False, according to “In Race to Market, It Pays to be Latecomer,” by Sarah E. Needleman, wsj.online, Jan 11, 2011.
She observes that the first company that tries to create a new market usually fails. The effort to educate the market is overwhelming and subsequent entrants benefit from watching the first movers’ business model.
“Isaac Barchas, director of the technology incubator at the University of Texas at Austin, says entrepreneurs looking to break into an untested or emerging market should consider taking a wait-and-see approach. ‘If you can watch other people and learn from them, that gives you the opportunity to figure out how to tweak the business on the margins to be better,’ he says. ‘You can learn a lot from the experience (someone else has) paid for.’"
Stanislav Dobrev, a professor at the University of Utah's David Eccles School of Business, and Aleksios Gotsopoulos, a professor at Boston University School of Management studied the 2,197 automobile firms founded between 1885 and 1981. None survived.
Netscape was overtaken by Internet Explorer, Safari, Firefox and Chrome.
PC makers Osborne, Kaypro, and Commodore were beaten by HP, Dell, IBM, and others.
Exceptions exist: Coca-Cola and eBay are still going strong, but a previous employer of mine, Digital Equipment Corporation (DEC), now part of HP, had a reputation for innovation and creating new markets—at least at the beginning of its existence. Not so, in general, DEC was a second or third market entrant and clearly learned from first movers.
The implications for CI professionals are clear. If we work for organizations that are first movers, we need to be very diligent about getting customer feedback in a regular schedule on the product, service, and business model, and be ready to make quick changes. Or we will be overcome by a smarter rival.
If we work for firms with growth plans, then we should sweep the market to find start-ups with good ideas and business plans that can be tweaked and that are related to our products, services, or markets. Then we acquire them, or take over the market that they created.
Harsh? That is the nature of competition.