FIRST LOSER’S ADVANTAGE

EVERYBODY TOLD US WHY HAVING THE FIRST MOVERS’ ADVANTAGE WAS MOST CRITICAL FOR SUCCESS. THEY WERE ALL WRONG!

The global business acumen is populated with a multitude of mildewed and hollow adages that fail to equip companies with knowledge to reap extraordinary benefits; First Movers’ Advantage is one such hogwash. Over decades, there have been entrepreneurs who have been washed away by this cliché, that once promised them a blue ocean. And most often than not, they ended up wasting truckloads of dollars in inventing the next unimaginable business bet, and building the platform for the late coming slumber-jacks, who eventually walked away with all the goods – the revenues, the profits, and in most cases, even the innovator’s future!

Henry Ford, who himself was a first mover (having pioneered the automobile), had once proclaimed, “I believe that the best strategy for the first per son is to be second!” He was right. Today, Ford Motor Company, his brainchild has not only slipped from being the world leader in automobiles, which it was some decades back (Toyota, GM & Volkswagen with respective market shares of 13.7%, 12.2% & 9.5% are the top three as per the December 2009 World Motor Vehicle Production OICA Survey), but has also become the champion of automobile recalls, globally! If you thought that the $16.4 million fine imposed on the late-mover Toyota Motor Co. by the US government, following its monstrous recall of 8 million vehicles since January 2010 was a fair punishment, how much would you recommend for the first mover Ford, which in 2008 recalled 14.1 million vehicles, after recalling 8 million in 1996?

What’s common between Vivola, Erwise, Midas and Mosaic? All four, individually claimed that they created the browser market. Their hard work translated into a business idea for late-mover Bill Gates. As of February 2010, Microsoft’s Internet Explorer commanded a 65% control over the global browser market (data by Janco Associates Inc.).

Being the first to stake a claim on a new territory doesn’t ensure sustainability. Sadly, it doesn’t even guarantee advantages as was originally believed. Take the case of the lesser known Prodigy Communications. It was an early bird in the business of online connections, which it entered in 1984, along with huge brand names to guarantee it success: there was IBM leading technology for its operations, Sears Roebuck heading its online retail and CBS was roped in for news coverage and selling of ad-space. Twelve years later, it was sold to a private investor group for just $250 million. Similar was the case with the Graphical User Interface, which was developed by the Xerox Corporation at their Palo Alto Research Center (PARC) in the 1970s. Steve Jobs, co-founder of Apple Computers, visited PARC in 1979 and was impressed by the Xerox Alto, the first computer with a graphical user interface feature. He offered Xerox a chance to invest $1 million in Apple pre-IPO stock, in lieu of two visits to PARC with his engineers. Today, none remember that the Xerox Alto was the first computer with a GUI; for the world, it is the Apple Lisa, which simply “copied” the technology which Jobs saw at Xerox. It’s interesting how one man can prove the case for the late movers so well. Steve Jobs didn’t invent the portable music player, or the first laptop, or even the first smartphone. He only followed, and followed right! His iPod, iMac, iPhone have become bestsellers.

There are many examples of how the first mover lot has been one which has been long forgotten. Names like King Kullen Grocery Inc. (which pioneered supermarkets in America in 1884), Minnetonka (which produced the world’s first liquid soap), Ampex (maker of the first VCRs, which lived for just two decades), Chux (from J&J, which was the first disposable diaper brand), Micro Instrumentation & Telemetry Systems (which pioneered personal computing with the Altair), Visicalc (the first desktop spreadsheet program), Atari (which brought to market the first video game), Dumont (which led the way in selling television sets), and many more, have been relegated to the dust-laden history books. And to talk about the new age champions, they are all those which learnt from the mistakes of the early birds.

Walmart was not the pioneer of retail. Excel was not the first spreadsheet to hit desktops. Commercial aircraft were not the brainchild of Boeing or Airbus. Neither did Disney start a theme-based park, nor was Starbucks the first to sell gourmet coffee. It’s true: they were not the first, they had learnt well and did better!

The criticism is supported well by research too. Researchers DavidMontgomery (Stanford University) and Marvin Lieberman (University of California), in their 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.

“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,” added the duo. And to talk about numbers, the fi nal nail is hammered in by Richard B. McKenzie of the University of California, who proved through an extensive study how failure rates across traditional industries for pioneers, was a 71%, with their lot controlling just a pathetic average market share of 6%.

A research by professors Markus Christen (INSEAD) and William Boulding (Duke University) also testifies 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. Bottomline: Pioneers were substantially less profitable than followers over the long run…

Once upon a time, long long ago in Bethlehem, the wise men said that competition was like a 100 meter race – the first off the blocks is the one who has the biggest chance of winning the race. What they unfortunately forgot was that competition was more like a 40 kilometer marathon, where it matters more how well would you last the whole distance and learn from the mistakes of those ahead of you. Imagine driving a car at 120 miles an hour on a completely pitch dark highway in the middle of the night. Now, wouldn’t you give a king’s ransom to have another car ahead of you tasting the bumps and ditches first?

FIRST LOSER’S ADVANTAGE

SPIEL GURUS TO SPIN DOCTORS

From Socrates in 400 BC to Barack Obama in contemporary times, the teaching profession has given more transformational leaders than any other profession.

The correlation was known for many years. But it took a spate of recent examples for pushing the premise beyond argument. Call them spiel gurus or spin doctors or plain and simple professors, the fact is that the teaching profession has regularly, over centuries, provided transformational leaders unmatched in the history of mankind.

Of course, the supremely confident and inspirational Barack Obama is the most recent and perhaps most brilliant example of this qualified hypothesis. Obama, a graduate of Columbia University and Harvard Law School, used to teach constitutional law for more than 12 years (1992-2004) in the University of Chicago. But if the 2009 Nobel Prize winning Obama is impressive, you’ll be amazed at the number of trailblazing tutors in history who’ve moved mountains and masses in their endeavours to changes the world.

Socrates, an iconic Athenian philosopher who lived around 400 BC, was a teacher who spawned students equally iconic, like Plato, and value systems that have become legendary discourses of today – one, which holds relevance till date and beyond, without any footnotes to the preacher, is where Socrates implores the community to focus on self development rather than on the objective of gaining material wealth.

America is replete with similar examples. The most charismatic William Jefferson Clinton, better known as Bill Clinton, went to law school and after passing out, became a law professor at the University of Arkansas-Fayettville. His teaching career is said to have contributed significantly to his political career. He’s one of the few Presidents of the United States who were elected twice to the position. It’ll be hard for any person to deny the command Bill Clinton holds over masses till date. Dixy Lee Ray was the 17th Governor of the U.S. State of Washington. She was Washington’s first female governor. After getting a master’s degree and later a PhD from Stanford University, Ray became a marine biologist and was a professor at the University of Washington for 26 years till 1972. James Abram Garfield (1831-1881) was the 20th President of the United States. In his earlier years, not getting his preferred job as a principal of a high school in Poestenkill, New York, James joined the Eclectic Institute teaching classical languages. For that matter, John Quincy Adams, the sixth President of the United States, was a professor at Harvard. The list of member representatives within the US Senate, who have been or still are professors in American universities (Vernon James Ehlers, Berkeley; Samuel Hayakawa, University of Chicago etc), is growing by the day. The Federal Reserve head, Ben Bernanke, used to teach at the Stanford University’s Graduate School of Business.

Even beyond America, the essence of education and belief in professors is noteworthy. The largely anti-American Mahmoud Ahmadinejad is the current President of Iran and enjoys an unassailably huge majority within Iran (despite all talks to the contrary by western media). He’s into his second term and is none the better when it comes to diplomatic talk. This son of a blacksmith holds a Ph.D from Tehran’s University of Science and Technology and used to teach in the University as a lecturer before becoming Iran’s premier. In the same breath, Vaclav Havel – the tenth President of the Czech Republic – is a close qualifyer being a chemical laboratory assistant for almost four years.

In the corporate front, Dr. Craig R. Barrett, retired CEO and Chairman of the Board of Intel Corporation used to work as an assistant professor in Stanford University before joining Intel. Post retirement, he has now joined the faculty at Thunderbird School of Global Management in Arizona. Barrett ushered in what is considered the most dynamic times in the history of Intel.

Ask yourself. Do you remember anyone in your life, apart from your family and close friends, who has been a significantly large – if not the biggest – influencer in modulating the way you think, and in the way you perceive situations? High chances are that you’ll have a school or college professor in your mind, one whom you would not forget even after years of disuse of the topics taught.

Millions across the globe idolize Mohandas Karamchand Gandhi, Mahatma to all of us. Single handedly, he generated a revolution out of the weakest link in our personalities, that of non-violence. His charisma and vision are what India owes its existence to. Given that, not many know that Mahatma Gandhi once wanted to take up a job as a high school teacher.

Looking at more recent times, this man is an MA, DPhil (Oxford) and DLitt (Honoris Causa). He was a senior Lecturer in Economics (1957- 59), Reader in Economics (1959-63) and Professor in Economics (1963-65) at Punjab University. Later, he became the Professor of International Trade in the intellectual hub Delhi School of Economics, University of Delhi. He further became an honorary Professor at Jawaharlal Nehru University, New Delhi, in 1976. The man is none other than Prime Minister Dr. Manmohan Singh, who led the globalisation wave into India and earned an image that is highly value based.

Clearly, if a country wants a radical and transformative change amongst its citizens and within the nation, it has to focus first on generating outstanding quality professors, without whom the change exercise is futile. To that effect, honourable Union HRD Minister Kapil Sibal has a hitting point when he says that there is a huge dearth of quality teachers in the Indian education system. This is actually an extremely worrisome issue as not only does it hinder the generation of quality professionals to join the corporate industry, it also stymies the nation’s development considerably as there are fewer and fewer thought leaders who can say, “Yes, we can,” and move a nation ahead with them. And that is the call of the day that India needs to address if it wants a revolutionary approach to developmental issues.

SPIEL GURUS TO SPIN DOCTORS