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First Mover strategy in simple terms simply means being the first to start, Innovate, or introduce a business or simply being the first to enter the market. Although there is no new idea, there are new ways to implement old ideas that it becomes a new business. Yahoo mail has been an electronic messaging, search, and news platform until Google came into the market with their innovative idea whereby a single email account serves more than a mailing purpose to becoming a gateway to tens of other products. One account, multiple benefits. They innovated and invented added to the old.
This when compared to fast follower strategy which means to copy exactly what has been with no innovative change to another place it has never been. Which is the single strategy for Chinese success in business. After all, if you can’t innovate, take from the innovators, imitate, and cut prices. For the fast follower sometimes, price is their only competitive weapon. You make YouTube, they make Tudou, you make WhatsApp they copy to produce Wechat. A business can succeed by following but you must follow fast and have enough cash and tools to execute. For China, its population makes its copied model market-ready.
Read Also: Fast follower strategy: How the Chinese are building giant businesses
Applying the first mover strategy can be an advantage especially on the initial stage until competitors start evolving. The first-mover strategy has its pros and cons but can be the best as long a business keeps leading innovation and of course taking certain strategies to make market entrance almost impossible or at least difficult.
CONS of first mover strategy
There are a lot of first mover strategy businesses that have gone out of business. Blackberry was the smartphone leader and now is nowhere to be found. Becoming a first-mover isn’t an arrival position, it’s a continuous pursuit of excellence.
Nokia was the king of phones but lost that position as they failed to lead the smartphone era. Businesses indeed rise and fall but foresight should be of great importance.
Here are the cons of first mover strategy
1. You set the pace
If you succeed you lead the path for others to copy, you fail, you become a lesson for others on what not to do so other Businesses restrategize and come out better using you as a springboard to success.
2. You break the market barriers
Let’s take an example from a Nigerian business, Gokada, a rider booking business. You book from your app and have a bike rider come pick you anywhere you are to your chosen destination. They discovered the market, faced the challenges, pulled off the resistance, and got accepted by people after the breaking the barrier of trust issues.
Then Oride, opera’s ride-booking business came on board, offered better pay to bike owners, slashed the price for the public, gave incentives that Gokada can no longer compete as it has become a price war. Gokada couldn’t compete with a company that had over 150million USD in funding from Chinese investors against Gokada’s 10million USD funding. Oride benefitted on the innovative idea of poor Gokada who had no flamboyant budget to take on a price war.
3. You become a feasibility study
The first mover strategy has this con, once someone is succeeding in a market space, the market is almost validated to be feasible. In fact, the presence of competition is a sign that business is feasible, just find a unique value proposition and start yours. One of the ways a first mover can block this is to make an entrance into the market very difficult or almost impossible.
Are there really benefits to this first mover strategy?
Yes of course! Let’s take a look at some American businesses like Apple, Amazon, Google, Microsoft, Adobe, Cisco, and many others. America has always taken the lead in business innovation that other businesses can’t catch up with but can only try to copy.
Imagine the first man who took the courage to construct railways? He did all the railways, introduced the business, and started operations that he became the richest man of his time by monopolizing the business even long enough after competitors set in. That was Andrew Carnegie.
Here are the benefits for a first-mover
1. First to reap the market benefit
You will get to enjoy the market profits and monopolize for long before other businesses even think of penetrating the market. This is one of the points pointed by Peter Thiel in his book Zero to One.
2. Market dominance
When things are done right with ruthless competitive strategy, can dominate the market. Thinking of coca-cola, they started thinking about market dominance from day one. Sometimes you hear businesses pitch 5% market share or even 1% market share. You hear pitch like there are 91milloin women in America who wear winter shoes if we can win 10% of this number we will earn 491million USD yearly.
That wasn’t coca-cola. Their vision was for the drink to be consumed in every family every day and despite the criticisms on them for producing sugar and carbonated water they are still the market leader. One of their secrets has been strong branding!
3. Larger market share
This market share might not last but you will surely enjoy it for some time, if you learn how to dominate, you will enjoy it the more. Henry Ford innovating and making the move to be the first to produce cars for the common man. The market share and profits share was so large that he satisfied investors yet became the richest man on earth despite crude oil’s fast-rising at its peak.
Before competitors think of coming in, you must have gained the market loyalty that hardly can penetrate except they run the freemium strategy.
What it takes to execute as a first-mover
1. Foresight and innovation
Henry Ford made a statement, if I have asked people what they wanted, they would have said a faster horse! Sometimes people don’t know what they want so you have to lead the market for them. First mover strategy demand first-mover thinking with fast action to execute
Apple’s mantra has always been “Think different” and it can be seen all over their product designs. Top-notch designs with strong tech innovation and premium offer that beats the market.
Google took over the internet space and became the encyclopedia of the internet. Building a community to become a tree that houses all the birds of technology. Want a map for your business app, you depend on Google. Want a form of data analytics on your internet platform? Google gives you one, want loads of mobile apps? Google has a platform and owns the open source android operating system that the Chinese businesses depending on the majority of the google platform until the china American trade war.
You can’t afford to compete, you can only compete. This is one of the most important factors in the first mover strategy, dominate or be dominated!