Tempted to be a First Mover?

Don’t be a trailblazer – but follow those who are

(an unpopular message for modern innovation-focussed business)

 The concept of First Mover Advantage (FMA) is widespread within business academic literature at all levels. It is the assertion that the first business to enter a market has an advantage over subsequent entrants to the market by virtue of precedence enabling the creation of a variety of potential benefits. Many entrepreneurs are encouraged to seek new initiatives, to operate in new markets, to peruse the vast uninhabited open plains which the competition has left untouched.

But does this strategy work?

In 2014 Stephen Berry, having long harboured doubts concerning First Mover Advantage, conducted a MSc research on the subject using the top 160 global brands – were they first movers? Did they gain a competitive advantage?

Many clearly were – Coca Cola, American Civil War veteran James Pemberton’s 1886 ‘brain child’ (he claimed that it was a ‘brain tonic’) has dominated carbonated drinks for a century. IBM formed as the Computing-Tabulating-Recording Company (C-T-R) in 1911 by merging companies involved in employee clocking-in technology and a variety of scales and measuring devices. Verizon can trace its history back to a merger with Bell telecom – formed by Alexander Graham Bell – so also a ‘first mover’. However these happy and possibly convenient examples hide the underlying story. Google was the 21st search engine; 8 years after a trio of Canadian students at Montreal University produced ‘Archie’. Apple was formed in 1976, a long time from Olivetti’s 1964 ‘Programma 101’ and after Hewlett Packard, Wand, Commodore and a range of Soviet era PCs.

For the top 160 global brands, the pattern is perhaps surprising:

category First mover Early entrant Follower Late entrant
% of the top 160 13.8% 18.1% 55.0% 13.1%

The summary of the research is clear – statistically the follower wins.

This is no surprise to the observers of animal strategies. ‘Strategies of the Serengeti’ unpacks a range of strategies from the competing animals of the vast East African savannah. The ‘strategies of the cheetah’ chapter shows how modern entrepreneurs seek to emulate (consciously or subconsciously) the strategies of the world’s fastest land creature – the 70mph cheetah. Initiative, speed, nimble operations, adaptability and often making sacrifices to achieve these objectives (such as lighter bone structures and weaker jaws in the case of the cheetah).

Meanwhile, quietly observing the spectacular pace and impressive ‘kills’ of the awesome feline is the less spectacular, often maligned, seldom admired hyena. The hyena has the strategy of the follower – gaining from all the hard work of the first mover. Hyenas will watch cheetahs, observe when they have made a kill and then combine to bully the cheetah away from its meal. The cheetah has the hard work of hunting, the follower hyena merely takes advantage of all their hard work.

Is it a successful strategy? Cheetahs are under significant threat of extinction, hyenas considerably less so. For business, following the hyena would mean not treasuring fast paced innovation – but carefully following and observing those who do. It would mean emulating their successes without the costs of failure and experimentation, without the research cul-de sacs.

To what extent is your business a cheetah and to what extent is it a more successful hyena?

The message from the hyena

Don’t waste your energy chasing prey – find those who do, then push them off their catch, making their meal become your meal. The business statistics of the top 160 brands agree; only 13.8% were first movers, 68.1% were either followers or even later ‘late entrants’ who pushed the tired and weakened first movers away.

Stephen Berry is an international business conference speaker, the author of ‘Strategies of the Serengeti’ and ‘teach yourself strategy in a week’ and formerly both a CFO and an international MBA lecturer in business strategy. On the web site www.StrategiesoftheSerengeti.com there is a free of charge assessment for each of us to consider which Serengeti animal strategies our business is using and also how much like the successful zebra we are.