I was reading my dear husband’s blog post about the new iPad mini and the Microsoft Surface, the latest entrants to the tablet market. It reminded me about a terrific book co-authored by one of my mentors, the late Paul Geroski. The book is [amazon_link id=”0787971545″ target=”_blank” ]Fast Second[/amazon_link], written with Constantinos Markides, written int 2005 so it pre-dates tablets. But the hypothesis may apply.
Their argument is that in a radically new technology, the supposed first mover advantage may be ephemeral: “The firms that end up capturing the new market are those firms that time their entry so they appear just as the dominant design is about to emerge…. For big, established firms contemplating entry into a new radical market, this is the best strategy to follow.” This is what they mean by fast second – neither first mover, nor second-mover i.e. waiting for a clearly dominant design and standards, and offering a cheaper me-too product.
The examples in the book include IBM in mainframes, GE in CT scanners, Canon in cameras, Sharp in faxes. I don’t know whether the iPad challenger tablets would count in Paul’s view, or whether the iPad mini will fend off fast seconds, but it’s worth pondering.
[amazon_image id=”0787971545″ link=”true” target=”_blank” size=”medium” ]Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets (J-B US non-Franchise Leadership)[/amazon_image]
One could argue that Apple has done this many times already – they weren’t the first with MP3 players (just, they moved real fast to launch iPod when the right technology – really small disk drives – became possible) and one could even say they weren’t first with phones / smart phones, etc. – the iPhone was the first to bring all the technology together in a very ‘cool’ way.
I’m not sure if Apple is mentioned in the book (I’ve not read it yet, but thanks for the tip) – Apple is at least not mentioned in Amazon’s book description.
I’m keen to read the book, since despite the cover quote about ‘bypassing radical innovation’ it would seem that it is still necessary to have a strong ‘innovation’ culture/competence, to be a truly ‘fast’ second, and really capture a market – I’m sure all the companies mentioned (IBM, GE, Canon, Sharp) claim to be innovative, and have significant R&D budgets, and used this in not just copying, but perfecting their market launch (and hence the success).
With the iPad it still seems (two and half years after launch) that Apple got a lot of it right first time round, hence the massive market share lead.
The book came out when Apple wasn’t doing so well. I don’t think the ‘right’ strategies are at all obvious in these markets, but it’s interesting to think about this question.
I have not read the book but I met Paul Geroski around that time at a talk about the theme. (He was really a nice guy – a ‘big name’ but very approachable for students). He quoted a broad range of examples for the fast second. More often than not we don’t remember the first movers – e.g. we all know Amazon and their design but who remembers the very first webshops.
@Matt: Paul set his theory of the fast second in the context of the ‘industrial/technological life cycle’. So in the beginning of a technology a “strong innovation culture” plays indeed a big role (just as the historical accident), later in the cycle it’s more size and planned R&D. (When IBM started their catch-up for the PC they set up a division wich was connected to the main company.) With Apple/the iPad one interesting question is of course what stage we are in the cycle and what technology we are actually looking at. ICT? mobile phones? tablets? Unfortunately Paul is no longer around to discuss these issues.
Here is Paul’s obit written by his predecessor as chair of the MMC/CC, Derek Morris: http://www.guardian.co.uk/business/2005/sep/14/guardianobituaries.obituaries
I worked with him there from 2001 until his death in 2005.
Thanks for the link.
I’m very interested in this topic because culture is a big factor in when new products get taken up by the general populace. As such there’s a lot of interest in working out when things are “ahead of their time.”
At the same time I’m always uneasy about first and second mover theories, because they seem like they can be rewritten as “first company to enter the market with a good enough design and the ability and desire to scale.”
Leica (like Apple under Jobs – this may be changing) was at least partially more interested in preserving margin than scaling up to Canon levels of volume. And Leica are still with us today, in that mould.
So much for desire – on ability, if we step away from Amazon*, if you’re a small company you won’t have the ability to scale and if you follow this thesis there’s no advantage to being first, but realistically there’s no advantage to being second. This is to me the essence of the EMI story in CT scanners – they were not in a position to scale the way GE were – if they’d waited until GE invented the CT scanner, EMI would not have been in a better position.
*Amazon is a story from a different age, because scaling on the web has different dynamics. But tablets (for example) don’t seem as easy to scale as web services.