02 July 2013

Is it advantageous to be first or to be better?

(illustration - internet radio)Newsweek magazine recently published an article "The Myth of First-Mover Advantage" about iTune entering the Internet radio business, thus challenging the well-established Pandora head-on. The article summarized the successes and failures of companies that are first-to-market.

This questions is commonly asked by QFD practitioners:
Is it advantageous to be first or to be better?

My thoughts:

Advantage belongs to first-movers if they continuously put themselves "out of business" before a new competitor does. This requires an on-going assessment of changing customer needs and producing corresponding features. QFD can mitigate the risk of first-mover's typical "technology push" mentality by building a "market pull" approach.

Customers will churn products as they mentally perform cost-benefit analyses of alternatives. Costs include purchase price, cost to change in terms of training, support, maintenance, disposal of old product, etc. To overcome these, the benefits of the new offering either by the original First-Mover or the new competitor must be overwhelmingly substantial in solving the customer problem, enabling a customer opportunity, or enhancing the customer's image.

Glenn

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