Page 39 - (DK) The Business Book

START SMALL, THINK BIG 37 37

Us.) The online clothing retailer of this new market. But success
boo.com is an example of a first- is not guaranteed—a 2012 study
mover that had technological revealed that on average, 65
superiority, but was ahead of its percent of users delete apps within
time—the site was too resource- 90 days of installing them.
If later entrants can leapfrog heavy for most consumers’ slow
pioneers, companies could be Internet connections. Launched in Timing is everything
better off entering late. 1999, boo.com went into receivership The reason a first-mover does
Peter Golder and the following year—being first is not always yield its promised
Gerard Tellis not a guarantee of success if the advantages is that much depends
basic business model is flawed. on timing, and therefore luck. In
Despite the evidence presented their 2005 paper, “The Half-Truth
by Golder and Tellis, and examples of First-Mover Advantage,” US
such as Google, it remains the case business scholars Fernando Suarez
that first-mover advantage has and Gianvito Lanzolla identified
captured corporate imagination. technological innovation and the
mistakes of these earlier entrants Mirroring the earlier dot-com gold speed at which the market is
and, quite simply, build a better rush, the recent boom in the market developing as crucial in
product. The organization realized for web-based smartphone- and determining whether or not being
that with so much information on tablet-accessed applications (the a first-mover is advantageous.
the Internet people wanted search “app” market) is fueled by a desire Their findings suggest that
results that were comprehensive to be first. Thousands of apps have when a market is slow-moving and
and relevant; the various market launched in the hope of staking technological evolution is limited,
incumbents offered a variety of their claims on lucrative segments first-mover advantage can be ❯❯
systems for filtering search results,
but Google was able to take the
best of these systems and build
its own unique algorithm that led 80
73
to market dominance.
Launched just
First-mover failures
two years later,
There are numerous examples in Commodore’s
corporate history of first-movers “fast-follower” GUI
that were unable to achieve or computer yielded a 36
shareholder return
maintain a competitive advantage. of 80 percent.
Famous failures in the online
sphere include Friends Reunited SHAREHOLDER RETURN (%)
and MySpace. Although both
companies still exist, their first- Apple Lisa (1983)
mover advantage was not sufficient Apple’s pioneering
to offset the might (and product GUI computer was a Commodore Amiga (1985)
commercial failure,
superiority) of Facebook. Similarly, with a shareholder IBM Personal System/2 (1987)
eToys.com, launched in 1999, was return of -61 percent.
HP (1989)
one of a new breed of online retailers,
but first-mover advantage was not -61
enough to sustain the business and Being the first-mover in a new, untried market
does not always result in success. Apple’s Lisa was
the company declared bankruptcy
the first computer with a Graphical User Interface
in 2001—by coincidence, the same
(GUI)—a version of which now forms the user
year that Amazon started to sell interface of every computer, smartphone, and
toys. (Resurrected some years later, digital device—yet sales were far exceeded by
etoys.com is now owned by Toys R later offerings from Commodore, IBM, and HP.