Whether it is cross-border or cross-border, it belongs to innovation. One of the three key points of the rise of small companies to be discussed in this paper is innovation.
Some people say that products without innovation are simply not worth doing. I wonder if you agree with this view? After studying Liang Ning's product thinking course, I began to believe this view. The reasons can be expanded from two aspects:
Stock market and incremental market
We can regard the chicken incubator in the above story as a product in the stock market, and the incubator combined with the chicken incubator model is a product in the incremental market. For small companies, what innovation should do is to find opportunities in the incremental market, not in the stock market.
Why is it an incremental market rather than a stock market?
Because making products in the incremental market is more valuable to customers than making products in the stock market. Here we introduce a user value formula:
User value = (new experience-old experience)-replacement cost
User value, what problems can be solved for users by using this product; New experience refers to the experience that new products add to users compared with the original products; Replacement cost refers to the time, study and use cost that I have to pay to give up the original product and switch to a new one.
Let's assume that the new experience that Microsoft office can bring to users is 90 points, the experience that Microsoft's previous office software can bring to users (old experience) is 50 points, and the replacement cost is 20 points. At this time, the user value =90-50-20=20 points.
At this point, Jinshan launched WPS. If the user experience brought by WPS can't exceed 90 points, then the value it brings to users is lower than that of Microsoft office, while the old experience (50 points) and replacement cost remain unchanged.
In real life, there are many conceited product managers who always feel that they can make better products, so they try their best to enter the stock market, and the final result is mostly frustration. The reason is not the new experience created by these product managers, but the replacement cost of users.
For example. For example, a product manager thinks Tencent's QQ music sucks, and he also made a music software, which is better than QQ music. Can this software beat QQ music?
The answer is difficult. The reason is his replacement cost. Let's make a simple cost comparison:
QQ music product experience: 80 points
New music software experience: 90 points
It is difficult to surpass Tencent, a company with resources and strength, in product experience, but here we assume that we have surpassed it.
Brand cognitive cost of QQ music: 0.
Brand cognitive cost of new products: 20 points
After new products appear, your brand awareness is very important for users to choose you.
The learning cost of QQ music: 0.
New product learning cost: 10.
Accustomed to QQ music, I have to learn it again.
In this comparison, the replacement cost of QQ music is 0, while the replacement cost of new products is 30. Let's assume that the old experience is still 45 points, and then substitute these data into the formula:
QQ Music =80-45-0=25
New product =90-45-30=25
From this comparison, we can see that the new product has not surpassed the user value of QQ music. Therefore, even if your new product has a good experience, the final user value is not necessarily higher than the previous product, because the replacement cost is high.
Here can also give a real example:
To sum up, we can find that new experience is not the key to the success of products in the stock market, because there is also the problem of replacement cost. Here we summarize the content of substitution cost, which can be summarized into four aspects, namely: brand awareness, user acquisition cost, learning cost and use cost.
Because of the replacement cost, the survival probability of innovation in the stock market is very low, which is also the reason why small companies want to be incremental markets.
In fact, the Internet is an incremental market. Its users are huge and not limited by time and space, and they are connected through the Internet. When some users have some unmet needs, and your product can just provide these needs, then this product may be successful, because there is no replacement cost here.
Here we tell a similar case:
This case accurately reflects the difference between stock market and incremental market. Even with the empowerment of giants such as Baidu, Tencent and Xiaomi, Cheetah failed to beat 360 in the stock market, which shows the huge threshold of the stock market.
Finally, the rise of cheetah just tells us that the incremental market is an opportunity for small companies. Therefore, positioning the incremental market and creating unattainable replacement costs are basically successful.
Finally, talk about how to make unattainable replacement costs. Yu Jun, founder of Baidu Post Bar, once asked a question:
Some people think it is 100, but the correct answer is 60. The reason is that in innovative products, the quality of product experience is only one aspect of product competitiveness, and the other aspect is replacement cost. When this product has gained a considerable number of users, even if the latecomer makes a better experience, it may not be able to beat you, because he is not only faced with the user's experience of the product itself, but also the user's consideration of the replacement cost.
Having said that, let's make a summary:
This article talks about a big topic, that is, how small companies should rise in the era of the strong and the strong. We give three views, namely:
Innovation ability, that is, small companies should have cross-border and cross-perspective innovation ability.
Incremental market, that is, positioning innovation in incremental market rather than stock market.
Replacement cost, that is, making products can not only stay in the product itself, but also create replacement costs for the latecomers.