Competition is a core characteristic of business. Corporations around the world strive hard to outsmart competition to achieve sustainable competitive advantage. Much has been researched about the how companies can formulate strategies that can narrow the gap between market leaders and new players. Similarly, much is discussed about how companies choose strategies depending on the specific competitive landscape.
A central feature of such strategies is what has come to be known as first mover advantage (FMA). First mover advantage refers to the phenomenon whereby companies can achieve a considerable lead time over their competitors by being the first in a host of activities such as entering a market, introducing a new product, launching a new service, creating a distinctive positioning, creating a unique community or developing an enticing web presence. The argument is that whoever does these things first will have a significant advantage over their competitors, who will be forced to imitate.
Consider the case of two of the biggest brands in the mobile communication industry: Apple's iPhone and RIM's Blackberry.
Blackberry was the first brand to introduce mobile email that was compatible with corporate requirements. Based out of Canada, Blackberry easily became the market leader, and has continued to dominate the market. Even though there have been many other makers of smart phones before Blackberry, Blackberry was the first brand to seamlessly integrate mobile communication, internet capabilities and corporate email into a convenient hand held gadget.
Not surprisingly, many competitors have since then tried to imitate those features in their own handsets. But since the introduction of Blackberry in 2002, it has been the market leader in smart phones till today.
Blackberry's stranglehold on smart phone market was strongly challenged by Apple with its introduction of iPhone in June 2007. Unlike many other competitors such as Motorola, Nokia, Sony Ericsson, and Samsung, that aggressively imitated many of Blackberry's features in similar looking handsets, Apple did the unthinkable. Apple created a totally new design with appealing features and build.
The iPhone was a very slim and handy gadget with a very large touch screen that lacked a physical keyboard. Furthermore, unlike Blackberry, it significantly improved the convergence of a mobile phone, a music player, an internet browser, a digital camera, and an in-built GPS. Furthermore, iPhone was efficiently connected to iTunes, Apple's online store to purchase music and movies. That way, iPhone not only bettered what Blackberry had done, but also created a new standard.
Challenge the conventional wisdomThis represents a classic case of challenging the conventional wisdom of FMA. Although it was Blackberry that created the industry standard for almost five years, iPhone seems to have changed those rules despite not having FMA. This begs a couple of very important strategic questions. First, is FMA sustainable or only temporary? Second, how can companies undertake strategic initiatives to sustain FMA?
Sustainability is a relative term. Nothing is sustainable forever. Even the mighty IBM had to bite dust and the once leader General Motors is struggling. However, sustainability is very important for companies. If all strategies were easily replicated, then competition would be ruthless and eventually lead to a zero sum game.
First mover advantage certainly creates a very significant advantage for companies depending on the underlying basis of FMA. Early entry into a market allows early penetration into different segments and market domination. Similarly, in this case, Blackberry was able to define the industry standard by being first. However, iPhone not only conformed to those standards by including all the features Blackberrys offered, but improved every single of them. As such, innovation and customer insight helped iPhone redefine the standard.
An even more important question is then, are companies that are not first are doomed to failure? The answer is certainly no. Companies can undertake certain strategic initiatives to overcome the FMA deficit.
As in this example, Apple initially conformed to the industry standard, but additionally practiced innovation. Constant innovation to improve the status quo always allows companies to overcome the FMA deficit. Additionally, building strong brands is an extremely important strategic necessity. Despite Blackberry's FMA, Apple's brand equity was so strong with cult like following among its customers, that it allowed iPhone to overcome its FMA deficit.
As such, strong brands can both be a cause and a consequence of first mover advantage. As companies formulate their strategies, they should clearly evaluate their FMA status and accordingly take strategic initiative to compensate for their FMA deficit. As has been consistently demonstrated by global iconic brands like Apple, brand equity provides one of the strongest and most enduring strategic assets to correct FMA deficit.
