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What is a First-mover Advantage? Meaning.
First-mover Advantage is the competitive edge gained by the first significant company to introduce a product or service in a market by having the shortest Time to Market.
ADVANTAGES FOR FIRST MOVERS:
The main benefits associated with being the first or at least the first significant in a market are:
Like always, being the first-mover only makes sense if the rewards justify the risks. Some industries reward first-movers with near-monopoly status and high margins. Other industries don't, allowing late-movers the chance to compete more effectively and efficiently against early entrants.
DISADVANTAGES FOR FIRST MOVERS:
The main drawbacks of trying to be the first mover are:
ADVANTAGES FOR IMITATORS (SECOND MOVERS):
The main benefits associated with being second or third in a market are:
DYNAMICS OF NEW PRODUCT INTRODUCTION STRATEGIES:
Lee, et al (2000) found that indeed moving timing and moving order are key factors in the dynamics of new product introduction:
TIPS FOR FIRST MOVERS:
It's good to separate operational speed (move quickly) (Operational Agility) from strategic speed (increase the ability to move quickly) (Strategic Agility).
Also there is a need to recognize that first-mover status is not an end in itself, but rather the beginning of a longer and much more complex strategy in which the initial advantage has to be defended against competitors and imitators.
Source: Hun Lee, Ken G. Smith, Curtis M. Grimm and August Schomburg (2000), Timing, Order and Durability of New Product Advantages with Imitation, Strategic Management Journal, Vol. 21, No. 1, pp. 23-30
Compare also: Blue Ocean Strategy | Strategic Window | Time to Market | Competitive Environment | Experience Curve Effects | Organizational Resilience | Entrepreneurial Organization | Second-mover Strategy | Art of War (Sun Tzu) | Sustainable Competitive Advantage
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