movers
new product categories are constantly emerging around us. Company struggle not with whether to enter a new product category altogether but whether to enter early or later. Sometimes Executives wonder if it would be wise, to wait until the companies in the first wave have been weakened by competition and seeing their technological Edge dull.
but by that point, there might not be enough time left to master the technology and question, it may not make a lot of sense to try to be the first mover. In environments were the first mover's Advantage is likely to occur early after years of losses, and then to be short-lived, discretion would probably be better part of valor
first entrance with limited resources and skills would probably have to settle for a short-term first-mover advantage example how
but singer a later entrant with greater resources, were soon able to find more customers the basic sewing machine change little over a half dozen years, but demand increase to such an extent that singer began expanding into Europe
3 main ways to be a 1st mover 1. by creating a technological Edge over competitors
by starting earliest, first movers have more time than later entrance to accumulate and master technical knowledge
four possible combinations of slow and Rapid technology and Market evolution top
calm Waters upper left Matrix cell, where the technology and the markets are evolving gradually. Upper right, technology Cool Change is modest while the Market grows rapidly does the market expands faster than the technology evolves.
by putting all its technological and marketing muscle behind is product development process and being paranoid about competition, intel has been able to dominate a product category in which markets kept expanding and Technology keeps changing at a furious pace
could you not take the position of substantial resources as a guarantee of winning. A sequence of fast growing markets for micro computers, personal computers, and laptops has generated Relentless demand for new versions of the device.
vintage eFax in product categories, gaming console Market, which Magnavox Odyssey in 1972, at least six generations of Technology emerged in Rapid succession
each push forward a new winner
only a company with Deep Pockets could
enter such a market first, survive in a hostile environment, withstand a considerable delay before obtaining durable first-mover advantage. Allow a firm to wait until the pace of Technology change slows, or the fundamentally new technology its product line and bodies becomes the new standard, and the market takes off.
a gradual pace of change in the technology makes it hard for later entrance to differentiate their products from those of first entrance
even if competitors discover some means of doing so, the differences are not rapid enough for drastic enough to prevent the first-mover from mastering them and folding them into its product line in a timely fashion
although how could not achieve a durable first-mover advantage in the product category the patent he owned on competitors products allowed him to extract substantial rent for sometime
example of how adorable first-mover advantage of a product category still can maintain profitability even after their time in the market has cease to exist
your company's odds of succeeding with the resources it possesses depends on how well you understand the market and the technology
first-mover Advantage chart matches your company skills and resources with the environment you face in a particular situation from the situations your company faces. short-lived and durable first-mover advantages for scenarios calm Waters Market Leeds technology leads Rough Waters and the Q resources required
the pace of Market Evolution can vary as markedly as the pace of technological evolution
fixed telephones needed more than 50 years to reach a household penetration at 70%, cellular telephones achieve the same level in less than two decades
the combined effects of market and technological change the pace of change in a technology and a market can have a profound effect on a company's chances achieving a first-mover advantage.
four possible scenarios face a would-be first mover slow slow calm Waters, Scotch tape. slow fast, the technology leads, digital cameras. fast slow, the market leads, sewing machines. fast fast, Rough Waters, personal computers.
to be or not be the first?
four scenarios in a matric place premiums are very different sets of assets and capabilities.
although know I bet it's last forever, firms that succeed in building durable first-mover advantages tend to dominate their product categories for many year
from a market infancy until well into its maturity Coca-Cola unmistakably demonstrates both the value in longevity early success
by contrast, the walkmen, it's Market grew abruptly, the sales reaching some 40 million units in less than 10 years.
given the Market's enormous expansion rate and potential size, one might think that only a short-term Advantage should have been available to the first movie
when the waters are calm
gradual evolution in both technology and markets provide first movers with the best conditions for creating a dominant position that is long lasting. example, the vacuum cleaner industry protected its first-mover by evolving slowly and smoothly, the technology changed as slow as the market. When innovation did occur, the change was enduring. the vacuum cleaner components in a streamlined canister creating a technological blueprint that more or less persists to this day.
achieving a durable Advantage under such conditions as rapid pace of Market evolution is not, however
impossible
four possible combinations of slow and Rapid technology and Market Evolution bottom.
in the low left, he technology leads- performance Improvement is rapid compared with the evolution of the market. the lower right is the Rough Waters area, we're both the technology and the market evolve quickly.
likelihood of a first-mover advantage, now consider the market for that product
is it growing so fast that you can hardly keep up with demand, or is it expanding only gradually, giving you another than the industry plenty of time to plan every new customers?
a rapid pace of Market evolution
makes long-term dominance unlikely, but it does not necessarily bar a first-mover from achieving worthwhile short-term gains, provided has an accurate sense of when to exit
half-truth to first-mover Advantage
many first-movers have enjoyed considerable success While others have failed we have found that the difference in outcome are not random that first mover status can confer advantages but it does not do so categorically much depends on the circumstances in which it is sought
despite is a car brand name and plenty of resources, IBM could not stay atop the hard drive industry for long
neither could opportunistic later entrants
even if product markets dominated by firms with large research and development budgets blank tend to drive technological progress
new entrance and other competitors
see yearly performance Improvement index shows the factor by which each
product technological performance has multiplied each year
the combination of a slowly changing Market in a slowly changing technology makes company resources less critical than they would be in the other technology and Market environment
resources are skills or capabilities and the assets that organizations develop over time. The most important capabilities are productive development, production, and marketing. One important asset is brand recognition. Others are physical assets, such as strategic locations, and financial resources
a first-mover advantage
simply defined as the firm's ability to be better off than its competitors as a result of being first to Market in their product category
large-scale marketing, distribution, and production capacity is key in
situations where the market leads
S-shaped curve
slow progress at the beginning yields to Rapid progress and then a flattening in the growth rate but the precise shape of the S varies from one category to the next
first-mover Advantage occurs not when you enter a market, but when you
start making real money in it
industry Dynamics are crucial
students at first Movers advantage have concentrated on how firms achieve them
research and development, new product development, and Deep Pockets are key in situations where the
technology leads
pace of change when the market penetration and performance Improvement of most new product categories follow similar trajectories of the S curve but it is the rate at which they change that varies dramatically
telephones in vacuums became widespread slowly VCRs caught on almost overnight, PCS improved rapidly, while personal stereos remained little changed for years
another vintage effect the first portable computer
the Osborne 1 was the first portable computer which was quickly superseded by lighter models, technology evolve so quickly that each success are, after briefly achieving dominance, was soon supplanted itself
an slow pace of market growth also tends to favor the first-mover by giving it time to cultivate and satisfy a new market segments
the gradual growth of scotch tapes appeal gave 3M time to organize production and distribution. Technological change was similarly modest, enabling 3M to keep up-to-date and preventing later entrance from both introducing Superior versions and inventing around 3 M's patent. The product remain basically a change in till 3 and release the almost Invisible Magic transparent tape Scotch tape dominated is category it became synonymous with
2. 2nd way is by pre-empting later disruptive the evolution of Technology
the greater the challenge for anyone company to control it
a fast-growing Market ads to a first movers challenge by opening attractive new competitive spaces for later entrance to exploit
the incumbent tends to be at a disadvantage, since it often lacks a production capacity or marketing research to serve a rapidly expanding customer base
the greater a new products or categories departure from existing products or categories,
the more uncertain will be the pace of the Market's growth and its eventual shape how many segments the market will divide into
two factors that powerfully influence a first-movers fate
the pace at which the technology of the product in question is evolving and the pace at which the market for that product is expanding
the pace of change chart shows how do you rate of technology and Market Evolution can vary across product categories
the trajectories of both technological Improvement within a product category and that categories expansion in the market or roughly s shaped
when the market leads and Technology follows
the walkmen became the personal stereo, the most successful consumer electronics innovation of our time, use mature Technologies readily available at the time, and it's basic technological design remained unchanged for a decade
neither AT&T nor Netscape was able to make a profit in the new product space due to the strength of later entrance offerings. our research suggests that a good part of the reason was the type of Waters they had stepped into
they fall in the lower-right cell of the Matrix, both the technology in the market evolving rapidly, irregularly for sale phones smoothly for browsers. In such conditions, it is very difficult for companies to gain durable first-mover advantage.
early entrance face many years of flat sales and operating losses and consequently the skepticism of stock market analyst at the same time, the Furious pace of technological change brings in new competitors who
think they're improvements will draw customers away from the incumbent and it's dated products. a durable Advantage, for most early entrance as well as most later arrivals is also unlikely in a reverse situation
Xerox and Sony both had great name brands Deep Pockets many valuable skills it marketing muscle but could not translate being the first mover in home VCRs into anyting approaching its success with the Walkman
through analysis of more than 30 cases of early entry into the market new products face an examination of the literature we will identify situations in which companies are likely to gain first-mover advantage and those in which advantage or less likely
to make real money in an evolving Market, you need to analyze the kind of environment that surrounds the new category
to assess the character and depth of your resources, comparatively speaking, and then to decide on the type of first-mover advantage. Short-term or durable, immediate or delayed, that is most achievable if indeed any is. once you've gone into the water you have no choice but to swim
vintage effects
to characterize the tendency of new generations of technology to usher in winning entrants.
is a products underlying technology changes very rapidly, the item quickly becomes obsolete more often than not, such products are overtaken by
versions for new entrants, which aren't burdened by maintaining and servicing older product lines and can innovate without fear a cannibalizing Pryor Investments.
when technology leads in the market follows
what happens in the reverse situation, in which technology change abruptly in the market is slow to accept a new product category? A short-lived first-mover Advantage is very unlikely here.
Sony's considerable Financial Resources in world famous technological capabilities allowed it to stay on top of the category and grab a commanding sheriff is slowly evolving market for digital cameras
when technology leads the market
even if Polaroid had been the first mover into digital cameras, a category that wanted to dominate, our analysis suggests is fate would have been the same. it didn't have the
wherewithal to triumph over or even survive Furious technological change, wrap it and frequent product obsolesvence, and a slow Market take off
short-lived advantage can obtain sound benefits from early entry
whether the income suddenly or slowly, profits can be great enough to make a short-lived first entry a worthwhile investment and perhaps to make it a strategic objective
distinguish between durable first-mover advantage
which improve a firm's market share or profitability over a long. Windows that are short-lived
knowing how fast or slow the technology and the market are moving will allow you to understand your odds of succeeding with the resources you possess
you will use the two eventually went to gather this information
frantic Pace enabled later entrance, Chief among them Microsoft, with its enormous resources, to find plenty of space in which to grow in the internet browser Market
Netscape arranged to be acquired by AOL in an amazing 10 billion dollar deal they were able to remove themselves before competitors could destroy their business
if you step into a given environment with the wrong type of resources, you can expect a rough time
Polaroid had a great brand name and excellent access to distribution channels but it was relatively weak and research and development and new product development leaving the product back
the company also needs a superb to keep at the technological Forefront in the meantime
R&D capability
Sony's market share was close to 48% even 10 years after the walk band launch, thanks to Superior resources
Sony Superior resources, in particular its design skills, marketing muscle, and strong brand
one possible explanation for success is that it has a strong brand name substantial Financial Resources an excellent marketing skills which allow it to make the most of its first mover status
a firm's resources and luck are important but certain other factors and conditions can be decisive as well
of course, having the most abundant resources and the most valuable skills is always desirable but in calm Waters,
a first entrance lacking those advantages may still have the latitude in the means to defend its product against later competitors
likelihood of a first-mover advantage, think about a new product category your company recently entered
ask yourself are Innovations continually popping up? Or do they appear in frequently enough that you can stay current?
when Waters get rough
both technological innovation and consumer acceptance rapidly, leaving first movers highly vulnerable
a firm's resources can make a big difference. Only a first-mover with Mighty resources, far superior to those of competitors, has any chance of achieving long-term first-mover advantage when
both technology and markets are moving rapidly. all else equal, a first entrance with a very strong brand name will tend to be more successful and locking in customers than one without a recognized brand name
