Thursday, September 13, 2007


For those who thought that the first mover advantage is the real thing, here comes a sensational eye opener...

If there was one launch that the entire world had been waiting for with bated breath, it was for the iPhone! Its been one of the most well planned launches in the history of marketing. By deliberately giving scant information about the product, they raised the excitement level to an unprecedented height, with frenzied fans waiting endlessly just to catch a glimpse of the coveted product. Not surprisingly, iPhone created a record by selling 2,70,000 devices, just within the first two days of its launch. Yet, analysts predict that the success run may not sustain. Competition has already begun to work frantically on phones that will look and sound like the iPhone and probably be much cheaper too.

Conventional business wisdom says, being first in the market allows you to set standards. In addition, you can gain economies of scale, get the consumers hooked on to your brand and gain market leadership. But reality is not all that simple. If you thought Hotmail was the first company to offer free e-mail; Amazon was the first to sell books online; eBay was the first auction site; or that Starbucks was the first to start a coffee shop, you could not be more wrong. Instead Juno was the first to offer free e-mail; was the first online book store (launched in 1996) and Peets was the first to launch the concept of a coffee shop.

Being first is not enough

The brands mentioned above were first movers in the category, yet the world does not remember them. It’s not enough to be the first mover in any segment. It’s not enough to innovate something new and introduce it in the market. Just doing that cannot guarantee you success in the long run. After all it was Robert Fulton who invented the steamboat, but Cornelius Vanderbilt was the one who ran off with the shipping business. Atari created the videogame industry. Some say if it wasn’t for Atari there wouldn’t be a videogame industry or a reason to have a computer on your desktop (in those days – 1980’s – people bought computers to play games). Today, the industry is defunct.

Not that being first does not have its advantages. Consider Coca-Cola – the first mover in the soft drink category. Pepsi is still struggling to fight “the real thing”. Similarly, Hoover was a first in vacuum cleaners. Henry Ford was the first to invent the automated assembly line, which gave him an edge over the competitors. But look closely and you realise that being first does not guarantee automatic success. Silicon Valley is proof to this. During the dotcom mania, the first-movers were the ones with the unique idea, who got all the venture capital, but it didn’t take long for the bubble to burst. Many burnt their fingers pretty bad.

First movers or first losers

Bill Gates didn’t develop the original DOS, he bought the programme from Seattle Computers Works for $50,000. Bill Gates is more a marketing genius than an innovator. It was his great understanding of the market that helped him keep a strong grasp on his market share.

After all, it was not Microsoft Internet Explorer that was the first web browser – it was Mosaic. You need to think fast, you need to adapt quickly to the changing consumer needs and you need to mould your brand constantly. The one who is the fastest, will survive and win. Intuit was faster than Microsoft and today it’s beaten it at its own game. Intuit’s Quiken beat MicrosoftMoney, its QuickBooks beat MicrosoftProfit – and come to think of it, Intuit was the 47th mover in its category!

There’s more. Dell was not the first to invent Personal Computers. It was a company called Osborne. Dell just showed the world a new and innovative way of marketing them and succeeded. Gillette didn’t hesitate to develop Mach 3 which would kill off its own product Sensor Excel, which was a highly profitable product. Cannibalising your own product is a tough call to take, but that’s what survivors are made of – they don’t fall in love with their old inventions, they move on.

Overnight delivery was not a new concept but FedEx gave a whole new meaning to it. The US Postal Service is still reeling from that one. The automobile industry in the 50’s and 60’s was in an enviable position. However, during the 70’s oil crisis, consumers demanded smaller fuel-efficient vehicles and only those who stood up and took notice reaped rich dividends. No wonder, Japanese auto-makers easily captured the US car market.

There is no guarantee of continued market dominance where technological innovation is possible. If you need to survive you need to keep innovating and changing. It’s not necessary to discover something new. You just need to be alert about the best practices and incorporate them. “Shamelessly copy best practices,” says Jack Welch. That’s innovation for you. Throughout its history, Japan excelled at finding the best the world had to offer and then adapted and improved it. It is this that accounted for its stunning economic growth between 1945 and 1985.

Just being a pioneer is no big deal. Nearly 47% of all market pioneers fail. Chucks invented the disposable diapers, yet it’s Pampers (of P&G) which is the leader. It was not Coke or Pepsi that invented the diet cola but a company called Royal Crown Cola. Ericsson was the first mover in the mobile market, but Nokia realised that it was design which appealed more to the consumers. Nokia leads the mobile phone market today. Similarly, Matsushita has always got a piggy ride on other firm’s inventions (like Sony), rarely inventing anything new. It just identifies the winning products, makes them and markets them well.

So if you have not been the first mover or have nor been able to invent something new, don’t worry. Gillette didn’t invent the safety razer, it was a company called Star! Gillette marketed it brilliantly. In fact iPhone is not as good as the original called IBM Simon which was priced at $900 back in 1994 and had most of the features found in today’s smart phones. In fact its buttonless touch screen interface was better than iPhones. Yet, the IBM Simon flopped.

History is proof that it’s not the largest, strongest or fastest that survive, but the ones who are ready to adapt. And sometimes it’s actually good to be the second best. As Avis once stated in its ads “We are No. 2, that’s why we try harder.”

Spot a winning product, a winning trend, keep an eye on customers needs, be flexible and don’t sit on your initial successes, for competitors are always keeping an eagle eye on you. Keep moving, try a lot of things, but keep only those that work and quickly discard those that don’t. Henry Ford once said “I believe, the best strategy is to be the first person to be second.” After all, first ain’t always good enough!

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