Second Mover’s Advantage

There was a lot of press in the late 90s about first mover’s advantage. The term describes a company that releases their product before their competitors, which allows them to secure a large portion of the market before anyone else can make a move. Companies like Amazon, Netflix and eBay lend credibility to the power of first mover’s advantage.

Erik Sink, one of the leading voices of the software industry, recently wrote an article that mentioned second mover’s advantage, and The Harvard Business School website had an article about Apple and their strategy of being second to market. The more I thought about it, the more I realized there are a slew of advantages that you gain from being a second mover.

Advantage #1: Learning From Their Mistakes
One of the largest advantages is being able to observe your competitors’ successes and failures. Not only do you get to see which features go unused (which amounts to wasted time on their part), but you can take the features that are successful and implement them yourself, hopefully improving them along the way. This amounts to less time evaluating new features and more time working on your product.

In terms of marketing and pricing, it certainly gives you the upper hand to know where and how a competitor has marketed their product (be it magazines, blogs,, etc…) and how much it’s selling for. This is a lot like knowing the answers before the teacher hands you the test.

Advantage #2: Revising Rather than Creating
T.S. Eliot said “Good artists borrow, great artists steal” and many after him, including Steve Jobs and Bill Gates have certainly put this quote to use while making their billions. Even Paul McCartney talks about how the Beatles “borrowed” bass lines and guitar riffs from the popular bands of the day.

Apple didn’t invent the MP3 player, but they did a great job revising it into the iPod. IBM didn’t invent the PC, but for many years they were the #1 PC manufacturer in the world. Google didn’t invent search, but they made it better and are the world’s leading search engine because of it. There are hundreds, if not thousands of companies that have found success revising previous designs. Just because someone has done it before does not mean you can’t improve on it and own the market.

Advantage #3: Surprise!
As a second mover you are a sniper in the hills. You’re able to create your marketing strategy knowing where your competitor has succeeded and failed.

One example of this is FeedBlitz, the service that allow blog readers to receive regular email updates of new blog posts. FeedBlitz is the second (maybe third) mover in this space, and Bloglet has a two to three year lead. But Bloglet has had issues with reliability and support, and FeedBlitz is attacking this weakness head-on with a chart that compares the two services, pointing out, of course, the superior features and reliability of FeedBlitz. This wouldn’t be possible if FeedBlitz were first out of the gate.

Advantage #4: Stealing Market Share Rather than Creating a Market
The first mover is faced with the task of convincing people they have a problem in need of a solution, which tends to be expensive in both dollars and man-hours. For the second mover the market already exists.

In most cases, it’s easier and more cost effective to steal customers from a competitor than to create a market from scratch. As a second mover you just need to convince them that your product can solve their problem faster, cheaper, or more reliably.

Although being first to market is certainly a desirable position, arriving second has advantages that, if used wisely, can turn the tide in your favor.

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#1 smartkid0516 on 09.28.05 at 8:45 pm

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#2 Adnan Masood on 10.28.05 at 1:54 pm

Techdirt published a story this morning which is pretty much the evidence of what you just said. Has The US Passed Europe In Wireless Technology? It’s about EVDO which will be way faster than various 3G networks in Europe and it concludes with “we should realize that being first isn’t nearly as important as getting the whole thing (technology, services, business model) right.”