The Half-Truth of First-Mover Advantage

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The Half-Truth of First-Mover advantage

The article by Fernando Suarez and Gianvito Lanzolla talks about how being the first mover is not always advantageous but depends on several factors to be successful in being a first mover. There are a less proportion of fast followers failing than the first movers because of the adaptation and adoption of the technology or product innovation by the first mover.

The value of first mover depends on two key factors.

1. Pace of Technological Innovation
2. Pace of Market Adoption

The speed of technological improvement varies from industry to industry and also varies from era to era. And the speed of market adoption also varies. Due to the result of the above two factors we have 4 outcomes.

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1. Calm Waters – Where the pace of market evolution and technological evolution is slow.
2. The Market Leads – Where the pace of market evolution is fast and pace of Technological evolution is slow. A first entrant with extensive resources can obtain a long-lasting advantage, a company with only limited resources probably must settle for a short-term benefit
3. The Technology Leads – Where the pace of Technological evolution is fast and pace of market evolution is slow. First-mover advantages of either kind--durable or short-lived--are unlikely. 
4. Rough Waters – Where the pace of both market evolution and technological evolution is fast. Gradual evolution in both the technology and the market provides a first mover with the best conditions for creating a dominant position that is long lasting

Before venturing into a newly forming market, you need to analyse the environment, assess your resources, and then determine which type of first-mover advantage is most achievable. Once you've gone into the water, you have no choice but to swim.

The Need for a corporate Global Mind-Set

The article talks about the importance of employees too to have a balance of global consistency with local responsiveness.  It is just not enough for executives to have a global mind-set.

Getting to a corporate global mindset requires demonstrating glocal mentality by the individual managers. Glocal thinking features three things – think globally, think locally and think globally and locally simultaneously. Achieving success internationally depends on the balance created by managers between global consistency and local responsiveness. Extreme global consistency seeks cost advantage by maximizing world class systems and extreme local responsiveness adjusts for country difference by allowing local autonomy

The three tensions of a global business:

To achieve a corporate global mindset, managers must balance global formalization vs. local flexibility, global standardization vs. local customization, and global dictate vs. local delegation.

The three tensions of global business are The Structure tension – global formalization vs. local flexibility, The Process Tension - global standardization vs. local customization, The Power Tension - global dictate vs. local delegation.

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Building Competitive Advantage through People

Capital is no more the critical strategic resource to be managed and in today’s world, capital is not that resource that is constraining growth.

The article is a very accurate description of HRM evolution from administrative to strategic
• HRM most sensibly strategic since the turn of the 21st century
• Not all companies and firms can actually afford HRM to be strategic 

Conditions for HRM to be strategic
Building the HRM processes and systems in accordance with people ; highly selective pre-recruitment and recruitment policy
Linking those who have knowledge so that they can share and learn from others skills ; trainings, talent development policy and peer mentoring process
Bonding :  to build an engaging and motivating environment to create a feeling of commitment ; aggressive payment policy, social advantages and flexible working conditions

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Strategy to fight low-cost rivals

The solution to fight a low-cost rival is not just lowering your prices. It may or may not help one fight the competitor. If the low-cost rival is not entering the market you are serving and targeting a different niche market, one need not worry and if the market we are serving is being targeted we have to apply the following tactics to fight them.

1. Differentiate

Differentiation is the first line of defense and a significant point of difference facilitates a sustainable competitive advantage..