Do You Have To Be First To Win?

There’s an awful lot of talk in business about the importance of being the “first  to market” when launching a new product or service. The conventional wisdom being that if a company is first to market with a breakthrough technology they’ll wind up with a competitive advantage. This in turn will allow them to enjoy large margins and a monopoly-like status.  Well, that sure sounds like a win, doesn’t it?

But here’s the thing. Have you ever noticed that in real life the company that’s “first to market” is often NOT the big winner? In fact, it seems  the eventual market leader is frequently a clever copycat. By this I mean a company that’s smart, has great timing, sees the market opportunity a new technology (created by someone else) provides, and is able to modify it by developing a practical application that will appeal to a broad audience.

Microsoft is a great example of a company that has capitalized on this kind of savvy maneuver.  Today, Microsoft is a $270 billion company who’s success was built largely on it’s reputation as a leader in personal computing.  And yet, it never actually created anything truly original. The company’s genius has been in it’s ability to modify and adapt existing technology for broad consumer use. In fact, this is how it got its first big break.

In a nutshell, it went something like this.

The personal computer was developed in the 1960’s.  During the early years a number of companies like HP, Altair, Apple and IBM were among the big players in the space. In fact, it wasn’t until 1984 when IBM tapped Microsoft to help develop a functional operating system for it’s IBM PC that the fledgling upstart got it’s first big break. If you’re old as dirt (like me), you might remember the initial operating system created by the two companies was called PC-DOS. Though Microsoft would later seize the opportunity to rebrand and sell software upgrades for the system as “MS-DOS”. A move that enabled Microsoft to establish it’s own brand and credibility in the market. Wisely, Microsoft also aggressively marketed the “MS-DOS” software to companies manufacturing IBM clones.

You see, as Microsoft demonstrates you don’t have to be “first to market” to develop market dominance. But you do need to get a few key things right. Here are four biggies:

1. You need to be early to the game.

2. You need to be good! Even though it was a young company, if Microsoft wasn’t good at what it did the company would never have won the partnership deal with IBM that ultimately changed it’s fate.

3. You need to recognize the benefits of a new technology for a larger audience and then create a useful application for which there will be high demand.

4. Perhaps most important of all, you have to have GREAT timing! Just imagine, if Microsoft had developed the PC-DOS operating system 10 years earlier, it’s likely we would never have heard of them.

This much I know.

-Jeanine