It is believed that a market with a limited number of participants relaxes competitors. The two largest manufacturers of legal reference systems - ConsultantPlus and Garant - categorically disagree with this. To maintain their positions, they have to constantly monitor each other's every move.

“When there are many players in the market, you most often choose from the first three found, compare their conditions, product and make a deal. And when there are few players on the market, two or three, the user knows everything about everyone. Here, only quality determines success,” Dmitry Novikov, general director of the ConsultantPlus company, describes the features of his work.

Alma mater of “Consultant” and “Garant” is the Faculty of Computational Mathematics and Cybernetics of Moscow State University. The future leaders of the companies, Dmitry Novikov and Dmitry Persheev, studied together and were friends; both gained their first leadership experience working as commanders of student construction teams. Together they started the “Garant” project at the NPO “Computational Mathematics and Informatics” (NPO VMI) - Novikov was the director, and Persheev led the project since 1990. It was this division that in 1992 became a separate company, Garant-Service, and NPO VMI started the ConsultantPlus project from scratch. The “divorce” took place in a civilized manner; its reason was not money, but different views of former partners on business development.

By 1992, Garant was already a well-known brand; Consultant had to enter the market second. Nevertheless, just a few years later, ConsultantPlus already became a leader and now confidently maintains this leadership.

According to the results of various studies conducted in 2004, the share of the ConsultantPlus company in the market of legal reference systems is estimated at 70-80%, Garanta - at 35-45% (the sum of the shares is more than 100%, since some clients use both systems ). Other players are much less significant.

The reasons for this result of competition should obviously be sought in the fact that from the very beginning, having divided the business, Garant and ConsultantPlus approached development strategies differently.

Product
First of all, Persheev and Novikov initially began to work differently on the products they were creating. Thus, Garant relied mainly on improving the existing system. “We have chosen a relatively narrow area of activity for ourselves and for thirteen and a half years we have been doing the same thing - improving the information product, the legal reference system,” says Dmitry Persheev. Thus, on the one hand, the company worked to simplify the use of its product, and on the other, added new features to it that increased its functionality. As users who have experience working with the Garant system admit, some functions in it are implemented extremely conveniently.

The ConsultantPlus company set priorities differently. “We decided from the very beginning that we would approach the issue comprehensively - for real quality of the product it is necessary to develop not only search and analysis technologies, but also to ensure the completeness of information, as well as improve document updating technologies. At that time, the most important thing for clients was information, and especially the timely replenishment of the system with new documents,” says the head of ConsultantPlus. “The main thing is that the document quickly reaches the user, and how beautifully the interface is designed is secondary. That’s why we made the difficult decision - to sacrifice external effects at first, but to ensure completeness and timeliness of information.”

As a result, the Consultant had a significant advantage: in order to update its information base, it was not necessary to reinstall it completely. At first, replenishment of the Garant database was carried out by replacing the entire database. The company regularly sent clients a pack of floppy disks (several dozen), on which the updated database was recorded. It is clear that this method was not convenient for everyone.

In addition, ConsultantPlus was the first to develop systems aimed at accountant users. “We realized that our users are not only lawyers, although this is the main group, but also accountants. And we made a special product for them five years earlier. There was also special content in the form of questions and answers (explanations from experts on individual documents, which we did together with specialized publications and representatives of ministries and departments), aimed at this audience, and additional services. As a result, we received a huge piece of the market that had not yet been developed by anyone,” recalls Dmitry Novikov.

“I would classify their competition as a war of ambitions”
Boris Shcherbakov, Vice President of Oracle, General Director of Oracle CIS:

– In my opinion, the market cannot and should not relax anyone at all. In addition to competitors, there are at least several other main driving forces in the market - consumers themselves, government regulators, technological progress, etc. Each of these forces keeps the manufacturer of goods and services awake, even if there are no competitors around. There is always “internal” competition of the manufacturer - between brands, directions, departments. But the case with Garant and ConsultantPlus is different: there is a fairly conditional division of the market between former partners, and I would rather attribute their competition to a war of ambitions - they could well reach a “cartel agreement” if they wanted. However, something is preventing us from returning to the state of partnership from which the owners of these companies began. But even if they merged, they would still have to compete for product quality, logistics, and prices with emerging aggressive young companies, not constrained by the syndrome of rank, experimenting with technology. Their appearance is inevitable. And with whom we will actually have to compete fiercely in five years is a big question.

Of course, it is possible that the “deadly” competitor of both has not yet been born. Perhaps the service of creating reference and legal databases itself will lose relevance with the evolution of state institutions. Russian brands are generally quite volatile - a decade of successful work is considered almost a pass to eternity. Creating and maintaining a competitive brand is hard and costly work that does not allow you to relax, regardless of the number of competitors. For example, Polaroid had virtually no competitors in instant photography, but so what? Coca-Cola and PepsiCo have been competing for decades, and both companies are alive and well.

The internal structure of companies generally has little to do with the creation of a competitive product, since there is no single management system that is equally applicable to all industries and types of companies: everyone chooses what they are better able to manage, which gives a more effective outcome. Another thing is that in this case it is possible and necessary to use the experience of effective organization of activities accumulated over decades in other countries. And you can save money on this.

Sales
Both companies built their sales and service structures in completely different ways. However, as practice has shown, those who made decisions with a view to the future were in an advantageous position.

“I didn’t understand a lot about business back then. But I intuitively felt that the market was huge. And he is far from limiting himself to Moscow alone. However, sitting in a Moscow office you cannot do large-scale work across the country on your own. And we realized: we need to attract partners,” Novikov explains one of the strategic decisions made by his company.

Instead of opening regional offices and branches, assigning their people there and spending significant funds on this, Novikov’s company began to actively develop a franchise network. At the same time, Consultant’s partners received an unprecedentedly large – up to 80% – share of the income from the product they sold. Dmitry Novikov: “Many then thought: “Let’s give the dealer 10%, that’s enough, let him run.” But we said: “On the contrary, it is the partner in the region that ensures success, so the bulk of the income should remain with him. It was this, and not investments in advertising or office interiors, that provided the breakthrough.” Until now, partner companies working with Consultant under franchise agreements pay only 20–40% of income to the manufacturer.

Moreover, Novikov’s company completely abandoned the idea of selling its systems directly to customers, trying to attract as many partners as possible and increase their trust. “The fact that we will not have a single direct client was a fundamental decision. And we still adhere to it,” says the head of ConsultantPlus. “We will not sell our system to any client, even if he comes directly to our office. We will provide him with a list of addresses of our partners, giving guarantees on our part that there he will receive both systems and service of excellent quality. And only if our partner himself asks for help with servicing a large client, who often needs additional services, our specialists help him.” Such a careful attitude towards franchisees has borne fruit, says Novikov: “It is very important for partners to have confidence that they can safely invest resources in the quality of service for the long term. If the manufacturer operates directly in the market, actually competing with them, this confidence is immediately lost.”

As a result, Consultant's sales and service network began to grow rapidly. Garant began to lag behind its competitor and decided to change tactics. Dmitry Persheev: “We entered the market with very soft methods, and then we saw that there were energetic and aggressive people working around us who were taking clients away from us. We endured and endured, and then decided that we needed to work in the same way.”

In 2000, he decided to change the promotion policy and rely on the development of a regional franchising network, essentially copying the Consultant strategy. However, a fundamental difference between competitors in sales tactics still remains: along with the use of franchising, Garant continues to sell its systems directly, while Consultant conducts all sales only through partners.

Staff
People are the third key element at the core of each competitor's business. And work with personnel in both companies is also carried out differently.

Consultant has adopted a democratic form of management. “Our policy is based on respect for people and their interests,” says Dmitry Novikov. “It’s not very difficult to write instructions, and we, of course, have them, but that’s not the main thing. Requirements for employees may be quite severe, but they must be reasonable, fair and predictable. We adhere to the same tactics both in relation to employees of the parent company and to partners in the regions. The key formula of our policy is mutual respect for interests.”

Persheev’s position is significantly different. The management system at Garant is seriously regulated and formalized. Each person hired by the company is given a special document “Personnel Regulations”, in which, on 56 pages, the newcomer is told about his rights and responsibilities. For example, among other things, a Garant employee is obliged to “maintain and improve the company’s image,” “keep his workplace clean and tidy,” and “improve business and production skills.” Also, staff “are not recommended to discuss the personal qualities of managers and employees behind the scenes within the company’s walls.” In addition, the rules require “maintaining cleanliness and order in the building” and not using company property for personal purposes “without the written permission of the immediate supervisor, including copying machines and Internet access.” Those who do not comply with the rules prescribed in the regulations are considered not fulfilling their duties. Judging by the text of the document, they are punished as follows: first they are reprimanded, then they are reprimanded, and in case of another violation they are fired.

Three P's
It was the integrated approach to these three “Ps” (product, promotion, personnel), on which the “Consultant” relied, that provided the company with a breakthrough. Having worked with one of these three elements - promotion - Garant was able to strengthen its influence on the market, which is also recognized in Consultant. But truly serious competition, Dmitry Novikov believes, his company can come from a player who will work equally carefully with all three elements. If this happens, the balance of power in the seemingly calm market for legal reference systems could seriously change.

Tatiana Tkachuk

The benefits of comparison