Value of being second

Value of being second: beating first movers on branding and market share by relying on evolving markets.

Extract from stratgy+business – Oded Shenkar:

Oded Shenkar, author of Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge, introduces an excerpt on the wisdom of entering markets after first movers from The Art of Being Unreasonable: Lessons in Unconventional Thinking, by Eli Broad.

Innovation does not need another advocate. It has acquired divine status, with even politicians promoting its virtues, promising that “we will innovate our way” out of any mess in which we find ourselves.

There is, however, one little problem: evidence. A close scrutiny of the empirical work suggests that the market supremacy of innovators is questionable, often distorted by biased assumptions and inadequate design. Many of the more rigorous studies show that innovators produce lackluster returns. Even those studies that identify a modest first-mover edge find that it has been receding over time.

Who does capture the benefits of new ideas, products, and models? Imitators. They get a free ride, avoid dead ends, capitalize on the shortcomings of early offerings or tweak the originals to better fit shifting consumer tastes. And yet, imitators rarely get the recognition they deserve: When was the last time someone received an Imitator of the Year Award?

Eli Broad, who built not one but two Fortune 500 companies — KB Home and SunAmerica — would be a good nominee for a lifetime achievement award for successful imitation. This excerpt from Broad’s recent book, which collects the insights and lessons he learned during his career, explains why.

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