The Second Mouse Gets The Cheese: Second Mover Advantage

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“The Early Bird May Catch the Worm, but the Second Mouse Gets the Cheese” — The Second Mouse

In “Think & Grow Rich”, Napoleon Hill tells the story of R.U. Darby. One of the many caught by “gold fever” in the gold rush days, Darby headed west to dig and grow rich. After weeks of labour, he struck gold. He needed machinery to bring the ore to the surface. Quietly, he covered up the mine and told his relatives and a few neighbours of the ‘strike’. They raised funds for the needed machinery and had it shipped to the mine. The first car of ore was mined and sent to a smelter. The returns proved they had one of the richest mines in Colorado. A few more cars of that ore would clear the debts. Then would come the profits.

However, after the initial strike, the vein disappeared. Despite diligent efforts, the project failed and they decided to cut their losses and sold the machinery to a junk man for a few hundred dollars and returned home. The junk man contacted a mining engineer to examine the mine. The engineer reported that the project had failed because the owners were unfamiliar with fault lines. By his calculations, they would find a rich vein a mere three feet from where the Darbys had stopped drilling. The junk man took millions of dollars in ore from the mine because he knew enough to seek expert counsel before giving up.

Hill concludes, “Failure is a trickster with a keen sense of irony and cunning. It takes great delight in tripping one when success is almost within reach.”

I like to use this story to highlight something other than quitting too soon. In the realm of strategy and innovation, sometimes it can be better to be a follower than a pioneer. Sometimes, it is better to let the pioneers take the arrows. Sometimes, it is better to be the second mouse because the second mouse gets the cheese.

In the context of the second mouse, the concept of first-mover advantage is occasionally cited to elucidate the success of companies that establish themselves in a particular market ahead of others. These companies leverage their capability to introduce unique technology or acquire strategic resources before costs escalate, (theoretically) positioning themselves at the forefront.

However, the perceived advantage of being the first mover doesn’t always guarantee sustained success. Often, later entrants learn from the mistakes and successes of those who ventured into uncharted territory before them. The second mouse, leveraging insights gained from the initial trailblazers, can navigate the market more strategically, capitalising on the evolving landscape to potentially surpass the early entrants in the long run.

In this week’s Thursday Thought, we look at two cases of the second mouse. In one case, the second mouse (GM) benefitted because the first mouse (Ford) clung to an outdated (mental) model. In the second case, the second mouse (Apple) allowed the first mouse to trigger the market, and once ready Apple claimed the cheese.

Mastering Change: How General Motors Outpaced the First Mouse, Ford

“Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.” — Sun Tzu

In the late 1920s, as the U.S. economy soared to new heights, the automotive landscape echoed the sentiments of change. Consumers, thirsty for greater variety and a closed-body design (including a roof and another colour other than black), signalled a departure from the era dominated by Ford’s Model T.

Seizing this opportunity, General Motors (GM) emerged as the second mouse poised to get the cheese. In 1924, Alfred Sloan Jr., GM’s president, introduced a groundbreaking market strategy. He segmented the U.S. car market by price range and purpose, tailoring cars to different consumer needs. Meanwhile, the Ford Model T, once an undisputed leader, started losing ground as competitors surged ahead. Ford’s single-minded focus on efficiency and minimising costs for the Model T turned out to be a remarkable success, and by 1921, the Ford Motor Company was responsible for over half of the passenger cars produced in the United States. However, the same single-mindedness that helped Ford to succeed also unravelled the master innovator.

Ford’s preoccupation with internal procedures rather than adapting to the changing market kept the innovator tethered to the past. Ford, like most companies, achieved greatness through creativity, agility and innovation. However, once successful, that flexibility was replaced by rigidity, rules and regulations.

By the late 1920s, Ford found itself trailing, and GM claimed the largest market share. Despite launching new models like the Mustang, Maverick, and Pinto, Ford struggled to grasp what consumers truly desired in a car. GM’s Sloan noted, “The old master has failed to master change.” Ford, now positioned as a follower, consistently lagged in terms of the look and style of its cars.

The story of Ford echoes the tale of the first mouse, which, despite some successes, ultimately lost in head-to-head competition with GM. Even with attempts to introduce new models, Ford couldn’t reclaim its former position and continued to follow the trends set by its innovative competitor. The lesson remains clear: to retain a position as the first mouse, leaders must keep abreast of market shifts, which often leads to sustained success in the ever-changing business landscape.

Second Mouse by Design — The Apple Gets the Cheese

Apple’s reputation for innovation lies in letting others (first mice) pioneer, test and stumble with innovations (triggering the trap). Apple steps in after initial groundwork has been laid, expanding existing technologies, and utilising a blend of its powerful marketing, proprietary platforms, trusted brand and business-building prowess to command a substantial share of burgeoning markets. We often forget that the Apple II wasn’t the inaugural personal computer, the iPod wasn’t the first MP3 player, the iPhone wasn’t the first smartphone, the iPad wasn’t the initial tablet, nor the Apple Watch the foremost connected wearable. In each instance, a different company defined the product and Apple waited until it understood the limitations of the original product, market or business model. Apple then released a refined product with enhanced features and introduced additional components like iTunes or an App Store that significantly enhanced the overall product. Such strategies further locked existing customers into the Apple ecosystem.

This deliberate approach of strategic timing allowed Apple to catch up and innovate on existing products, demonstrating that being the second mouse often involves more than just technical improvements — it requires a comprehensive enhancement of the user experience and ecosystem.

In our series with Kaihan Krippendorff, Kaihan tells us the Apple strategy unfolds as follows.

1. Innovation Testing / Observation: Another company, the first mouse, tests out an innovation — such as the Kindle, Sony Reader, or Barnes & Noble’s Nook.
2. Slow Adoption: The innovation, though attractive, faces slow adoption. Customers may not fully understand it, or barriers in the overall system impede widespread acceptance.
3. Investing in Change: The initial innovator invests in changing the system, influencing consumer behaviour, and initiating a shift that facilitates the innovation’s success.
4. System Loosening: The system begins to loosen, and people start embracing the innovation as it gains traction.
5. Apple’s Strategic Entry: Apple, holding critical strategic assets, strategically enters the scene. Leveraging its marketing prowess and business acumen, Apple draws the wind from the initial innovator’s sails and takes ownership of the innovation.

The age-old adage “The Early Bird May Catch the Worm, but the Second Mouse Gets the Cheese”serves as a poignant reminder that success often lies not just in being the first mover, but in strategic adaptation and innovation. The stories of General Motors surpassing Ford and Apple’s deliberate approach to refinement underscore the importance of learning from pioneers, adapting to changing circumstances, and strategically entering the scene. The second mouse, armed with insights from those who ventured first, not only avoids pitfalls but also positions itself to seize the metaphorical cheese.

Thanks for Reading

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