Tip of the Spear

Ask yourself, would you rather be MySpace or Yahoo, Nokia or Apple (iPhone), Theranos or Illumina, or Sony Music Player or iPod? In hindsight, these comparisons are easy. In 1988, two Stanford Business School professors wrote a paper describing a "first mover advantage" enjoyed by the first businesses in any given market. The concept has since gained widespread popularity in business schools and boardrooms. The topic has a Wikipedia page that states that the first-mover advantage (FMA) enables a company or firm to establish strong brand recognition, customer loyalty, and secure early purchase or access to resources before competitors enter the market. FMA comprised technology leadership, resource control, and buyer switching costs. Luck and timing were also crucial in FMA situations, particularly in areas such as pricing and profits. Interestingly, very successful firms such as Google, Facebook, Instagram, and TikTok were not first movers.

A dramatic form of FMA is disruptive innovation, in which the technology or solution creates a massive leap that leaves the competition behind. This is why Netflix conquered Blockbuster.

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