Tempted to be a First Mover?

The concept of First Mover Advantage (FMA) 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 people 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 always work? How many of the top 160 global brands were they first movers? Did they gain a competitive advantage?

Many clearly were – Coca Cola and IBM are good examples of first movers. On the other hand, Google was the 21st search engine, Apple was formed in 1976, a long time from Olivetti’s 1964 ‘Programma 101’ and after Hewlett Packard, Wand, Commodore and a range of PCs.

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

  • First mover: 13.8%
  • Early entrant: 18.1%
  • Follower: 55.0%
  • Late entrant: 13.1%

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

This is no surprise to the observers of animal strategies. Some modern entrepreneurs seek to emulate 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. Is your business under a cheetah or under a hyena strategy?

Summing-up: 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.

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