First Mover Disadvantage
One of the interesting themes discussed at TechTalk in association with our Investment Forum in Sheffield yesterday was that he who dares doesn't always win. Being first to market can mean you do all the R&D, validate the idea and educate potential users only to see the competition eat your carefully prepared lunch. Equally, being best technically doesn't necessarily equal success either.
As Lee Strafford emphasised as he spoke about his success story at Plusnet, route to market can be a real differentiator when it comes to execution. Stuart Green CEO of ZOO Digital warned that while you are evangelising about how beneficial your innovation will be to users, potential competitors will be readying themselves to shoot arrows in your back. And Steve Barnes, CEO of Infoserve reminded us that history is littered with those that tried first and failed or thought being (second) best equals success. Oracle didn't have the first relational database and VHS wasn't the best video technology, but each ended up the 800lb gorillas in their respective markets.
Being at the bleeding, rather than the leading, edge can leave you exposed if the market or infrastructure just ain't ready. Equally stealing a march on the competition is what innovation is all about, so this all has to be finely judged. Being first or best certainly isn't a prerequisite for commercial success.
1 comment:
This is what the Americans call "Drafting to Win". You have to be hot on the back wheel of the leading innovator to have a chance but you can bet your shirt you won't be alone.
A note of caution the key speakers are speaking from their expereince in the internet/service arenas and are not really representing the perceived wisdom for mainstream technology companies. Although the doyens of the stock market often refer to internet companies as technology stocks, they are not, in the main they merely use technology infrastucture to provide a service. There may be some software innovation but that is about it. This is an important distinction. In their arena protection for R&D spend through registered intellectual property rights is limited. They tend to rely on copyright. That is why companies in this area often do not convert an innovation leadership position into market dominance. Once they go public every man and his dog can have a go.
For mainstream technology companies where patents are the main IP option there is no contest being first is what it is all about!
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