Innovation or doom

Innovation is not any 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 a client 3.5 years ago. The plan is voluminous, 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 about him today because I received information that the company for which it was created in due time is now “dying” ...

Why do companies refuse to change?
Only 2 days after I sent the management this plan, 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 business automation project, and at that time the company’s leaders thought that the implementation of my proposals was too long and expensive.

2 years have passed since our first collaboration. The management decided on changes, and they ordered me some of the points of that very plan, which had long been forgotten. The simplest and most understandable: site upgrades, landing page development, implementation of a CRM system and mailings.
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Why did they think about such things? A crisis ensued, there was a devaluation, and the prices of their products (and the company is engaged in the resale of imported goods) increased 2-2.5 times. Customers began to abandon them, finding more affordable options.

We successfully carried out 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 somewhat. But it was all a temporary occurrence. 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 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 work successfully and not lose the market.

As a result of the difficulties that have arisen, processes have begun, which are practically impossible to draw. Not only customers, but also company employees began to leave. The director quit, as the 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 increased by 2 times! It is clear that to quickly double sales is unrealistic, and in a crisis even more so, and in the absence of such important tools as advertising, it is almost impossible. Naturally, this affected the salary.

Following the director, the company lost two top sales managers. The company had only 4 managers who were working with clients, and two of them, experienced and successful, quit one after the other. Of course, newcomers took their place in a short time, but they could not work as successfully as the specialists who had left the company.

And today, as a person subscribed to the company's newsletter, I received a letter informing me of the sale of goods. This is the last cry.

My experience says, and I wrote about this in the article “Increase in sales. Practical advice from a business consultant ” that a sale is an indicator indicating that a company operating in the B2B sector (this company belongs to this sector) is in decline. Therefore, I look at this letter and understand that the final has come. And the market is about to become one smaller company.

Why did I decide to write this article?

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

Right now, at the same time as a 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 far from unique in my practice. And almost always similar 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 repair and maintenance of equipment. On the one hand, today the company is working successfully. On the other hand, the crisis has affected them, and people have 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 to quite young people who are no more than 35 years old, and because of their inertia and resistance to any changes, it seemed that they were old. They were ready to buy a program or equipment, but this limited their understanding of change. I told them directly that their inertia can lead to sad results.

And today, after reading the letter from the “dying” company, I realized that this question must be disclosed and as detailed as possible.

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

Today in many areas of business exactly like this: innovation or doom!

The vast majority of modern business in Russia is built on resale. The most common scheme: the company buys imported goods (clothing, appliances or any other product), often in China, and sells them in 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 a unique service is in a vulnerable position.

Today, due to the developing crisis in the economy, all attention is paid to it, and all the problems of the company are associated with the crisis, forgetting about the many other threats that I would divide into external and internal. And their number will only increase with time.

External threats. The development of markets and aggregators.

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

If you trade in a certain commodity, then any platform that can offer customers service, goods or knowledge in the related field will replace you over time.

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

What does the usual company work process look like? There is some kind of warehouse, in China the goods are purchased at this warehouse, then there are orders from customers for certain positions, the goods are shipped from the warehouse. It would seem that all is well, you are trading in foreign goods, which the client cannot buy in Russia. Until a certain point, that was exactly what happened. And get the goods that you offer, buyers could really only from you or from your competitors, who work in the same way.

Now everything has changed. Foreign companies enter the domestic market directly. For example, through the service AliExpress or the like. In such services, the volumes are 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 with these services is much more powerful than yours. And these services are beginning to push you.

Sometimes, as a counterargument, I hear: "We occupy the first places in the search engines, and therefore we are still the best." In fact, this is a temporary phenomenon, soon large services will force you out of the search results TOP, technologically they are much more developed than you. We'll 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 faster to customer requests and do not leave the usual seller, who works on the usual patterns, no competitive advantages.

More recently, among the advantages of small companies was the opportunity to work on credit. But due to the crisis and this advantage has disappeared. Who is now ready to provide goods on credit? Virtually no one. And without this advantage, the attractiveness of large trading platforms only increases.

I now observe such a picture: for many, sales are falling, falling simply dramatically. But why? Where do customers go? They have no money? It is not true. Yes, the money may be less, but not enough to stop buying goods. And the thing is that they find other channels for the purchase of goods, many sites are getting closer to the client, much closer than they were before.

AliExpress, Yandex.Market, Amazon, OZON - all of them, thanks to their volumes, can buy goods at a much greater discount, the range there is much richer. And the same wholesaler can buy there all the necessary goods with delivery, with all the documents and certificates, with convenient service, on a convenient site, at a convenient time. But many Russian wholesalers even have normal websites, where their client could place an order, no. They live en masse "yesterday," and on this they lose customers.

So, sites - aggregators attract customers:

• Assortment;
• More favorable price;
• Convenience;
• Owning big data, i.e. a large amount of information, a large array 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 methods of analysis, and they do not want to do this work.

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

Large sites and aggregators possess an array of information and a ready-made methodology, and actively apply their knowledge in practice. Now it is very noticeable, since they crowd out many competitors.

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

Internal threats.

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

If sales fall, the “stars” leave the company, the very experienced and successful employees who hold almost all the work of the sales department.

The best of your employees are well aware that if you do not move forward, do not introduce innovations, live at the expense of satry clients 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, the “stars” are leaving - sales are falling. Sales are falling - the remaining specialists are leaving. And so the chain of the company dies.

I have observed this process in many companies that I have had to advise lately. By the time they appealed to me, they were already left without their “stars”. There is an owner who still drives a Land Rover or another executive class car who can still afford to fly on holiday to the Alps or elsewhere. A company, as such, in fact, no longer exists. It falls apart before our eyes.

About vain hopes.

Over the past year, I have had about 250 to 300 calls from various businessmen. In addition to working with projects, I also deal with consulting, communicate with businessmen, help with advice. I am often found through search engines, through the website and articles, and therefore they read me, write to me, ask me questions.

And many times we discussed with clients and businessmen who addressed with questions, situations similar to the one described above. And I was faced with objections, which I call vain hopes.

We are the first search engines for our requests.

Of course, today it may be so. But very soon it will all be in the past. Many of my clients have already lost their first place in Google’s issue two years ago, but they are still hanging in Yandex, but they will soon lose those places. Why? Because companies often use “black” promotion methods for website promotion, one of which is, for example, non-thematic link exchange.

For example, if you open the site filezilla.ru, then in the basement you will see a strange and incomprehensible advertisement of some tights, shoes or other areas not related to the theme of the site.

It would seem that the site is very well visited, takes first place in the search, and if there is a link to your site, this is good. But in fact, the users of the filezilla.ru site do not need this non-topic advertising. 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 “informational garbage” is a disadvantage “in the eyes of” the search robots Google and Yandex.

As a result, many sites begin to lose their positions. How do they cope with this situation? Many people start to make high bets on low-frequency queries. But, unfortunately, no matter how much the “subwoofers” praise, they cannot become a panacea and salvation of the situation.

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

There is one more minus that I observed in practice. Most likely, by the time you learn how 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 in the furnace in the hope of overtaking another.

In order for such queries to work and bring in 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 are working with these requests, so that the price of each request is constantly increasing.

I actually watched two competing companies that fought with each other for low-frequency queries. At that time I worked in parallel with both companies, advised them, but not in the field of SEO. But I still monitored the situation, including watching their progress in search engine promotion and working with contextual advertising, and therefore I saw how they interrupted each other’s request rate in real time.

Some companies are starting to create aggregator sites themselves. Take information from suppliers, try to make a similar resource for utility and convenience. I even received requests 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 decided to make such sites. At the request of customers, we created a site that became a “mirror” of other sites that provide information on a particular product group. And in practice, we made sure with these customers: it does not work.

Search engines pessimize such sites, and your information will either simply not show, or it will appear in the output much lower than you would like. Just because such information is already on other sites, because the sites where you get the information are older, and the information itself appears before them.

In addition, distributors often can not provide information on time or even distort. I had a project where integration with the distributor site was carried out. And we could not understand why our information does not coincide with them. While we, reluctantly, were not told that their system works that way. As I understand it, distributors simply distort the information in order not to give complete or some important information about the product to their, one might say, competitors. After all, almost all distributors today have their own retail sites, which are not reported to their partners.

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

Another vain hope: “I have a brand.”

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

In most cases, the brand owners mistakenly consider the name of the company and / or the site, arguing that the company “for twenty years in this field and“ knows the whole market ”about them.

The real fact: small and medium business does not have brands. 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 resale of finishing materials. They are proud of the fact 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 partner network. But they also have sales fall.

Why? And because they really are not a brand, they are not unique, they do not have any unique products. In a private conversation, one of the owners complained that sales were falling due to the activity of a competitor, namely the Russian manufacturer. The fact is that this firm is engaged in the sale of imported finishing materials, while in Russia a domestic plant that produces such finishing materials has appeared and is actively promoting its products. My customers say that these Russian manufacturers are taking away their customers. Of course, take away! Production is located in Russia, the cost of products is initially cheaper, and the quality of products turned out to be quite comparable.

The market is constantly evolving, the situation can not be static. New competitors appear, new offers and services appear. And in a crisis, these factors become particularly noticeable.

Without innovating, 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 reasonable to approach the introduction of certain ideas. Let's look at examples.

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

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

What kind of innovation is required for a particular business is a purely individual question. The exact prescription can be written only after the survey, so think about how to develop your competitive advantages, what solutions will help to optimize your work structure and the work of the client with you.

Change to flourish!

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

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

Another prime example is the rental property market. More recently, it was possible to rent a property only through realtors. What now? Everyone knows the sites where you can find the right property, go there and choose the options you want. Many companies were driven out of this market by those who introduced innovations, made their website more convenient, more open to users, and stronger in terms of promotion. If earlier realtors charged a commission of 100%, now they are asking for more than modest amounts: 50%, and more often 40, 30, or even 20% are heard. And it is likely that the number of players in this market will continue to decline, simply because they are no longer needed, and a significant portion of their services have been successfully replaced with convenient Internet sites.

Therefore, be sure to revise your policy. Agree to change, innovate!

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

I have a client who once bargained with me for a discount of several thousand rubles, told me that he had no money, and at the same time chose and bought himself a car of a representative class. It is not right. Personal expenses are, of course, necessary and important. But there may come a day when a business will cease to produce the very profit that is spent on personal needs. Remember, investing in the future is also very important.

As Einstein said, "You can’t 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 all chances to continue working despite all the difficulties and changes in the market.