First Mover Disadvantage
A review of “First-Mover Disadvantage”
By William Boulding and Markus Christen
What is this article about as a whole?
In today’s business environment many believe that in order to be successful and most profitable that they must be the “first mover”. The first mover is the initial firm that paves the road for a new product or market. It is believed that the first movers lock in competition enabling them to squash future entrants. The first mover often has heavy brand recognition or even contracts which keep other firms on the outside looking in. Early movers have the ability to learn from their mistakes and correct problems before competition enters the market. Early movers can establish patents on their advancements making it very difficult for others to compete. Usually first mover’s marketing and advertising costs are very minimal.
This article disagrees with the notion that being the first mover is the most advantageous. Using statistics they prove that being the first mover is not always the best way to enter a market. Boulding and Christen believe that followers have many advantages over early movers. Followers can learn from the mistakes of early movers and avoid adaptations necessary to perfect a product. The risk of producing a product that has been widely accepted is much less than spending money to introduce something that may or may not be a success. They argue that followers often come up with more efficient processes than movers who won’t change from their old ways.
In a study of profitability, Boulding and Christen found that the ROI for first movers was slightly lower than that of followers. Over time, followers became more profitable than first movers. The study showed that it took approximately ten years for followers’ profitability to overcome the high revenue produced by the first mover.
What are the essential points in this article?
The essential point of this article is to prove that being a follower is not
By William Boulding and Markus Christen
What is this article about as a whole?
In today’s business environment many believe that in order to be successful and most profitable that they must be the “first mover”. The first mover is the initial firm that paves the road for a new product or market. It is believed that the first movers lock in competition enabling them to squash future entrants. The first mover often has heavy brand recognition or even contracts which keep other firms on the outside looking in. Early movers have the ability to learn from their mistakes and correct problems before competition enters the market. Early movers can establish patents on their advancements making it very difficult for others to compete. Usually first mover’s marketing and advertising costs are very minimal.
This article disagrees with the notion that being the first mover is the most advantageous. Using statistics they prove that being the first mover is not always the best way to enter a market. Boulding and Christen believe that followers have many advantages over early movers. Followers can learn from the mistakes of early movers and avoid adaptations necessary to perfect a product. The risk of producing a product that has been widely accepted is much less than spending money to introduce something that may or may not be a success. They argue that followers often come up with more efficient processes than movers who won’t change from their old ways.
In a study of profitability, Boulding and Christen found that the ROI for first movers was slightly lower than that of followers. Over time, followers became more profitable than first movers. The study showed that it took approximately ten years for followers’ profitability to overcome the high revenue produced by the first mover.
What are the essential points in this article?
The essential point of this article is to prove that being a follower is not