The half-truth of first-mover advantage
Fernando Suarez1, Gianvito Lanzolla
1Boston University, USA. suarezf@bu.edu
Harvard Business Review
|April 6, 2005
Summary
First-mover advantage depends on market and technology evolution speed. Analyze these factors and your resources to determine achievable first-mover benefits for sustained market dominance.
Area of Science:
- Business Strategy
- Innovation Management
- Market Dynamics
Background:
- Executives often assume early market entry guarantees long-term dominance.
- However, the success of first movers is not always guaranteed and depends on external factors.
Purpose of the Study:
- To analyze how the pace of technological change and market evolution influences first-mover advantage.
- To provide a framework for companies to assess their potential for success as first movers based on environmental and resource analysis.
Main Methods:
- Analysis of market and technology evolution rates in new product categories.
- Case study examples illustrating different scenarios of first-mover success and failure.
Main Results:
- Gradual evolution in both technology and market favors long-lasting first-mover advantages.
- Rapid market evolution with static technology benefits well-resourced first movers.
- Static markets with rapid product change or rapid churn in both create challenging conditions for first movers.
Conclusions:
- Companies must analyze environmental dynamics and assess resources to determine the most achievable type of first-mover advantage.
- Strategic timing and exit strategies are crucial for maximizing benefits in dynamic markets.
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