In their 1993 marketing classic "The 22 immutable laws of marketing", Al Ries and Jack Trout forcefully argue that "it is better to be first than it is to be better". In fact, this aphorism was bestowed the honor of being the first of their 22 laws!
I have come to believe that this "law" is a lot less immutable than they suggest. Think of the dotcom bubble of the late 90's. Boatloads of folks who all wanted to be the first to enter the brave new world of the internet went bust at that time. Painfully so. And what is happening a decade down the line? Web 2.0 is taking over our lives, and folks like Facebook founder Mark Zuckerberg and Google's Larry Page (and others) are billionaires by riding this second wave.
Let's take a closer-to-home example. Quite a few of my friends bought plasma TV's when they were first the rage a few years ago. I remember they paid about S$ 10,000 for a 42" plasma at the time and proudly took it home. I'm not sure how they feel a few years down the road, when far better performing plasmas are being sold for as little as S$ 2000, but I am sure I don't want to be in their shoes.
It is not always better to be the first.
Why? I think that sometimes inventors, innovators and visionaries tend to be too far ahead of their time, and can get too carried away by their own steam to carefully see the ground beneath them.
Let's go back to the internet example. The dotcom era visionaries missed simple facts around low internet penetration especially outside of the US, a non-existent consumer habit to go online, miserable bandwidths leading to low speeds for most meaningful applications and content, the lack of meaningful applications and content and the relatively user-unfriendly interface on most platforms. Similarly, simple issues around revneue models and payback periods were ignored by investors. These critical factors were swept aside as being "mere details" and the people who raised them were shut up for being "old foggies who did not get it".
Indeed, the vision and the world-changing power of ideas of taking entire industries like banking, retail, news, entertainment, communication and social networking online was too intoxicating for anyone to notice the devil in the detail.
The vision was not wrong. Today, people (at least in the developed world) go to Google by default to search for anything, log into their hotmail or yahoo accounts to communicate with each other, increasingly meet each other on numerous dating sites, say hi to friends on facebook and do their banking and airline ticketing online as a matter of course. They buy their books on amazon, watch and post their videos on youtube and get answers to their questions on wikipedia. Some even live out their fantasies on secondlife or play games or gamble in online casinos. Low-end executive search firms are being made redundant by Linkedin; travel agents are getting real heat from airline and other online vendors, and all print newspapers I know are evaluating strategies to deal with the Web. Even as this is happening, the internet is going mobile in a very big way (the iphone alone is a driver), and the developing world is catching up on all of this ... fast!
What went wrong in the dotcom era is that since key details were missed, expectations around the time it would take to materialize and monetize some of these business models were very unrealistic. Being a trail-blazing visionary is great, but it is often the smart, yet level-headed follower with an eye for detail who makes the killing.
Pedestrian and uninspiring as it might sound, I think it is more accurate to say, "It is exciting to be first, but usually better to be the savvy second".
A penny for your thoughts?
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Hi Chandan
ReplyDeletegreat blog and thinking ....for me , neither is the correct (or the right) solution. Its all a function of risk vs return . the return if you get it right would be far higher than if one were to be the second or a follower. Hence, the key question is : whats the market(consumer/competitive etc) under which one should make the choice to be first or second (or even later) ? Its all about timing to be in line with when we believe the demand will intersect with our offering .
keep the blogs going ...
Cheers
pankaj
Thanks, Pankaj, and your point is fully valid. However, I think some innovators are so seduced by the potential of enormous return or so enamoured by their vision that they tend to gloss over some risks, and end up rushing in without doing the kind of factual and objective analysis you're talking about.
ReplyDeletegreat hypothesis..though i would always like the savvy second ..yet in discoveries and inventions...columbus ;vasco; newton to name a few first were relevant.i guess the pioneers need to take a breather and have some old foggy along!!! on the whole agree with you .
ReplyDeleteI Have also experienced in life some simple things one does better after seeing the first timers or being one.the glory that came to Amitabh did not to Dilip Kumar.thats why people say the second child is usually smarter and the parents wiser.
ReplyDeletekeep writing.........
hey chandan, good to see you're maintaning a blog pretty consistently. as for this post, i felt, the point here was to an extent at odds with the point in a previous post about being unreasonable.
ReplyDeleteyou'll have to be a little unreasonable to be first, and fairly reasonable to wait!
so what does one choose :)
Thanks :). Well, a couple of thoughts. One, not all "unreasonable" folks become trail-blazing heroes, many of them must fail big-time too, like many of the dotcommers. Having said that, I think the "unreasonable" dotcommers still made a contribution by paving the way for the "savvy second" folks. It is just that by being too ahead of their time, they did not get to monetize their ideas successfully for themselves in majority of the cases.
ReplyDelete