Does First-Mover Advantage Still Exist?

In the tech world, many businesses continue to buy into the supposed advantages of being first to market. But is being a trailblazer in today’s competitive environment really that advantageous?

By now, you’ve probably seen Samsung’s new commercial for its Galaxy Gear smartwatch.

Opening with a shot of Dick Tracy’s famous radio watch and weaving in shots of the Jetsons and Inspector Gadget, the commercial does an excellent job of piquing interest in what the company clearly believes is a revolutionary product, while also positioning the tech giant as a world-class innovator.

In business terms, it’s a classic attempt to leverage first-mover advantage — the supposed boon a business can achieve by being the first to release a product in a new market.

Numerous tech businesses have leaned on that concept over the years, with eBay being the case study for the marketing, financial, and economic advantages that being first to market can provide. Then again, as serial entrepreneur and author Steve Blank points out in this post, being a first-mover has also proven to be a curse for some other companies like Overture (overtaken by Google) and Ford (overtaken by General Motors).

Which fate will Samsung experience? The jury’s still out, of course, but we thought it might be valuable to debate the true value of being first to market (for another take, read Sudip Verma’s blog post, “Learn from Samsung: Should You Be a First Mover or Fast Follower?”).

Why First-Mover Advantage May be a Myth

 

There are, of course, a couple of issues working against Samsung.

First, Samsung’s smartwatch isn’t really the first smartwatch to make it to market. Pebble, which raised $12 million via Kickstarter, released its first smartwatch earlier this year, while Sony released its SmartWatch in mid-2012.

Second, the reviews of Samsung’s Gear smartwatch have been lukewarm, at best, so far. In fact, in a post for Bloomberg earlier this month, Rich Jaroslovsky wrote that while Samsung is well-positioned to “truly inaugurate the era of wrist-based computing” the company’s product isn’t nearly as usable or useful as it could be.

And therein lies a major hurdle for first-movers, writes David Fields in a recent post for IndustryWeek.

Fields says that for every first-mover that has grown into a market leader, there are at least 10 businesses whose attempts at executing a “land grab” have failed miserably (hello, Atari, Netscape, Friendster, Palm, and MySpace). And it’s often because first-movers rush to be pioneers often comes at the expense of product quality and usability.

“In most cases, any first mover advantage is a gift from the latecomers whose offerings are insipid, uninspired and me-too,” Fields suggests. “Apple’s stranglehold on the tablet market remains unbroken because Samsung has not figured out a meaningful reason for consumers to purchase something other than an iPad.”

The Case for Being First

 

Then again, there are some inherent advantages to be a first-mover.

For instance, in Fields’ article for Industry Week, he points to a business like Xerox, which leveraged patent protection of its photocopying invention to gain a 15-year head start on its competition. Similarly, after inventing its first waffle-style running shoe in the early 1970s, Nike used its position and reputation as a market pioneer to eventually become one of the world’s biggest businesses.

That said, businesses like Xerox and Nike didn’t get to where they are now simply by being market pioneers. According to innovation expert and scholar Tim Kastelle, it also took a significant amount of follow-on execution and innovation, as well as an ability to scale at the right time.

Kastelle also cites the work of James Gardner’s book, “Sidestep and Twist,” which argues that building and growing a business has far more to do with creating a product that’s easily understood, adopted, and shared, than it does with creating a product that’s “first.”

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Whether You’re First or Last to Market, Focus on This

Regardless of where your business falls on the innovation spectrum, Fields’ says that businesses should be focusing on one thing no matter what: Being better. Ultimately, Fields writes, better almost always trumps fast.

“Better” is a nebulous word, of course, and your market’s definition of it will likely be different than another market’s. But in order to succeed long-term, Fields says that companies need to figure out what it means to their customers, and then deliver that value as quickly and meaningfully as possible.

In that sense, Blank believes that there are more inherent advantages to being a first-follower than a first-mover.

“First-movers tend to launch without fully understanding customer problems or the product features that solve those problems,” Blank writes in this post. “They guess at their business model and then do premature, loud, and aggressive public relations hype.”

Sounds a little bit like Samsung’s current strategy with its Galaxy Gear smartwatch, doesn’t it?

Learn How to Take Down the Big Guys

Slaying GoliathBeing a first mover may not always be the best competitive advantage, but there are plenty of other ways your small business can challenge and take down your larger competitors.

Download this free eBook and learn how to:

  • Understand your own strengths
  • Identify and exploit your larger competitors’ weaknesses
  • Successfully defend against their attacks
  • Leverage your size to your advantage

Download

We Want to Hear from You

Has your business derived any benefit from being a first-mover? Or have you taken the opposite approach — observing and studying the failures of a market pioneer, and focusing on delivering a better product?

 

Photo by: Karlis Dambrans

Josh Zywien
Josh Zywien
Content Marketer

Josh is a Content Marketer at Ambassador which gives marketers the tools they need to grow customer relationships and drive revenue through word-of-mouth, referrals, and recommendations. Previously, he was an Account Executive at CBS, Inc.
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