The Half-Truth of First-Mover Advantage - Harvard Business ...

A first-mover advantage can be simply defined as a firm's ability to be better off than its competitors as a result of being first to market in a new ... Youhave1freearticlesleftthismonth. Youarereadingyourlastfreearticleforthismonth. Subscribeforunlimitedaccess. Createanaccounttoread2more. Technologyandanalytics TheHalf-TruthofFirst-MoverAdvantage First-moveradvantageismorethanamythbutfarlessthanasurething.Here’showtotellwhenit’slikelytooccur—andwhenit’snot. by FernandoF.Suarez and GianvitoLanzolla by FernandoF.Suarez and GianvitoLanzolla FromtheMagazine(April2005) Tweet Post Share Save GetPDF BuyCopies Print Tweet Post Share Save GetPDF BuyCopies Print Leerenespañol Leremportuguês Somemanagementconceptshavesuchintuitiveappealthattheirvalidityisalmosttakenforgranted.First-moveradvantageisonesuchconcept.Althoughthefateofitsmost-convincedadherents,thedot-coms,offersacautionarylesson,managers’faiththatfirst-moverstatusbringsimportantcompetitiveadvantages,evenwhennetworkeffectsarenotavailabletoaccelerateandentrenchit,remainsundiminished.Businessexecutivesfromeverykindofcompanymaintain,almostwithoutexception,thatearlyentryintoanewindustryorproductcategorygivesanyfirmanalmostinsuperableheadstart. Butforeveryacademicstudyprovingthatfirst-moveradvantagesexist,thereisastudyprovingtheydonot.Whilesomewell-knownfirstmovers,suchasGilletteinsafetyrazorsandSonyinpersonalstereos,haveenjoyedconsiderablesuccess,others,suchasXeroxinfaxmachinesandeToysinInternetretailing,havefailed.Wehavefoundthatthedifferencesinoutcomearenotrandom—thatfirst-moverstatuscanconferadvantages,butitdoesnotdosocategorically.Muchdependsonthecircumstancesinwhichitissought. First-moverstatuscanconferadvantages,butitdoesnotdosocategorically.Muchdependsonthecircumstances. OnepossibleexplanationforSony’ssuccessisthatitsstrongbrandname,substantialfinancialresources,andexcellentmarketingskillsallowedittomakethemostofitsfirst-moverstatus.ButXerox,too,hadagreatbrandname,deeppockets,andmanyvaluableskills.AndSony,despiteitsbrandandmarketingmuscle,couldnottranslatebeingthefirstmoverinhomeVCRsintoanythingapproachingitssuccesswiththeWalkman.Yes,afirm’sresources—andluck—areimportant,butcertainotherfactorsandconditionscanbedecisiveaswell. Ourresearch,basedonathoroughexaminationoftheliteratureonfirst-moveradvantage,aswellasananalysisofmorethan30casesofearlyentryintonewproductspaces,hasenabledustoidentifysituationsinwhichcompaniesarelikelytogainfirst-moveradvantagesandthoseinwhichsuchadvantagesarelesslikely.Specifically,weidentifiedtwofactorsthatpowerfullyinfluenceafirstmover’sfate:thepaceatwhichthetechnologyoftheproductinquestionisevolvingandthepaceatwhichthemarketforthatproductisexpanding.Knowinghowfastorslowthetechnologyandthemarketaremovingwillallowyoutounderstandyouroddsofsucceedingwiththeresourcesyoupossess. WhatKindofFirst-MoverAdvantage? Afirst-moveradvantagecanbesimplydefinedasafirm’sabilitytobebetteroffthanitscompetitorsasaresultofbeingfirsttomarketinanewproductcategory.Wefinditusefultodistinguishbetweendurablefirst-moveradvantages,whichimproveafirm’smarketshareorprofitabilityoveralongperiod,andthosethatareshort-lived.Althoughnoadvantagelastsforever,firmsthatsucceedinbuildingdurablefirst-moveradvantagestendtodominatetheirproductcategoriesformanyyears,fromamarket’sinfancyuntilwellintoitsmaturity.Coca-ColainsoftdrinksandHooverinvacuumcleanersunmistakablydemonstrateboththevalueandlongevityofearlysuccess. Butevenwhenacompanycannotbuildadurablefirst-moveradvantage,itmayobtainsomebenefitsfromearlyentry.ThepioneeringeffortsofNetscape,thefirsttomarketanInternetbrowser,brieflyproducedenormousgainsforshareholdersuntilthestockpriceplummetedin1997followingtheriseofMicrosoft’sbrowser,Explorer.Appledeclinedmoregradually—itwasprofitableforseveralyearsbeforepressurefromMicrosoftandInteltookatoll,forcingittorestructureintheearly1990s.Whethertheendcomessuddenlyorslowly,profitscanbegreatenoughtomakeashort-livedfirstentryaworthwhileinvestment—andperhapstomakeitastrategicobjective.Ofcourse,abusinessisfreetochoosenottoenteranewmarketatall.Butevenarunner-up’smarginsmaylookgoodcomparedtotheopportunitycostofstayingoutofanewmarket. IndustryDynamicsAreCrucial Moststudentsoffirst-moveradvantageshaveconcentratedonhowfirmsachievethem.Oneofthethreemainwaysisbycreatingatechnologicaledgeovercompetitors.Bystartingearliest,firstmovershavemoretimethanlaterentrantstoaccumulateandmastertechnicalknowledge.Thesecondwayisbypreemptinglaterarrivals’accesstoscarceassets—forexample,alocationonacity’smainstreet,talentedemployees,orkeysuppliers.Thethirdisbybuildinganearlybaseofcustomerswhowouldfinditinconvenientorcostlytoswitchtotheofferingsoflaterentrants. Whathasbeenlargelyignoredistheconditionsunderwhichthosethreetacticsaremostlikelytosucceedorfail.Justasaswimmer’sabilitytocrosstheEnglishChanneldependsasmuchonthewater’sroughnessasonhisorherownskillandexperience,anearlyentrant’sprospectsdependasmuchonbackgroundfactorsastheydoonthefirm’sresourcesandcapabilities.Thetwomostimportantfactors—thepaceoftechnologyevolutionandthepaceofmarketevolution—aretypicallybeyondthecontrolofanysinglefirm. Therecanbeenormousvariationintheratesatwhichproducts’underlyingtechnologiesadvance.Forexample,thefirstmanufacturedglassdatesbacktoabout3500bc,whenMiddleEasternartisansheatedcrushedquartztomakeglazesforceramicvessels.Butittookthreemillenniaforthenextimportanttechnologicalchange,glassblowing,toarise,and1,600yearsmorebeforeEnglishmanGeorgeRavenscroftinventedleadglass.NootherimportanttechnologicalchangeoccurreduntilAlastairPilkingtoninventedthefloat-glassprocessinthetwentiethcentury.Bycontrast,acomputertodaybearslittleresemblancetoonemadeeventenyearsago. Sometechnologies,suchascomputerprocessors,evolveinaseriesofincrementalimprovements;othersevolvedisruptively,creatingabreakfromthenorm,aswasthecasewhendigitalphotographybegantodisplacefilm.Thefasterormoredisruptivetheevolutionoftechnology,thegreaterthechallengeforanyonecompanytocontrolit.EveninproductmarketsdominatedbyfirmswithlargeR&Dbudgets,newentrantsandothercompetitorstendtodrivetechnologicalprogress. Thepaceofmarketevolutioncanvaryasmarkedlyasthepaceoftechnologicalevolution.Forexample,themarketsforautomobilesandfixedtelephonesdevelopedmuchmoreslowlythan,say,themarketsforVCRsandcellulartelephones.Fixedtelephonesneededmorethan50yearstoreachahouseholdpenetrationof70%;cellulartelephonesachievedthesamelevelinlessthantwodecades. Thegreateranewproduct’sorcategory’sdeparturefromexistingproductsorcategories,themoreuncertainwillbethepaceofthemarket’sgrowthanditseventualshape—howmanysegmentsthemarketwilldivideinto,forexample.NokialaunchedtheN-Gage,agamingandmusicplatformthatincludesaphone,inOctober2003.Despiteamassivemarketingcampaign,positivecommentfromexpertsandthepublic,asuperbbrand,andmarketdominanceintherelatedcategoryofmobilephones,thecompanyshippedin2004onlyafractionofthe“severalmillion”devicesitsaiditwould. Theexhibit“ThePaceofChange”showshowtherateoftechnologyandmarketevolutioncanvaryacrossproductcategories.Thetrajectoriesofbothtechnologicalimprovementwithinaproductcategoryandthatcategory’sexpansioninthemarketareroughlyS-shaped—slowprogressatthebeginningyieldstorapidprogressandthenaflatteninginthegrowthrate.ButthepreciseshapeoftheSvariesfromonecategorytothenext. ThePaceofChange TheLikelihoodofaFirst-MoverAdvantage Thinkaboutanewproductcategoryyourcompanyrecentlyentered.Areinnovationscontinuallypoppingup?Ordotheyappearinfrequentlyenoughthatyoucanstaycurrent?Nowconsiderthemarketforthatproduct.Isitgrowingsofastthatyoucanhardlykeepupwithdemand,orisitexpandingonlygradually,givingyouandothersintheindustryplentyoftimetoplanandreachnewcustomers? Theexhibit“TheCombinedEffectsofMarketandTechnologicalChange”illustratesthefourpossiblecombinationsofslowandrapidtechnologyandmarketevolution.Weusetheterm“calmwaters”fortheupperleftcellofthematrix,wherethetechnologyandthemarketareevolvinggradually.Intheupperright,technologicalchangeismodestwhilethemarketgrowsrapidly—thusthemarketexpandsfasterthanthetechnologyevolves.Inthelowerleft,thetechnologyleads—performanceimprovementisrapidcomparedwiththeevolutionofthemarket.Thelowerrightisthe“roughwaters”area,whereboththetechnologyandthemarketevolvequickly. TheCombinedEffectsofMarketandTechnologicalChange WhentheWatersAreCalm Gradualevolutioninbothtechnologyandmarketsprovidesfirstmoverswiththebestconditionsforcreatingadominantpositionthatislonglasting.Thevacuumcleanerindustryprotecteditsfirstmoverbyevolvingslowlyandsmoothly.In1908,inOhio,WilliamHenryHooverproducedthefirstcommercialbag-on-a-stickuprightvacuumcleaner,butitmadelittleheadway.Aslateas1930,fewerthan5%ofhouseholdshadpurchasedone.Thetechnologychangedasslowlyasthemarket.Wheninnovationdidoccur,thechangewasenduring.In1935,HooverdesignerHenryDreyfussencasedthevacuumcleaner’scomponentsinastreamlinedcanister,creatingatechnologicalblueprintthatmoreorlesspersiststothisday.Insuchabenignenvironment,Hooverhadlittletroublekeepingup-to-datetechnologicallyandmeetingdemand.Thecompany’smachinesbecamethereferencepointwithinthecategory.TheBritisheventurnedthebrandintoaverb—“tohoover.” Agradualpaceofchangeinthetechnologymakesithardforlaterentrantstodifferentiatetheirproductsfromthoseofthefirstentrant.Evenifcompetitorsdiscoversomemeansofdoingso,thedifferencesarenotrapidenoughordrasticenoughtopreventthefirstmoverfrommasteringthemandfoldingthemintoitsproductlineinatimelyfashion,asHooverdidwiththerelativelyfewminorinnovationsintroducedbycompetitorsElectroluxandEureka.(Withglobalization,however,thevacuumcleanermarkethasfragmented,creatingnichesforEuropeanmakers,suchasMiele,thatHooverandothermass-marketmanufacturersarenowtryingtooccupyaswell.) Aninitiallyslowpaceofmarketgrowthalsotendstofavorthefirstmoverbygivingittimetocultivateandsatisfynewmarketsegments.Thoughdevastatingtomostbusinesses,theGreatDepressionwaskindtoScotchTape,whichwasinventedby3M’sRichardDrewin1930.Atfirst,Drewthoughttheproductwouldbeusedinindustrialsettings—perhapstosealcellophanewrappedaroundbakedgoods.Instead,itwastakenupbyordinarypeople,whowerelookingtorepairitemsthatinmoreaffluenttimestheymighthavediscarded.ThegradualgrowthofScotchTape’sappealgave3Mtimetoorganizeproductionanddistribution.Technologicalchangewassimilarlymodest,enabling3Mtokeepup-to-dateandpreventinglaterentrantsfrombothintroducingsuperiorversionsand“inventingaround”3M’spatent.Indeed,theproductremainedbasicallyunchangeduntil3Mreleasedthealmost-invisibleMagicTransparentTapein1961.AswithHoover,ScotchTapesodominateditscategoryitbecamesynonymouswithit. Thecombinationofaslowlychangingmarketandaslowlychangingtechnologymakescompanyresourceslesscriticalthantheywouldbeintheothertechnology-and-marketenvironments.By“resources”wemeantheskillsorcapabilitiesandtheassetsthatorganizationsdevelopovertime.Amongthemostimportantcapabilitiesareproductdevelopment,production,andmarketing.Oneimportantassetisbrandrecognition.Othersarephysicalassets,suchasstrategiclocations,andfinancialresources.Ofcourse,havingthemostabundantresourcesandthemostvaluableskillsisalwaysdesirable,butincalmwaters,afirstentrantlackingthoseadvantagesmaystillhavethelatitudeandthemeanstodefenditsproductagainstlatercompetitors. WhentheMarketLeadsandTechnologyFollows ConsidertheWalkman,thefirstproductinaclevernewcategory—thepersonalstereo.TheWalkman,pioneeredbySonyin1979,usedmaturetechnologiesreadilyavailableatthetime,anditsbasictechnicaldesignremainedunchangedforadecade.Bycontrast,itsmarketgrewabruptly,withsalesreachingsome40millionunitsinlessthantenyears.Indeed,thepersonalstereoisoftencitedamongthemostsuccessfulconsumer-electronicsinnovationsofourtime.Giventhemarket’senormousexpansionrateandpotentialsize,onemightthinkthatonlyashort-termadvantageshouldhavebeenavailabletothefirstmover.YetSony’smarketsharewascloseto48%eventenyearsaftertheWalkman’slaunch,thankstoitssuperiorresources—inparticularitsdesignskills,marketingmuscle,andstrongbrand. Afirstentrantwithlimitedresourcesandskillswouldprobablyhavetosettleforashort-termfirst-moveradvantage,however.Boston’sEliasHoweintroducedthefirstcommercialsewingmachineinthelate1840s,butthemachinesmadebyIsaacSinger,alaterentrantwithgreaterresources,weresoonabletofindmorecustomersthanHowe’s.Thebasicsewingmachinechangedlittleoverthenexthalf-dozenyears,butdemandincreasedtosuchanextentthatSingerbeganexpandingintoEurope.(AlthoughHowecouldnotachieveadurablefirst-moveradvantageintheproductcategory,thepatentsheownedoncompetitors’productsallowedhimtoextractsubstantialrentsforsometime.) WhenTechnologyLeadsandtheMarketFollows Whathappensinthereversesituation,inwhichtechnologychangesabruptlybutthemarketisslowtoacceptthenewproductcategory?Ashort-livedfirst-moveradvantageisveryunlikelyhere.Earlyentrantsfacemanyyearsofflatsalesandoperatinglossesand,consequently,theskepticismofstockmarketanalysts.Atthesametime,thefuriouspaceoftechnologicalchangebringsinnewcompetitors,whothinktheirimprovementswilldrawcustomersawayfromtheincumbentanditsdatedproducts.Adurableadvantage,formostearlyentrantsaswellasmostlaterarrivals,isalsounlikely. Onlyacompanywithverydeeppocketscouldentersuchamarketfirst,surviveinitshostileenvironment,andwithstandaconsiderabledelaybeforeobtainingdurablefirst-moveradvantages.Deeppocketsallowafirmtowaituntilthepaceoftechnologicalchangeslows,orthefundamentallynewtechnologyitsproductlineembodiesbecomesthenewstandard,andthemarkettakesoff.Ofcourse,thecompanyalsoneedsasuperbR&Dcapabilitytokeepitatthetechnologicalforefrontinthemeantime. In1981,Sonylaunchedthefirstdigitalcamera,theMavica.Salesofdigitalcamerasdidnotbegintogathermomentumforatleasttenyears,andsalescontinuedtobemodestforanotherdecade,duringwhichtherelentlesspaceoftechnologicalimprovementrenderedproductsobsoletewithinayear.Akeyareaofimprovementwasthedensityofinformationadigitalimagecouldhandle.Intheearly1980s,ahigh-endcameracouldproduceimageswithupto60,000pixels.By2000,thepixelcounthadreached5million.Sony’sconsiderablefinancialresourcesandworld-famoustechnologicalcapabilitiesallowedittostayontopofthecategoryandgrabacommandingshareoftheslowlyevolvingmarket.In2003,SonywasstilltheleaderintheU.S.market,withabouta22%marketshare. WhentheWatersGetRough Sometimes,bothtechnologicalinnovationandconsumeracceptanceadvancerapidly,leavingfirstmovershighlyvulnerable.AT&TandNetscapeareexamplesofcompaniescapsizedbytherapidchurningoftechnologyandmarkets.AT&TwasthefirstcompanytodeployacellulartelephonesystemintheUnitedStates.Itbuiltaprototypein1977andayearlaterheldthesystem’sfirstpublictrial,involving2,000customersinChicago.However,in1983,Ameritech,notAT&T,offeredcommercialanalogcellularoperationsaftertheywereauthorizedbytheFCC.AsforNetscape,MarcAndreessen,acodeveloperofMosaic,teamedupwithJimClarkin1994toinventNetscape’sbrowser,whichkickedofftheeraofwidespreadInternetaccess.YetNetscapetodaysurvivesonlyasasmallunitofTimeWarner. NeitherAT&TnorNetscapewasabletomakeaprofitinthenewproductspacesduetothestrengthoflaterentrants’offerings.Ourresearchsuggeststhatagoodpartofthereasonwasthetypeofwatersbothhadsteppedinto.CellulartelephonesandInternetbrowserswouldfallinthelowerrightcellofthematrix,withboththetechnologyandthemarketevolvingrapidly(irregularlyforcellphones,smoothlyforbrowsers).Insuchconditions,itisverydifficultforcompaniestogaindurablefirst-moveradvantages. Ifaproduct’sunderlyingtechnologychangesveryrapidly,theitemquicklybecomesobsolete.Moreoftenthannot,suchproductsareovertakenbyversionsfromnewentrants,whicharen’tburdenedbymaintainingandservicingolderproductlinesandcaninnovatewithoutfearofcannibalizingpriorinvestments.Someresearchershaveusedtheterm“vintageeffects”tocharacterizethetendencyofnewgenerationsoftechnologytousherinwinningentrants.Onecanobservevintageeffectsinmanyproductcategories.Inthegamingconsolemarket,whichMagnavoxOdysseyenteredin1972,atleastsixgenerationsoftechnologyemergedinrapidsuccession,eachpushingforwardanewwinner.Thesamethinghappenedinharddrivesandlaptopcomputers.TheOsborne1,generallyconsideredtobethefirstcommerciallyavailable,trulyportablecomputer,weighed24poundsandwassoonsupersededbylightermodels.Butlaptoptechnologyevolvedsoquicklythateachsuccessor,afterbrieflyachievingdominance,wassoonsupplanteditself. Afast-growingmarketaddstoafirstmover’schallengesbyopeningattractivenewcompetitivespacesforlaterentrantstoexploit.Theincumbenttendstobeatadisadvantage,sinceitoftenlackstheproductioncapacityormarketingreachtoservearapidlyexpandingcustomerbase. Arapidpaceofmarketevolutionmakeslong-termdominanceunlikely,butitdoesnotnecessarilybarafirstmoverfromachievingworthwhileshort-termgains—providedithasanacutesenseofwhentoexit.ConsideroncemoretheInternetbrowsermarket.In1994,theInternetstartedgrowingextremelyquickly.Withintwoyears,thenumberofWebsiteshadincreased50-fold.Thisfranticpaceenabledlaterentrants,chiefamongthemMicrosoft,withitsenormousresources,tofindplentyofspaceinwhichtogrow.ButbeforecompetitorscoulddestroyNetscape’sbusiness,NetscapearrangedtobeacquiredbyAOLinanamazing$10billiondeal. Arapidpaceofmarketevolutiondoesnotnecessarilybaranincumbentfirstmoverfromachievingworthwhileshort-termgains—providedithasanacutesenseofwhentoexit. Achievingadurableadvantageundersuchconditionsisnot,however,impossible.Hereiswhereafirm’sresourcescanmakeabigdifference.Onlyafirstmoverwithmightyresources,farsuperiortothoseofcompetitors,hasanychanceofachievinglonger-termfirst-moveradvantageswhenbothtechnologyandmarketsaremovingrapidly.Forinstance,allelsebeingequal,afirstentrantwithaverystrongbrandnamewilltendtobemoresuccessfulinlockingincustomersthanonewithoutarecognizedbrandname.AgoodexampleofafirmtodaythatmakesthebestofitsendowmentsinthemostdifficultofcircumstancesisIntel.Byputtingallitstechnicalandmarketingmusclebehinditsproductdevelopmentprocessandbeing“paranoid”aboutcompetition,Intelhasbeenabletodominateaproductcategoryinwhichmarketskeepexpandingandtechnologykeepschangingatafuriouspace. Butdonottakethepossessionofsubstantialresourcesasaguaranteeofwinning.WhenIBM,forexample,introducedtheharddriveinthelate1950s,itwasthelargestcomputermakerintheworld.Sincethen,asequenceoffast-growingmarketsforminicomputers,personalcomputers,andlaptopshasgeneratedrelentlessdemandfornewversionsofthedevice.Despiteasuperbbrandnameandplentyofresources,IBMcouldnotstayatopthehard-driveindustryforlong.Neithercouldopportunisticlaterentrants. WeexpectApple’siPodtofacesimilarrigors.Famouslystronginmarketing,R&D,anddesign,ApplelaunchedtheiPodinOctober2001andby2003hadaround70%ofthemarketfordigitalmusicplayerscontainingharddrives.Inthefirstquarterof2004alone,thecompanysoldmorethan800,000units;bythethirdquarter,ithadincreaseditsshareoftheretailmarketto82%.However,theiPodminihasalreadyimproveduponitspredecessor,andDellisofferingpricecutsanda12-hourbatteryforits20-gigabyteplayer.EventhoughtheminiisApple’sowninvention,Applewillbehard-pressedtostaytheleaderforlong. ToBeorNottoBeFirst? Thefourscenariosinthematrixplacepremiumsonverydifferentsetsofassetsandcapabilities.Large-scalemarketing,distribution,andproductioncapacityiskeyinsituationswherethemarketleads;R&D,newproductdevelopment,anddeeppocketsarekeyinsituationswherethetechnologyleads.Ifyoustepintoagivenenvironmentwiththewrongtypeofresources,youcanexpectaroughtime(seetheexhibit“IsaFirst-MoverAdvantageLikely?”).Polaroid,forinstance,hadagreatbrandnameinphotographyandexcellentaccesstodistributionchannelsintheearly1990s,butitwasrelativelyweakinR&Dandnewproductdevelopment.Indeed,itsleadingproductbackthen,theinstantcamera,embodieda15-year-olddesign.Afteralmosttwodecadesoffruitlessdiversification,thecompanyhadtofileforbankruptcyprotection.EvenifPolaroidhadbeenthefirstmoverintodigitalcameras,acategoryitwantedtodominate,ouranalysissuggestsitsfatewouldhavebeenthesame.Itdidn’thavethewherewithaltotriumphoverorevensurvivefurioustechnologicalchange,rapidandfrequentproductobsolescence,andaslowmarkettakeoff. IsaFirst-MoverAdvantageLikely? Rightnow,SymbianiscontendingwithMicrosofttoestablishtheoperatingsystemforthenewproductcategoryof“smartphones”—cellularphonescapableofmultimediaandwirelessbroadband.Symbian’stotalrevenuesfor2003wereslightlymorethan$100million,whereasMicrosoftspent$7billionjustonR&D.Althoughtheleadersinthehandsetmarket,includingNokiaandSiemens,organizedSymbiantokeepMicrosoftatbay,marginsaresothinintheirindustrythattheycouldverywellchooseMicrosoft’soperatingsystemoverSymbian’sifMicrosoftweretoprovideitforfreeorverylittle.AlreadyMotorola,aSymbianfounder,haschosenMicrosoft’sOS.ItremainstobeseenwhetherSymbiananditsbackerswillbeabletostanduptoMicrosoft’ssuperiorresourcesinafast-growingmarketforafast-movingtechnology. Newproductcategoriesareconstantlyemergingaroundus.Inmostinstances,companiesstrugglenotwithwhethertoenteranewproductcategoryaltogetherbutwithwhethertoenterearlyorlater.Sometimesexecutiveswonderifitwouldbewise,forexample,towaituntilthecompaniesinthefirstwavehavebeenweakenedbycompetitionandseentheirtechnologicaledgedulled.Butbythatpoint,theremightnotbeenoughtimelefttomasterthetechnologyinquestion.Still,insomesituations,itmaynotmakealotofsensetotrytobethefirstmover.Inenvironmentswhereafirstmover’sadvantageislikelytooccuronlyafteryearsoflosses,andthentobeshort-lived,discretionwouldprobablybethebetterpartofvalor.Afterall,first-moveradvantageoccursnotwhenyouenteramarket,butwhenyoustartmakingrealmoneyinit. Tomakerealmoneyinanevolvingmarket,youneedtoanalyzethekindofenvironmentthatsurroundsthenewcategory;toassessthecharacteranddepthofyourresources,comparativelyspeaking;andthentodecideonthetypeoffirst-moveradvantage—short-termordurable,immediateordelayed—thatismostachievable,ifindeedanyis.Remember,onceyou’vegoneintothewater,youhavenochoicebuttoswim. AversionofthisarticleappearedintheApril2005issueofHarvardBusinessReview. ReadmoreonTechnologyandanalytics orrelatedtopics Marketing, Productdevelopment, Competitivestrategy, Web-basedtechnologies, Fabricationandmanufacturing andTelecom FS FernandoF.SuarezistheJeanC.TempelProfessorofEntrepreneurshipandInnovationattheD’Amore-McKimSchoolofBusinessatNortheasternUniversity. GL GianvitoLanzolla isaprofessorattheBayesBusinessSchoolattheCityUniversityinLondon,England Tweet Post Share Save GetPDF BuyCopies Print ReadmoreonTechnologyandanalytics orrelatedtopics Marketing, Productdevelopment, Competitivestrategy, Web-basedtechnologies, Fabricationandmanufacturing andTelecom PartnerCenter Diversity Latest Magazine Ascend Topics Podcasts Video Store TheBigIdea Data&Visuals CaseSelections