We always hear about how innovation drives business. This has been typically true for the whole of human existence. As businesses have tried to stay profitable among the problems they’ve faced throughout the COVID-19 pandemic, we are beginning to see a troubling trend where new products are released with a laundry list of new features, but aren’t really enhancing the customer experience. Today, we look at how businesses have enhanced their marketing efforts to make products that don’t provide the types of innovations that are useful to customers. 

Before we get into the practices that have caused this shift, we first have to come to understand the difference between upstream activities and downstream activities. Upstream activities are parts of a business that allows them to create the products and services that they offer. Things like sourcing, assembling production staff and resources, and logistics are considered upstream activities. Downstream activities are the ones that work in the facilitation of creating a product or service, as well as all the activities that go into selling them. 

Upstream Issues Complicate Things

The past couple of years haven’t been very friendly to businesses. The global pandemic and other issues led to serious supply chain problems that not only raised procurement costs, but also made it difficult to get the components and resources they need to create quality products. Add in what is called “the great resignation” where large swaths of people quit their jobs over potential health and safety issues and wage discrepancies and businesses are finding maintaining effective operations more difficult than ever. 

Running a profitable and efficient business isn't easy to begin with, but with the myriad of obstacles that today’s landscape presents the modern business owner, innovating processes and products has become more costly and more difficult. For enterprises, it is easier to earmark money for research and development, but for small businesses, finding a way to keep your company in the black, while making smart investments that return palatable ROIs has become the norm. 

Marketing Taking the Place of Consistent Innovation

Most of the time the research and development money of any organization dwarfs the marketing budget. Both are necessary, but innovation has always been a driving force of the business, while marketing or advertising has always been looked upon as an expense that is one of the last items in a SMBs budget. This is largely because in order to avoid becoming stagnant—and be competitive—businesses have to continue to grow their offering. 

Large businesses are able to do this successfully and it has resulted in a growing gap between the staying power of businesses. Additionally, it has caused a lot of SMBs to make a choice, go in on a business model with products and services that have brought the modicum of success the organization has achieved, or spend capital they don’t have to try and advance their offering in some way. With margins shrinking rapidly because of inflation, fuel costs, and supply chain interruptions, smaller businesses are turning to their message to try and drum up business rather than focusing on research and development. 

What’s worse, many SMBs are forced to spend less on their sales processes and administrative costs (which include IT, HR, and improving and innovating business processes), while larger businesses have no problem acquiring the resources and talent they need to thrive. Unfortunately, the people that are affected the most are the consumers. 

People are Paying More for Less

Like the business that is having difficulty innovating, many consumers today are spending more money for less. This creates a situation where it may not be viable for consumers to avoid purchasing their goods and services from larger companies. This is a dire consequence for small businesses as they depend on their intimate, customer-first approach to continue winning new business. As SMBs' dollars continue to be spent on operations, their marketing initiatives are the only avenue they have because they find themselves not able to make the future plans needed to ensure their customers (or their workforce) stay around. 

How We Can Help

If you run a small business, you have had to see how your IT costs have started to rise. You may not be getting what you are paying for. At 415 IT, we offer a way to reduce your technology support costs with our managed IT services. We can monitor and maintain your IT, back up your data, and consult on your technology decisions to help you get more for every valuable dollar. 

Things are tough out there, but instead of redirecting your capital to try to keep your lights on with a message, make the smart business decision and give 415 IT a call today at (415) 295-4898.