Tag Archives: first to market

First Mover or Fast Follower: What is Right Business Strategy? Think Hard About; Pros-Cons of Being– First, Fast, Late…

Some management concepts have such intuitive appeal that their validity is almost taken for granted; ‘first mover advantage’ is one such concept… Business executives from most companies maintain, and many without exception, that early entry into a new industry or product category gives a firm an almost insuperable head start… But for every academic study proving that ‘first mover advantages’ exist, there is a study proving they does not…

Many business people believe that being the ‘first mover’ or ‘first-to-market’ is the key to success… however, according to a study cited in Harvard Business Review, 47% of first-movers fail…

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Innovation is usually equated to being ‘first’– first to market, first to offer a product, first to employ a process… However, it might just be that the best innovation strategy is to spot the great ideas of others and rapidly replicate and improve them…  According to Ruud Gal; as a generic statement one cannot say what is better; ‘being first’ or ‘being a fast follower’… There are many parameters that influence the decision, e.g.: value proposition, business model, barrier to entry, culture change… so, it basically becomes an individual company decision or reality…

Although being first mover can create an overwhelming advantage, in many cases the products, services… that are first to market often do not succeed. They become victims of ‘first mover disadvantages’. Much of the problem with the concept of first mover advantage is that they may be hard to define, e.g.; should a first mover advantage apply to just firms entering an existing market with technological discontinuity or should it solely be new markets? The definition vagueness has certainly named undeserving firms as pioneers in certain industries, and that has led to some debate over the real meaning of the concept of first mover advantage…

First movers are not always able to benefit from being first. Although firms that first enter a market with a new product, service… can often gain substantial market share due to lack of competition… Whereas, a second mover or fast follower advantage occurs when a firm that follows the first-mover is actually able to capture greater market share despite having entered later…

According to McGee; the image of ‘fast follower’ is intended to evoke a NASCAR driver drafting behind the leader, carefully waiting for the right moment to streak past and across the finish line. It’s deeply rooted in a notion that strategic success is a function of execution…

Many Asian companies are fast followers; they don’t aim to be technology leaders, nor are they trying to come up with radically different new products… but rather, their strategy is to watch the market closely, tracking the market leaders, and being ready to quickly adjust and match demands, once a new concept has proven its potential in the market…

Logic suggests that the greatest benefit comes from letting others lead so that they discover the pitfalls and incur the costs of adjusting strategy… According to Steve Blank; you don’t always want to be the first mover. In fact, you typically want to be the first fast follower… there are the old adages; ‘learn from those before you!’ or, ‘never invent, spot the trend, then do it better!’ or, ‘invent, trademark, sit on it for 3 years!’…

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In the article First Mover or Fast Follower? by Jacob Morgan writes: Today technology is evolving at ever rapid pace and an organization needs to ask itself a very important question: Is it worth investing in new technologies to stay on the bleeding edge, or is it better to wait for other companies to deploy these technologies, and instead be a fast follower? Often times you hear people talking about the ‘first mover advantage’, meaning if you get there first you ‘win’. Organizations that follow closely behind the ‘first movers’ are the ‘fast followers’…

So maybe the question should be: Is it better to be ‘first mover’ or ‘fast follower’? However, this is not necessarily an issue of a better or worse option, since there are many examples that support both… and not to sound cliché, but each individual organization will largely dictate the specific approach that works best for it…

The first mover has the opportunity to define and own a market but also has the greatest risk of failure… The fast follower can observe the first mover and get a better understanding of what works and what does not… but also it has a risk of not being able to move fast enough or smart enough to overcome the advantages of the first mover…

According to Strategyn; most markets have a first mover advantage… being first to market means that the company has the infrastructure to capitalize before others. However, there are many examples where the first mover did not ultimately win, but rather a later player took advantage of the pioneer’s trailblazing… 

In the article Why Fast Followers Beat First Movers by Don Dodge writes: Innovation drives many industries; it attracts– the best talent, attracts investment, wins fame for its leaders… and when innovation leaders burst onto the scene, they often win early market leadership, but sometimes they cannot sustain the pace… and, that’s when a ‘fast follower’ can often jump-in and takes over a leadership role…

So, why can’t the initial innovation leader-first movers sustain their success, where do they go wrong? Is it because these early innovators-first movers are mostly led by technical visionaries who lack the appropriate management and business skills to succeed, or is it something else? Also, it’s not unusual that a fast follower suffers the same fate as the initial first movers, and they too are overtaken by a new fast follower…

However, it’s just possible that we all over-estimate the abilities of the first-movers and under-estimate the abilities of the fast-followers… Studies have shown that most fast followers are, in fact, leaders in disguise; they are visionaries, they have excellent management skills, they continue to innovate beyond the original idea… they have realistic balance between business and technical… they have the keys for sustained market leadership… So if there are lessons to be learned they are; never stop innovating; build a well-rounded management team early; value sales and marketing talent as much as technical talent; react quickly to disruptive technologies or business models; don’t be too proud to imitate when it makes sense…

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In the article Better Growth Decisions: Early Mover, Fast Follower or Late Follower? by Stephen Wunker writes: For companies seeking ways to fuel growth by capturing new markets, there is a pressing need to think hard about when it’s wise to be an– early mover, fast follower or late follower… Each of these options requires a different competitive strategy, and many authorities have argued the merits and drawbacks of  a ‘first mover advantage’… In practice, however,   knowing which firm is the very first in a market is often debatable, and, in many cases, can be irrelevant.

A wiser approach is to observe how an early first-mover advantage might cement leadership in certain markets… then consider what approach and industry circumstance may allow fast followers and late followers intercede and triumph. When is a first-mover advantage real?  The answer is simply ‘know’. When a business is assessing its strategic options, it should first ‘know’ and understand their industry; ‘know’ what customers are really buying; ‘know’ the competition? Once a company ‘knows’ their business, it can easily determine its advantages and drawbacks and develop an appropriate strategy, as either; first mover or fast follower…

We hear a lot about first-mover advantage, which is a notion that the first occupier in a specific market segment has a significant competitive advantage. But, some experts argue that the second-mover advantage or fast follower can be even greater. The Financial Times ran a story declaring that being first-mover is not always a surefire path to success– in fact, often times the ‘fast follower’ will eclipse the first-mover…

As FT explains; the so-called ‘fast follower’ have advantage of being able to use the pioneers’ experiences to learn about their– consumer tastes, design and manufacturing techniques, potential size of a market, marketing and sales strategies… They can also learn from their mistakes. According to Brad Feld; when I think about first mover, I don’t think of being a broad ‘market’  first mover, but rather a ‘category’ or ‘segment’ first mover, for example; Google? Not the first search engine. Facebook? Not the first social network. Groupon? Not the first deal site. Pandora? Not the first music site. The list goes on…

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An overarching question is whether corporate innovators need to heighten their risk profile; being first on markets can be risky and the rewards can be hard to reap, but on the other hand many might find that they have no choice… according to experts; if business want to enjoy sustainable success then it must be first… But, being a first mover doesn’t just necessarily mean– being the first with a new idea… but it can also mean being first in execution, value… do more faster

According to Simon Wardley; a novel and new innovation clearly offers the opportunity to create many benefits, but so too does providing an improved version of something that already exists. In the first case, benefits comes from a differential advantage– something competitors don’t have yet. In the second, the benefit comes from your advantage– competitors provide the same item or activity but you provide– more efficiently, lower cost, better performance…

In general, unless intellectual property rights interfere, most experts suggest that it’s better to let someone else blaze a new trail, then you move quickly into their market space and establish your advantage.   However, regardless of their specific strategy– all companies must be nimble, fast-moving and bold…