Keep the damned remote back in the next five seconds!

Is First Movers’ Advantage really a blinder or a blunder for the Einsteins of business?

.He’s the grouchiest uncle with the most terrifying frown I’ve known since childhood. He’s over sixty, talks to nobody and nobody is encouraged to talk to him. Anger is his middle name and fables have been told by my aunt and my mum about the times Godzilla has blasted men out of this universe. And unfortunately, the first Saturday of every month, I have to escort my mum to uncle’s house for an evening family gettogether. It’s a ritual that has no escaping, try as hard as I have [‘family honour at stake, son’, I’ve been irritatingly told]. So through the two hours while everybody meets up and indulges in blackboard nail scratching polite conversation, I slip away to watch the only television in the household kept in the study; but most unfortunately, with my uncle, who holds the remote like a revolver, and ensures that almost every time, I get to see this most boring astrology channel bleating paeans after paeans of painful discourses.

Throughout all of it, T-Rex never talks; and I don’t talk to him. In fact, I don’t remember the last time he spoke a word. The same scene gets repeated month after month... “Boss, be the first mover in making conversation with your uncle!! Believe me, the results would be fantastic!” My eloquent investment banker friend was pretty convincing in his incisive analysis of my predicament, “Look dude, global research proves that first movers have succeeded beyond imagination in history. And don’t forget the time in college when everybody knew you were a sissy while all your first moving friends got the most beautiful damsels? Why don’t you at least try and be the first mover in breaking the ice with your Unc? Invite him out for dinner. Anything! It’ll surely work!”

Perhaps the biggest claim to fame across the world for biting the bullet goes to Dr. Richard Schmalensee, Dean, MIT Sloan School of Management, who in an exemplary discourse in May 2006 (in which he amusingly quoted, “I have the disadvantage of having actually studied the first mover’s advantage...”) proved not only how first movers were at a major disadvantage, but also that “there were plenty of industries where the first movers got killed!” This criticism was resoundingly supported by well-acclaimed global researchers David Montgomery (Stanford University) and Marvin Lieberman (University of California), who, in their outstanding paper titled First Mover Advantages... stated that “The ability to ‘free ride’ on first-mover investments and resolution of technological and market uncertainty” comes as an advantage to Second- Movers! Putting a nail on the first movers’ coffin is the research by Richard B. McKenzie of University of California, who showed how failure rates across traditional industries for first moving pioneers was an elephantine 71%; first movers also had a pathetic average market share of 6%.

Talking more about numerical conclusions, a well referred research by professors Markus Christen (INSEAD) and William Boulding (Duke University) reads thus, “We found that pioneers in consumer goods had an ROI of 3.78% lower than later entrants. And the ROI of first movers was 4.24% lower than followers in the industrial goods sector. The bottomline result: Pioneers were substantially less profitable than followers over the long run, controlling for all other factors that could account for performance differences.”

Dorde Kalicanin, faculty of Economics, University of Belgrade, while outlining the myth of first movers’ advantage, notes in his paper titled A Question Of Strategy: To be a Pioneer or a Follower, “Historically, the advantages of being a pioneer have been promoted to a much greater extent than the risks... It is logical that risks associated in a completely new product are greater than those associated with incremental product changes.”

Professors Vladmir Smirnov and Andrew Wait, faculties of economics, University of Sydney, also devastated the supposed advantages associated with first movers. Their report titled, Second-movers advantage in a market entry game, conclusively puts forward the fact that each player “prefers to be a follower rather than a leader in the market, perhaps because they can free ride on the other party’s investment... The second entrant into a new market often does better than the first firm that entered. If a firm could commit to being the second entrant it would be better-off.”

Another award-winning research titled First-Mover (Dis)Advantages by the previously mentioned Montgomery (Stanford University) and Lieberman (University of California) proves emphatically that “Pioneers often miss the best opportunities, which are obscured by technological and market uncertainties. In effect, early entrants may acquire the ‘wrong’ resources, which prove to be of limited value as the market evolves.”

The most dramatic paper by Rhee (Hong Kong University), Palma (Universite de Cergy, France) and Thisse (ENPC, France) titled First-Mover Disadvantage... supported the fact that the follower “has an informational advantage not only because it directly observes market conditions, but because it makes inferences about market conditions based on the first-mover’s quantity choice. Thus, informational advantage enables the follower to attain higher market share and profits.”

Another sparkling paper by Lieberman titled, Did First-Mover Advantage Survive the Dot-Com Crash?, statistically proves how, “benefits of early entry appear much less pronounced when firm survival is used as the performance measure.” This fact was also vindicated by Min (California State University), Robinson and Kalwani (Purdue University) through their paper titled, Market Pioneer and Early Follower Survival Risks... which statistically proves how, “When the pioneer starts a new market with a really new product, it can be a major challenge just to survive... Overall, these results indicate that in markets started by a really new product, the first to market is often the first to fail.”

It strangely seemed too quiet in my uncle’s study as the channel bleated on, with Groucho Marx (my uncle) and I, super-silently watching the same stupid channel on the same stupid television. But my mind was working overtime. Strangely, though almost none of the above mentioned research supported the first movers concept, I was torn back to my friend’s advice. I couldn’t help thinking that perhaps being a first mover does actually help in relationships. Well, like my friend had mentioned, wasn’t college time the most painful for me just because I always was the second mover? Moving first and fast had to work! I didn’t want to be the loser ever again! I had to do it!! It was now or never!!!

Pumped up and charged to the core, I decided to crush the Orwellian worm of silence this time. In a superflash, I grabbed the remote from my uncle’s hand, switched off the TV in one smashingly swift move, threw the remote to one corner of the room, and looked my uncle straight in the eye, and blurted out maniacally, “Unc, let’s do something new; let’s go out for dinner...” Seconds passed by like eons, but a deafening silence prevailed... I could hear my heart beating at 200 beats per second and the blood rushing in and out of my liver... For the first time in my life, I could hear sweat slowly dripping down from my face, drop by drop... I could even hear someone breathe, perhaps me... Like I said, the silence was deafening...till my uncle spoke to me for the first time in my recorded history, “Keep the damned remote back and switch on the goddamned TV in the next five seconds!”

I did both the things in much lesser time than he had requested. For the next hour, we continued watching the astrology programme in silence... The frog eyed saffron haired presenter was braying away his prediction for my zodiac sign that it’s going to be the happiest day of my life... Last I heard, my investment banking friend – trying to out beat the market by being the first mover – had been wiped out clean in the stock market crash!!! And these days, Godzilla has strangely started visiting our house. Crap! What an ending!!!

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Keep the damned remote back in the next five seconds!