Monthly Archives: March 2010

Is first mover advantage overrated?

Apple iPod, Microsoft Windows, Toyota cars, Facebook. There’s one thing common among these products. They are all market leaders in their respective categories with substantial market dominance but were not the first movers in their industries. There were hundreds of personal music players before iPod came into picture, Windows was not the first operating system, American cars were dominant when Toyota entered the US market and there were Friendster and MySpace in existence much before Facebook became the social network of choice on Internet. So this pops up an important question: is the first mover advantage overrated?

First movers have a certain advantage. They win the coveted place in the hearts and minds of the early adopters. Early adopters can form a formidable force to help the product cross the chasm, and reach the masses. But the place where the first mover advantage starts to degrade is with the masses. Because the laggards don’t care whether you were first or the last one to enter the market. These are the skeptics, the people who care about the price tag and the popular thing, the advertisements and the buzz.

How can a first mover use the advantage and sustain it? Some ways to do that is by out innovating the competition, maintaining the price advantage and keeping up with the buzz in the industry. Another thing that can play a critical role is the ecosystem around the product. Ecosystem is powerful. It gives you the edge you need to fend the competition, attract the masses and attain the leadership position.

The takeaway from this is if you are trying to decide whether you should enter a particular industry or not, and the no-go decision is based on the fact that there is an existing dominant player in the industry, think again and try to recall one of these products. Then do your due diligence, look for opportunities, ways to improve over existing competition, possibility of an ecosystem and make your decision.

State of denial

Most human beings have a habit to live in the state of denial. Businesses take it a step further…go on record with their denial and then deny that they were ever in state of denial, sometimes decades later. We can describe this as the human touch of doing business. American car companies were in state of denial when Japanese started exporting cars, Sears rubbished Walmart, Yahoo! and Microsoft were in state of denial when Google was growing and Sony et al ignored the shiny white thing Steve Jobs introduced. The list can go on and on.

Any individual caring about his or her PR today cannot ignore twitter. Denouncing twitter as intrusive or waste of time is perfect symptoms of being in state of denial. Along the same lines, businesses cannot ignore the growing importance of social media. Your company is out there. You can remain in the state of denial and let it bounce like an orphan, or leverage the power of social media and reach your target audience where they want to talk about you.

We need to get out of this state of denial. The best way to do this is by relying on facts. Trust facts. Look at facts as they are, don’t try to decode them your way. Believe in numbers. Numbers generally don’t lie unless you want them to. The idea is to be adaptive to the world around us. Change is constant, we need to move forward by leveraging the change. It would be foolish to suggest against doing due diligence and getting randomized with every activity out there, but do your research with an impartial mind to reach to an answer, not to validate the theory you conceived while denying the facts. The sooner we come out of the state of denial, the better off we are as compared to the people who are still living in it!