First Mover or Fast Follower?

By Tunde WaleTemowo | 3 min read
8th March 2018
First Mover or Fast Follower?

The concept of "first mover advantage" is a maxim that affirms the benefits of taking the lead in a particular market, often through the introduction of an innovative product or service. While exploring "blue oceans" or "green fields" comes with immense advantages, principally being market leadership, such ventures are however not for the faint-hearted. As an entrepreneur or an aspiring one, do bear in mind that underneath the much-hyped advantage of a "first mover", is a huge risk that cannot be ignored.

Maidique and Patch (1998) classified innovation strategies based on timing to market. Two prominent classifications from their work are the "first mover" and "fast follower" strategies. In this piece, we will explore the features of both, the considerations for making a choice between the two, and select examples of companies that have adopted either strategy.

1. The "first mover" or "first-to-market" strategy is one aimed at gaining competitive advantage through the commercial exploitation of trail-blazing ideas. It typically gives the business a grip of the market and the opportunity to harness hitherto untapped market segments. A first mover must have good appetite for risk-taking and should be willing to take a long-term view of the market to predict consumer behaviour and demands. Another key feature of the first-to-market strategy is that companies adopting this would typically have to structure their pricing models to maximise profits and recover (often significant) research and development (R & D) costs.

Capabilities required for businesses seeking to adopt the first mover strategy include:

  • Willingness and capacity to invest significantly in R & D;
  • Strong technical and market knowledge;
  • Ability to simulate and predict market demands to a high degree of accuracy; and
  • Ability to secure patent protection where necessary, especially for proprietary goods and services.

2. "Fast follower" or "second-to-market" strategy is one adopted by businesses that are not willing to take pioneer risks, but are also not willing to be left behind by the competition. Features and inherent advantages of this approach include the following: 

  • Risks are lower, as the market would have been opened up by the first mover;
  • The business is able to learn from the first mover's errors;
  • The second mover is able to "free ride" on the technical and market investments of the first mover.

The fast follower also requires certain capabilities to compete favourably in the market.  Some of the required capabilities are:

  • Flexible and responsive R & D capacity to be able to match the first mover's product and service offerings;
  • Strong technical and market knowledge, just like the first mover;
  • Ability to rapidly commit capital for business expansion in order to catch up with the first mover;
  • Ability to stimulate secondary demand.

At different points in the developmental cycle of any market, a first mover or fast follower could be the dominant player in the market. Steven Conway (2017), referencing the findings of Grant (2002) provides a snapshot of the state of play in certain markets, comparing the first mover and fast follower. Some of the examples cited are listed below:

1. Product: X-ray Scanners

    First Mover: EMI

    Fast Follower: General Electric

    Dominant Player: General Electric (Follower)

2. Product: Disposable Diapers     

    First Mover: Procter & Gamble

    Fast Follower: Kimberley-Clark

    Dominant Player: Procter & Gamble (Leader)

 3. Product: Plain Paper Copiers

     First Mover: Xerox

     Fast Follower: Canon

     Dominant Player: Not Clear

 4. Product: Web Browsers

     First Mover: Netscape

     Fast Follower: Microsoft

     Dominant Player: Microsoft (Follower)

It can therefore be inferred that being a first mover is not a guaranteed formula for market dominance. Before making the move, appraise the capabilities of your business, analyse the market dynamics and take an informed leap. But do remember that beyond timing to the market, continuous improvement and reinvention of your products and service offerings are very critical ingredients for market leadership.

Tunde WaleTemowo
Tunde Wale-Temowo heads the Human Resources function of a specialized financial services institution in Nigeria. Prior to his current role, he had worked in the Management Consulting practice of one of the Big 4. He writes from Abuja.
Regulatory Requirements for Starting a Creche Business in Nigeria

Regulatory Requirements for Starting a Creche Business in Nigeria

Regulatory Requirements 3 min read
With more and more women holding down full-time jobs or running a business full time, there is a
Regulatory Requirements for Starting a Hospital Business

Regulatory Requirements for Starting a Hospital Business

Health 3 min read
Hospitals play a crucial role in providing health services in communities and in the nation as a
Putting Together Start-up Costs for a Fish Farming Business.

Putting Together Start-up Costs for a Fish Farming Business.

How to Start a Business 3 min read
Isn't it fascinating to know that most lipsticks ladies wear today are made from fish scales? Some

Comments

Please sign in to write a comment
No comments