Saturday, May 12, 2007

Worms or Cheese?

I think I was quite young when I first heard the phrase “the early bird gets the worm” and when you examine the statement, I guess you can imagine that it does make a fair bit of sense. In terms of a new innovation, product or idea, some people would be of the school of thought that the best option is to get it to market first and get “the worm” with your first movers advantage.

A few years ago I heard an addition to the phrase about the bird and his worms, “the early bird gets the worm BUT the second mouse gets the cheese” and again this phrase made a lot of sense to me. The problem is, by being the first to stick you head out there and releasing your product; it means you are acting as the guinea pig for a whole industry and a host of would-be competitors.

In terms of business, the determining factor in the long term success of a product is its competitive advantage, something that its other competitors cannot imitate. For example Apple did not create the original mp3 player, they didn’t have to put R&D dollars into the development of a new music format, they didn’t have to test the market and see if there was any demand (companies like Rio were the early pioneers), however they did have a competitive advantage, they made mp3 players “cool”, a fashion statement and innovated with great interface and design and cleaned up the market riding on the hard work of others.

Other examples are

  1. Sony did not invent the portable cd player
  2. Ryanair did not invent the concept of low fare airlines
  3. Microsoft didn’t invent the operating system
  4. Google did not invent the search engine

To lead or to follow? That is the question


David said...

Hang on, Sony invented the walkman.

Ryanair did not invent the low fares concept, but they took it from the US and applied it to Europe which has a completely different regulatory envirornment. Also, its often the case that business models whch work in the U.S. don't work in Europe, e.g. the Walmart failure in Germany.

Tifossi said...

Well its sad but true ..the company that forays into a new arena first seems to lose out more often than not.