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Is First Mover the Best Strategy or “Is It Easier to Run From Behind?”

Seems the old sage Theodore Levitt was right when he stated in his article Marketing Myopia “In truth, there is no such thing as a growth industry, I believe. There are only companies organized and operated to create and capitalize on growth opportunities.(see my article “What Business Are You In” for more on Marketing Myopia)

Three recent headlines in the Wall Street Journal caught my eye as providing some evidence that Levitt’s hypothesis is valid.

  • Nokia’s Bad Call on Smartphones (WSJ Thursday, July 19, 2012)
  • Japan’s Dimwitted Smartphones: Electronic Makers Sony and Sharp Play Catch-Up to Apples iPhone; ‘The Gold Age of TV is Over’ (WSJ Thursday April 16, 2012)
  • How Japan Lost Its Electronics Crown: Sony Sharp and Panasonic Fixated on Hardware Breakthroughs; “Sometimes, It’s Easier To Run From Behind”  (WSJ Wednesday, August 15, 2012.

All three articles provide excellent examples of the perils company face when they lose sight of the customer and become product and industry focused.

In the article “How Japan Lost Its Electronic Crown,” I was somewhat surprised and skeptical to read Sony’s strategic decision to let Samsung and others take the lead in developing innovations. According to Sony’s chief strategy officer:

“The first runner has to face the wind – sometimes, it’s easier to run from behind.”

Wow, this is form a company that was known for its breakthrough new products and technologies. Sounds as though Morita-san’s magic is wearing off.

But is there wisdom to not being the trail blazer? Why not let the early explores and pioneers deal with the wilderness and all its unknowns. Skip the arrows in the back and wait till safe ground has been established before moving in.

First movers can definitely realize a competitive advantage, but often it’s not the first mover that wins the battle, it’s the fast follower that wins.

A good example of first mover “disadvantage” was Nokia’s experience with its smartphones. By all accounts the new product development teams got the trends right but they hit the market too early, before consumers or wireless networks were ready to make use of them.

Nokia could very well have rode out the early adoption issues but unfortunately it made a strategic decision to merge the advanced smartphone division with the basic-phone operations. The basic phone business was growing while the smartphone market was still early stage and nascent, insignificant to the top and bottom line. The result was that the more profitable basic phone business started calling the shots and deemphasized their smartphone efforts.

With the benefit of time and network evolution, Apple launched the iPhone resulting in a huge success.  Apple simply did not follow, but learned what was working and not working in the market and followed up with a superior product and user experience. Much of what was learned and create for iPod and iTunes was leveraged and repackaged into a device that had the best of both worlds – consumer electronics and mobile computing devices.

Is it accurate to say Apple was a  fast follower? Yes and no. They waited for the adoption cycle to advance before launching their solution, but they led with a “total” product solution and a strong brand and positioning strategy. They understood what customers wanted, leveraged existing resources, and invested the time and energy to launch a product ready for prime time.

The point of the story is that First Mover and Fast Followers are strategies. In the right situation either strategy can work. The key is to understand what the market landscape is and applying a strategy that fits the circumstances and constraints.

Apple had the vision, discipline and design philosophy to do the product right because it knew the conditions were right to launch a revolutionary and game changing new product category. Their strategy was bold, decisive and focused. They hit the market with overwhelming force and established themselves as the category leader. So yes they weren’t the first, but they also weren’t simple followers in the true sense of the word.

There are multiple lessons to takeaway form these three articles. One is that a fast follower strategy can work but only if it truly brings a new value proposition to the table. The focus must be on discovering, creating, arousing and satisfying customer needs. Simply following what everyone else did will either continue to miss the mark and/or if you wait too long and just copy once a market emerges, the likely result is a red ocean strategy where the product will quickly commoditize.

Secondly, companies need to allow innovation to evolve outside the core operational performance engine and not allow innovation to become a “distraction” getting in the way of operational excellence. Understanding how to manage in the different stages of exploration (innovation) and exploitation (operational execution) is paramount in creating successful new business ventures.

If you are an incumbent company, following fast with better innovations that help people get important jobs done better may be the right strategy for you.

Keep innovating!

Kevin

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