First Mover Disadvantage

The copycats get the rest

The other day we talked about First Mover Advantage with some teams. I’m not a big believer in First Mover. After probing a bit further, I agree that First Mover does exist in certain cases, and in others, it may actually be a disadvantage.

Here is how I see it breaks down. Based on Christensen’s Disruptive Innovation model, First Mover may apply in sustaining innovation as opposed to disruptive.

Disruptive innovation by nature implies a steep education curve. True disruptive innovation creates new sets of behaviors. This is why the businesses have to spend a lot of resources in teaching and converting users.

Sustaining innovation on the other hand captures current behaviors and extends it by technology. The model I have in mind is BJ Fogg’s Behavior Model.

A good example of how First Mover works in sustaining innovation is AirBnB. AirBnB relies on the necessity and our understanding of looking for housing over the decades. That behavior has already established itself in the intraweb through the vast popularity of Craigslist. Andrew Parker’s observation of the Spawning of Craigslist aptly describes this. Offering temporary lodging is the flip side of the coin, and AirBnB captures it through its momentum as a First Mover.

On the other hand, scenarios where Wesabe lost to Mint, Marc Hedlund concluded that “Changing people’s behavior is really hard.” Other cases include Yahoo! losing the search war to Google, Friendster & Myspace to Facebook. These company out executed their predecessors.

Some people call this the Second Mover Advantage, and the link includes some other examples.

Pioneers who create new markets generally end up with around 7% of the markets they create. The copycats get the rest. — Venkatesh Rao

Read Quote of Venkatesh Rao’s answer to What are the disadvantages of being a first mover in a market? on Quora