I listened to an excellent talk yesterday from my friend Clay Phillips. He was giving a brief overview of Lean Startup methodology and how intelligence can play a critical role in the Lean Startup process. His central point was that intelligence is all about understanding unknowns, and Lean Startup is about converting unknowns to evidence, decisions and market moves.
It also got me thinking about our theme of bad strategic advice.
When I talk to small businesses and budding entrepreneurs I often talk about the two great sources of new business ideas: The really different and the merely different.
The really different, as we discussed earlier in the series, is the cool, new-to-the-world thing that completely alters how customers or consumers solve a particular problem or address a need. The merely different is the better thing … the product or service that substantially improves how customers or consumers currently solve a problem or satisfy a need.
Which causes me to reflect on that often cited but rarely questioned concept of “first mover advantage.” Is there really such a thing? Do first movers really capture the lion’s share of value? Or do they often end up in the mouth of an orca, not unlike the proverbial first diving penguin?
Consider the recent rise and fall of Meerkat, the apparent first mover in “live video syndication” applications, to second comer, Periscope. I won’t pretend to understand the business model or appeal of the product, but it does seem that the second guy got the concept right.
This happens a lot more than “experts” want to admit. A quick look at the top companies in the world shows a bunch of “second movers,” perhaps the most famous being Apple.
Apple was arguably first in creating the standard Personal Computer experience (thanks to a certain fellow named Gates), but not first in the concept of personal computers. They were second to music and phones … and maybe one-millioneth to time pieces. Their success has been to make the products and experiences substantially better within the conceptual confines laid out by the largely forgotten “first movers.”
Google, Facebook, Wal-Mart … fill-in-the-blank … there are a lot of exceptional second movers out there.
This doesn’t mean that “first movers” don’t often rake it in. But the risks of going first can be substantial. And the supposed “advantages” of going first can become an achilles’ heel. All the research, marketing with help from a local tv advertising agency, supply chain, customer development, branding, etc., the “first mover” invests in, “second movers” can easily draft on while they concentrate on showing off how they are better. The first mover builds the house, the second mover lives in it.
Getting back to Clay Phillips’ talk. So much of the Lean Startup methodology is about getting ideas off the drafting table and into test so that “real evidence” of market and customer viability can be ascertained.
So what’s the best evidence out there? Current products and services. Often, the “first movers.” Robust innovation approaches with rapid learning models and rapid-fire prototyping and testing may mean that greater advantage starts to accrue to second movers.
Either way, we should never buy into “first mover advantage” as a fundamental truth. There’s more to it. Go first and build an empire? Or go second and replace an empire? Both may be valid approaches.
What do you think?