. I had a project where integration with the distributor website was carried out. And we could not understand why we didn’t have the same information. So far, reluctantly, they have not given the answer that their system works this way. As I understand it, distributors simply distort information in order not to give complete or some important information about the product to their competitors. Indeed, almost all distributors today have their own retail sites, which are not reported to their partners.

    Conclusion: low-frequency queries and aggregators are not a solution to the problem.

    Another vain hope: "I have a brand."

    Everything is very simple here. Everyone who says such things needs to understand that the brand is Coca-Cola, this is Pepsi, this is Apple, and many others. But, if you are a seller company, then the word brand is not about you.

    In most cases, the owners mistakenly consider the brand name of the company and / or site, motivating it with the fact that the company “has been in the industry for twenty years and has“ known the whole market. ”The

    real fact is that small and medium-sized businesses do not have brands. I have clients among my clients there is a company related to medium-sized businesses with a turnover of more than 50 million per month. The company is engaged in the reselling of finishing materials. They are proud that they are a brand, that they have been on the market for 20 years, that they have their own store, and a developed regional partnership network, but they also have pada sales yut.

    Why? And because they are not really a brand, they are not unique, they have no unique products. In a private conversation, one of the owners complained that sales were falling due to the activity of a competitor, namely a Russian manufacturing company. The fact is that this company is engaged in the sale of imported finishing materials, while a domestic factory producing such finishing materials has appeared and is actively promoting its products in Russia. My clients say that these Russian manufacturers are robbing them of their customers. Of course, take away! Production is located in Russia, the cost of production is initially cheaper, and the quality of the products turned out to be quite comparable.

    The market is constantly evolving, the situation cannot be static. New competitors appear, new offers and services appear. And in times of crisis, these factors become especially noticeable.

    Without introducing innovation, you will not be able to achieve anything. You will simply be forced out of business, and your company will self-destruct.

    What is not an innovation?

    It is important to understand that not every innovation is an innovation, and it is wise to approach the implementation of certain ideas. Let's look at examples.

    • The innovation is not the introduction of a CRM program. At the same time, the processing and rethinking of working with a client using CRM systems and other modern solutions is a real innovation.
    • The implementation of the accounting system can also not be called innovation. And cost reduction as a result of reforms (which may include the introduction of an accounting system, staff training, other stages) will be an innovation.
    • Also, new printing forms, integration of the site with the accounting system, and other software solutions designed to increase the convenience of your work will not be an innovation. But the introduction on the site of solutions that will increase the comfort of the client and become assistants in navigation, for example, a convenient search on the site, the service “similar products” or “buy with this product”, is certainly an innovation.
    • The innovation is not the creation of convenient forms for entering data about your stocks, etc. But the introduction of a supply management system is an innovation.

    Those. new convenient programs, new talented personnel in the company - this is always good. But innovations include only those solutions that change something in the structure of work for the better, optimize supply or sales, have a positive effect on the level of sales, etc.

    What specific innovation is required for this or that business is a purely individual issue. The exact recipe can be written out only after the examination, so think about how to develop your competitive advantages, which solutions will help optimize your work structure and the client’s work with you.

    Change to thrive!

    So, I hope, you now understand why it is necessary to change, moreover, in a timely manner. It is very important to understand what your competitive advantage is and to develop in this direction. If there is no such advantage, it is necessary to create it. And companies that do not consider it necessary to introduce innovations and actively develop will be gradually displaced from the market. Already today in Russia, large players are already actively crowding out small and medium-sized businesses from the market.

    As a positive example of innovation, remember what taxi services look like today. Even 5 years ago it was even hard to imagine that the taxi market could change so much!

    Another striking example is the real estate rental market. More recently, it was possible to rent a property only through realtors. What now? Everyone knows sites where you can find the right property, go there and choose the options you need. Many companies were forced out of this market by those who introduced innovations, made their site more convenient, more open for users, more powerful in terms of promotion. If before realtors charged a commission of 100%, now they are asking for more than modest amounts: 50%, but more often the numbers 40, 30, sometimes even 20%, sound. And it is likely that the number of players in this market will continue to decline, simply because they are no longer needed, a significant part of their services have successfully replaced convenient online sites.

    So be sure to review your policy. Agree to change, innovate!

    Personally, I am outraged by the fact that people who earn 40,000 a day are not ready to spend 200,000 a month on innovation. It would be funny if it were not so sad. Because this is not right. And here it is clearly not a matter of money, but of inertness of thinking.

    I have a client who once haggled with me for a discount of several thousand rubles, told me that he had no money, and at the same time chose and bought a representative car. It is not right. The costs of personal needs, of course, are needed and important. But the day may come when the business ceases to bring the very profit that is spent on personal needs. Remember, investing in the future is also very important.

    As Einstein said, “You cannot wait for change without changing anything.” Therefore, it is very important to allocate funds and, more importantly, internal reserves and change. Only then your business has every chance to continue to work despite all the difficulties and changes in the market.

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