Thursday, February 25, 2016

First Mover Advantage?

Being The First

Writing in 90s, Al Ries and Jack Trout made the Law of the First their first law in the celebrated 22 Immutable Laws of Marketing. The proposition simply was - It is better to be FIRST than to be BETTER! Citing a rage of examples from Yuri Gagarin, Charles Lindbergh, IBM and Harvard, their point was that customers always remember the first, and the second person/ brand doing the same, even if they did it better, is usually forgotten.

Presented as a Law, this may not really stand up to any scrutiny. IBM was never really the first, as were not a host of brands that came to dominate the market. In fact, Ries and Trout themselves added all those qualifications in their later laws - like, it is not First in the market but first in the mind! To be fair, what they were trying to do is not create new laws based on evidence, but rather presenting the generally accepted marketing wisdom and marshaling the evidence to support it.

But, it held - and we got obsessed with First Mover Advantage!

Rushing To Be Different

The Law of the First, which may have driven numerous explorers and adventurers into climbing mountains and finding new places, is not very useful for businesses, though. Being first is a nice idea, but what if one is not lucky enough to be first? Indeed, if the Law of the First was really true, there was no need for 21 other laws, or, for that matter, Marketers.

What really created a job for them is actually the 2nd Law: The Law of the Category. "If you can't be the first in a category, set up a category you can be first in"! So, if you have not won in Notebooks, try with Netbooks, so on and so forth! This made First Mover Advantage into an actionable thing, and the principal job of marketing. This started the scramble for new words, or new meanings in old words. And, the word that benefited the most was 'Differentiation'! This, in its verb form, 'To Differentiate', became the single point job description of any Marketing Director, and for that matter, any business.

Reality Sets In

However, in terms of actual business practise, a lesser known book may have more useful advice. This is Fast Second (2002), written by Paul Geroski and Constantinos Markides. Based on evidence, this presents something more like a Law: That a 'Fast Second Company' let other companies innovate and create new markets, and just as a 'dominant design' begins to emerge, they enter the market, capture the 'dominant design' and gain market leadership. 

We see this playing over and over again in the Internet economy. This always makes me think of Samsung, but so was Apple itself when it followed the lead of Blackberry, or Nokia when it unseated Motorola and everyone else. Being Second, rather than First, has now become fashionable, particularly after so many success stories of the kind in the Internet Economy (anyone thinking of Google?).

Does It Matter?

So, does First Mover Advantage matter? Imagine going into an investor pitch and saying - we are not the first and we are just following the business model of this really cool company! Or, think of that frequent question that gets asked, what's new? With disruption being the talk of the town, if you don't have anything really new, it does not really fly.

So it really takes courage to say, as I heard an entrepreneur say yesterday, that when you are really doing business through people, first-mover advantage does not really matter. This is a forgotten point: Even if you come late in the game, you can still win if you have the best people. And, this applies to almost all service businesses. Think Education for a moment: Offering better education works!

For some reason, we don't have a Law of Better as we have a Law of the First or the idea of Fast Second. But this is not because it does not work, but this 'Dog-Bites-Man' phenomenon, so obvious that there is nothing to write about! But not writing about makes us forget it, or start thinking it is not important. And, besides, this oversight changes our priorities: We replace relationships with algorithms in our search for differentiation.

One can hope, and there is some evidence to back this up, that despite all this talk about algorithm-driven, first-obsessed, start-up talk, the space for authentic, people orientated businesses are opening up. When everyone is trying to be first, an improbability, it is possible, even easy, to be better and be known. That is one law of business which has proved to be really immutable.


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