Talk:First-mover advantage/Archives/2012

Pasted in critique

This is a very poorly written article. I guess I'm not really in the mood to rewrite it, but I'll paste it in here in quotes and critique what it currently says. Since that could create a messy looking discussion, I've created some sectioning around it, and people with more wiki-skillz than I can feel free to fix the formatting to something more conventional.

"The first-mover advantage is the advantage gained by the first significant company to move into a new market."

There are a large number of first mover advantages, though they can sometimes be slippery to define or even notice. So, as a singular noun, First Advantage refers to the sum total of all of the individual advantages. It is usual to discuss individual advantages and to look in what area of a company they occur, with the "collective" singular used as a shorthand by people who actually have a deeper understanding of FMA theory. The article starts with "marketing" advantages:

"Being the first mover allows a company to capture market share without competition from rivals. Moreover, when competition does appear, the first mover will likely have the advantages that come from customers who are familiar with and loyal to their products."

OK, I guess, But a more important marketing advantage is the establishment of brand name, the identification of the first mover's product with a market need. Many many large brands you can think of started as a first mover in some area (Otis: elevator brakes; Westinghouse: train brakes; Microsoft: microcomputer operating environments; Apple: microcomputers bundling hardware+software; A&P: supermarkets; Ford: mass produced cars; GM: different cars for different people; IBM: mainframes compatible over a range of scales. Here is a test: where would you go to buy a book online? where would you go to auction off an item? Do you want to ship a package overnight?

"Nevertheless, there are two obvious drawbacks to being the first mover: cost and risk. Not only is it expensive to be a pioneer, but it is risky, ..."

bzzzt. nope. First, this misuses the term "risk". Risk is not "risk of failure", risk is also "risk of success". Risk gets rewarded. Taking risks that do not offer rewards is "stupid", not "risky". Oil exploration is a "risky" business, and people do it because it offers great rewards. You should only undertake to do it if you know what you are doing. Then, it is a risky, but smart, thing to do. This is not a drawback, it's just a description of a market where the outcomes have a large standard deviation.

"...as the first company in a particular market cannot benefit from knowledge of successes and mistakes of others."

bzzzt. nope. Any corporate strategist will tell you that the knowledge accrues to the first mover, and it's a big disadvantage to entering second. As an example, ebay knows a lot more about auctions than you do, and Amazon knows a lot more about bookselling, and chances are they will crush you if attempt to compete. Yes, it is true that making mistakes is bad, and people can take advantage of your mistakes. FMA is not a guarantee that you will make no mistakes. But it is turning the theory on it's head to try to say that latecomers benefit from the experiences of the first mover because it is the core of the first mover advantage. This area is called "learning curve advantages", and it applies to learning how to market to a new audience, learning how to manufacture, learning how to service, etc. etc.

"Obviously, every market is different. Thus, while some markets may highly reward first movers, others may not."

Are you still with me? this is just boilerplate, and it's bad boilerplate. First mover advantages are always advantages. They may not be enough to overcome other advantages, but a market need does not arise that does not give advantage to a first mover. There are some notoriously fickle markets, like kid's toys, teen "cool" items... but this just means products have short lifecycles, not that latecomers can capture them. Other markets have very large capital requirements: we know that telecommunications (internet, phone, wi-max, 3G, whatever) or media (music, movies, etc.) will in the long run be dominated by very large companies, and those companies may not be good first movers, so it can be difficult to predict in advance who will win. In the meantime, make sure your definition of First Mover Advantage allows you to talk about entering those markets, because the first movers will have advantages.

—Preceding unsigned comment added by 85.250.218.179 (talk • contribs) 10:59, 13 July 2006

Merge with Second-mover advantage

I propose a merger with Second-mover advantage on the grounds that the two concepts are very closely related. Not all first entrants succeed in their market segments, creating the opportunity for fast followers to gain second-mover advantage. I have created a suggested merge mockup in my sandbox: User:Apdevries/First mover advantage Apdevries 12:43, 8 September 2006 (UTC)

Merge completed Apdevries 16:07, 22 September 2006 (UTC)