At a major company, I heard an executive make this statement:
“We don’t need to study our customers. We’re a fast-follower. If you read all those Harvard Business Review articles, you know that it doesn’t pay to be first.”
This person was clearly not familiar with the proverb, “If you’re not first, you’re last,” as coined by philosopher Ricky Bobby from the movie Talladega Nights.
All markets have a first mover advantage. Just because other factors also contribute to a product’s success, that does not mean that there is some inherent advantage with being second, third, or later.
Being first to market means that your company has the infrastructure to capitalize before others. However, the risk is that you become complacent after educating the world about the utility of your product. Such sins of negligence include the following:
- - You don’t learn satisfaction levels of your particular product and improve it.
- - You stop studying the market, so you don’t know how to improve your product relative to substitutes and later entrants.
- - There is a reluctance to create a newer and better product out of fear of cannibalizing the original.
- - The company develops a harvest mentality and insists on using the same physical assets.
There are many examples where the first mover did not ultimately win, but rather a later player took advantage of the pioneer’s trailblazing. Nintendo defeated Atari, Amazon defeated Books.com, iTunes defeated cdbaby.com.
Innovation from a market perspective is an endless series of product adoptions with each having some advantage over the previous generation. Let’s not confuse an “advantage” with a “guarantee.” There is a first mover advantage but not a first mover guarantee.
If you claim to be a fast-follower and yet do not study your customers, then how can you know which innovations to copy?
According to Deloitte, over 70 percent of mergers and acquisitions fail to create shareholder value. Granted, some of these deals are about decreasing costs, increasing efficiencies, and other various reasons. But many times, the acquisition is about obtaining a firm that has a product or technology that the purchaser believes will be received well in the market.
How can a company know what technologies to acquire if it does not know what the needs of the market are?
The bottom line is simple. Study your markets. Know your customers. Learn their needs, and the associated market opportunities. Your company must study them as if you were Indiana Jones and your customers collectively had the map to the Holy Grail, the Ark of the Covenant, the 10 Commandments, and Vince Lombardi’s secret playbook.
Take a page from Ricky Bobby. With precise knowledge about your markets, you can innovate, create solutions, and acquire the proper technologies to boldly enact your growth plan.