Some would suggest that to be first into a market is a significant advantage and this opportunity must be closely guarded. Others would suggest that it is better to be close second to enter the market so that you can learn from the mistakes of the first entrant and not expend so much capital in being first.
Sun Tzu ‘the Art of War’ is often quoted as the source of this wisdom, “In general, whoever occupies the battleground first and awaits the enemy will be at ease; whoever occupies the battleground afterward and must race to the conflict will be fatigued. Thus one who excels at warfare compels men and is not compelled by other men”.
Blue Ocean Strategy and Disruptive Innovation are commonly cited as modern-day business examples of first mover advantage at work. In very simple terms, Blue Ocean is about redefining the value proposition provided to the customer and Disruptive Innovation is about introducing a new value (often technology). Both effectively seek to create a new market by shifting the value proposition.
The authors of Blue ocean strategy would prefer not to be seen as a means of entering a market first but rather being first by linking innovation to value. I would still consider linking as being first mover advantage.
So is it that simple, that first into the marketplace has a sustainable competitive advantage?
Well the answer is that it is certainly not that simple.
Turning back to Sun Tzu, the principle of first mover advantage must be considered with regard to the terrain that is entered and its condition amongst other factors. It is better to consider this principle as one of, leading your competitors and not being led by them. Considered in this light it introduces the aspect of movement and control. First mover advantage requires movement and through movement control of your competitors.
Also when thinking of the concept of land as Sun Tzu describes it, it may well be represented by customer value but it can also be a new geographical market, customer demographic or some other aspect where you move ahead of your competitors.
Cirque du Soleil had first mover advantage when it created its unique mix of circus arts and street entertainment. Amazon had it when it created its online store. Apple through its online music service and its iPods had it, and I am sure you can now think of many others. The question however is how many of these organisations do you believe still maintain advantage in respect to ‘new markets’ they had first mover advantage in? Probably only Cirque du Soleil.
First Mover advantage cannot be static and must be considered in a dynamic environment. To sustain the advantage there must be constant movement to always keep your competitors playing catch up. Customer value is the defensive barrier that must be continually shifted and thereby strengthened so that when your competitors finally reach your position you have already shifted. In the language of Sun Tzu, the opportunity to defeat someone lies in their hands as only if they allow their defenses to become weak that you will be able to defeat them. On the other side, your competitors will only catch you and defeat you if you allow them to.
Maintaining first mover advantage lies in being formless which is achieved by being tactically alive. This competitive strategy requires:
- Gathering Knowledge: estimates and intelligence
- Attaining Understanding: tao and yin
- Gaining Advantage: strategic advantage and positioning
- Achieving Adaptability: adaptability and growth
- Maintaining Formlessness: deception and foreknowledge
