Problem
Exercise: Is Being the First Mover Usually Advantageous?
Henry Ford is often credited with saying that he would rather be the first person to be second. This is strange coming from the innovator of the mass-produced automobile in the United States. So is the first-mover advantage really a myth, or is it something for which every firm should strive?
First movers are typically considered to be the ones that initially introduce an innovative product or service into a market segment (in other words, first to market in a new segment). The notion subscribed to first movers is that being one creates an almost impenetrable competitive advantage that later entrants find difficult to overcome. However, history is replete with situations where second or later movers find success. If the best way to succeed in the future is to understand the past, then an understanding of why certain first movers succeeded and others failed should be instructive. Accordingly, this exercise requires you to investigate a first mover and identify specifically why, or why not, it was able to hold onto its first-mover advantage.
Part I: Select an industry that interests. Research that industry and identify one or two instances of a first mover; research the introduction of a new offering into new market segments. For example, you might pick consumer electronics and look for firms that initiated new products in new market segments.
Part II: Present the findings with the discussion centering on the following at a minimum: Brief history and description of the industry chosen (e.g., was this a fast-, standard-, or slow-cycle market at the time the first mover initiated its strategic action)?
• How has innovation of new products traditionally been accomplished in this industry: through new firms entering the market or by existing firms launching new offerings?
• Identify one or two first movers and provide a review of what happened. If the product or offering is still considered successful, describe why. If not, why not?
• What did you learn as a result of this exercise? Do you consider trying to be the first mover a wise competitive action to take? Is your answer dependent upon industry, timing, or luck?