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.

One response to “Is first mover advantage overrated?

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