Does it pay to be a pioneer or a fast follower?

The answer to that question is, according to a story in today’s Wall Street Journal, is that “while platform creators may reap early financial gains (mostly by selling to followers), long-term advantage goes to the followers.” The three authors, Gezinus J. Hidding , Jeffrey R. Williams And John J. Sviokla, state:

Out of the 15 platform industries that we studied, 14 of the current leaders began as followers in a market created by a competitor’s platform. In only one market, for integrated business software, was the original platform creator still the leader–SAP AG. Five were fast followers, which we define as the second, third or fourth company to enter a market. The other nine were later followers.
. . .
online auction sites already existed when eBay Inc. founder Pierre Omidyar created his company. But those earlier sites were run by businesses selling to consumers. EBay changed the concept to one in which consumers would sell to consumers.
. . .
Research In Motion Ltd.’s BlackBerry predates the iPhone as a smart phone with PDA features, but Apple’s product offered key new features of a touch screen and applications that users can purchase or design themselves.
. . .
Early on, companies like WordPerfect, VisiCalc and Harvard Graphics dominated PC applications. But Microsoft responded by making its Word, Excel and PowerPoint programs (all follower products) compatible with one another, with existing products (like Lotus 1-2-3), and with the Windows operating environment.

Interesting – and an important point for policy. We have an S&T policy that promotes inventiveness. But where is our innovation policy that promotes “fast followers”?

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