SECOND MOVER IS THE NEW ADVANTAGE

Its “big cats” month on National Geographic channel and in just under three days of watching these documentaries, I have become somewhat of a fanatic. Watching the survival of the fittest in the jungle between predators and preys is simply breath-taking, there is a lot to take in for the discerning learner. I simply call it junglenomics. In this particular scene of junglenomics are three animals, the Lion, Cheater and Impala, a prey sandwiched between two daring predators of the jungle.

My first instinct is what I consider common sense reasoning, the Lion being bigger, more daring and of course king of the Jungle will intimidate and outmuscle the Cheater to go after the impala first. “It just has to play out like this”, I murmur to myself.  In all this, I get the shock of my life; the lion acts totally uninterested in going after the impala, and further surprises me by seating in the Savannah grass panting while observing his surroundings. However, I get surprised by his attentiveness as he watches from a distance with calculated eyes as the Cheater charges after the impala at the speed of light. “Is he injured, sick or just had the meal of his life to not want to go after the impala himself”? I ask myself.  I honestly find myself getting angry at the so called king of the jungle for spoiling the scene in my head. Everything seems to be happening so fast that before I could even finish thinking about the lion’s behaviour, the Cheater had already taken down the impala and taken one or two bites.

Then I instantly see it, the king of the jungle roaring back to life and immediately charging at the Cheater enjoying his lunch. Within a matter of minutes, the lion intimidates and outmuscles the Cheater who doesn’t put up much of a fight. The Lion would then settle down to enjoy a proverbial “free lunch”. For a moment, I am laughing so hard at the turn of events and partly at the shame that I did not see this angle.

While all this is happening, my mind is running at supersonic speeds trying to interpret and extrapolate to a real business scenario. Then like a man who has discovered pearls on his farm, I find the connection too! Before we get down to real business, let me give a brief overview of the Cheater so that the perspective of the “second mover” is seen with more appreciation and beauty.

The Cheater is the fastest land animal on earth. It is a big cat that has been engineered for speed. Its entire design from long tail, slender body, and half retractable claws feeds into the powerful speed machine enough to more than impress and inspire Ferrari engineers. So while the cheater does not rule supreme in the jungle, it holds the record of being the big cat with the highest kill ratio; almost 50% of all hunts results in a kill. However, while its body is its greatest asset for speed and ultimately its success, the same body is also a big liability in keeping its food. Their small, slender bodies coupled with half retractable blunt claws means they are not a match when faced with intimidating foes like lions, hyenas and wild dogs. So while the cheater kills half of its pursuits, a success ratio like no other in the jungle, it also loses half of its kills. The cheater can therefore be compared to the first mover, and mostly the innovator that sets the pace in the market but fails to sustainably dominate the market they conquer and in no time, the hunter becomes the hunted.

 The first mover advantage is the celebrated theory of the firm in universities. This theory is all about long-lasting success and market domination for a firm that is first to achieve significant scale in a particular market. It’s akin to the principle of the “early bird catches the worm”. A lot of reasons have been advanced to support this theory and chief among them include; control of resources and supply chain, brand equity in the eyes of the consumer and control of technological infrastructure and patents to mention but a few.

On paper, it’s a theory that flows so beautifully to the point of hooking na?ve university students like it did me. But there is more to this story than meets the eye. While there was a point in time when this theory reigned supreme and still does in a few selected industries, there has always been a very powerful force behind the scenes and whose effects is even more pronounced in the current economy; the second mover advantage!

 The second mover advantage on the other hand is the advantage enjoyed by a follower firm in a market. While it is easy to make a supposition that there isn’t so much to enjoy due to the dominance already established by the First Mover, akin to the principle of “late comers always eat bones”. That is not always the case and this piece will show that the second mover advantage can be a great advantage to have especially in the fourth industrial revolution era. Advantages enjoyed by the second mover include, entering a market that has already been primed, noting the weaknesses of the first mover and perfecting the art of the concept; this could be done by reverse engineering.

Much like a Lion waiting patiently, with calculated eyes for the Cheater to do its bidding, the second mover watches intently on the side-lines how the market will respond to a particular product or service. All the second mover needs is speed, ingenuity and aggressiveness to outmuscle the first mover and turn the game on its head. Below are some old time classics of how second mover advantage have reshaped entire industries.

                                        Motorola just not Razr sharp!

Motorola were the first movers in the mobile phone market, actually credit should be given to Motorola for enabling the world make its first cellular call. The company was way ahead of its rivals in the hardware and technology for mobile phones. Weaknesses would however start to show in its model when Nokia arrived on the scene and started making serious inroads in its territory and even beating it to the number one spot especially in emerging markets. However, it held its own especially in the United States by releasing sleek phones like the Moto Razr which was the bestselling phone at the time.

It was not until 2007 when Steve Jobs stood on a podium and introduced the IPhone to the world that the world of Motorola would change forever, even for Nokia too, but much more for Motorola. “Today, Apple is going to reinvent the phone” would be 8 words by Jobs that would spell the end of an era for the once iconic brand. Despite the durability and sleekness of their phones, Motorola were not Razr sharp enough to notice the trend the mobile phone was gravitating to; from being a mere phone to a smartphone. An electronic gadget combining sleek hardware with super powerful software. Motorola had the former, but were slow, if not outright resistant to make tweaks on the latter. Apple with some resilient Asian makers like Samsung would win the ensuing battle and effectively introduced the world to a new era of the smartphone. Motorola were left to rue of what could have been, not even being first could help them because they were dealing with something much bigger and powerful; the second mover advantage!

                                  A Block Busting Bankruptcy!

It’s the year 2000 and Reed Hastings had just scheduled the appointment of his life, with none other than John Antioco, the corporate titan heading Blockbuster. In a way, on face value, it seemed very respectable that a powerful executive in John Antioco would lend ear to a CEO from a young upstart and pretender organization at the time, Netflix. But the original plan was more cynical than noble. Antioco just wanted to laugh and intimidate Hastings out of the meeting, and laugh he did! Ten years later, in 2010, Blockbuster would file for bankruptcy after Netflix had turned the industry on its head. Netflix would change the very landscape of the movie rental business especially with their digital overtures which left Blockbuster in the dust. A movie was now a “click” away instead of a “drive” away and all unnecessary late fees which had formed a core part of Blockbusters income was a thing of the past. Funny enough, in the 2000 meeting, Hastings had proposed to run Blockbuster’s digital business online. Well, that meeting did not end so well, but as fate would have it, he who laughs last laughs the loudest and in 2018, with Reed Hastings sitting atop a 28 billion dollar empire, Blockbuster was gone with the wind.

                          Zuckerberg puts his Face in another Space!

Myspace were the pioneers of what would turn out to be modern day Social Media. When Mark Zuckerberg was just a sophomore at Harvard, Myspace were setting the pace in a brave new world of Social Media, even to the point of attracting the attention of media mogul, Rupert Murdoch, who invested in the company to add to his ever spiraling media empire. Myspace had it all, they had the money, the man to make it happen and enthusiastic founders. It was really their space to lose! However, in 2004, Facebook would come on the scene with one core mission, build a global community by connecting people across the globe in their areas of interests. For a time, Facebook and Myspace would go toe-to-toe for social media dominance. But in 2009, Facebook would sprint ahead of its rival sending the founders of social media into a slow and painful obscurity. Facebook currently has over two billion visits monthly compared to fifty million for Myspace. How a dropout from Harvard founded a company to go on and topple a rival backed by the mighty News Corp is still the subject of study in management theory today. But Mike Jones, a former head of Myspace would later give some details on the fall from grace. According to Michael Jones, “Facebook perfected the social networking concept, while Myspace merely introduced people to it”. Do you know what that sounds like? To me, it sounds like the second mover advantage.

These are just three of the so many proverbial “Kodak moments” found in management theory. The first mover has some advantages that have made it an endearing theory to university professors for some time now. But history has also shown that second mover advantage is more than equal to the task when used effectively.  

This is a story that started in the heart of the African Savannah, to corporate America and right into Silicon Valley. For a moment, it all seems jumbled up but it’s not. To the discerning reader, it’s a neatly interwoven story of a simple powerful concept; the second mover advantage. This is not a story for the faint-hearted, neither is it for the hard-core academics who will criticize it for being one-sided. Although it’s not a guarantee for success, the second mover is powerful advantage that should be known by would be entrepreneurs and managers of firms where the odds are stacked against them.

This is therefore a story for the brave. A story for daring entrepreneurs in the fourth industrial revolution economy. Founders and managers shouldn’t whine that another firm is first to the market with an idea. They can still watch with calculated eyes how the whole idea plays out in the real world. If the market seems to be primed just right, then with speed, ingenuity and ferociousness of a Lion, the market can be turned on its head, with the first mover rising from their slumber to a whole new different world. It has been done before countless times, it can be done again now and in the future.