First Mover Advantage

FIRST-MOVER ADVANTAGE
TECHNOLOGICAL LEADERSHIP

Experience curve Patents R+D, product development, process Ec. Scale production, distribution

PREEMPTION SCARCE RESOURCES

Patents, Physical – natural resources, products Channel space

Lower prices Superior position - geográphical space - technological space - clients perceptual space - attractive niches

FIRST – MOVER ADVANTAGE (2)

GENERATES SWITCHING COSTS

Attract clients Accept suppliers Quality uncertainty Brand loyalty Net effect – first product receives more attention

LATE - MOVER ADVANTAGES

Benefits from previous investments ( free-rider effect)

Skilled labour Buyer education Infraestructure development

Imitation costs / Innovation costs Less market and technological uncertainties Technological discontinuities First-mover inertia Fixed assets transformation costs Fear of cannibalization Harvest or adapt ? Organisational blinders Suppliers stable relationships

FIRST-MOVER ADVANTAGE Pace market evolution slow fast

slow Pace technological evolution

Calm waters
Difficult differentiation for late-movers

Market leads
Big sales

fast

Technology leads
Low sales, losses

Rough waters
Difficult to maintain advantage

Source: Suarez, Lanzolla, HBR, April, 2005

FIRST-MOVER ADVANTAGE Context S/T Calm waters Market leads Technology leads Advantage L/T Brand awareness, resources Marketing, distribution, production capacity, design. R+D, product development, financial resources R+D, Marketing, distribution, production Key resources

Long term advantage, easy maintain technology updated, respond demand increases. Time to satisfy new segments, difícult differentiation by late-entrants.

Short term advantage with limited resources

Difficult short term advantage, limited sales, losses, new competitors

Rough waters

Difficult long term advantage,technology in evolution, high obsolescence, high maintenance, service mature products, fear cannibalization