Why Pioneers Have Arrows In Their Backs | Hacker News Reader

Why Pioneers Have Arrows In Their Backs

steveblank.com

63 pointsspahl12 comments

There are statistical artifacts here that need to properly be taken into account.

First, there is only ever one first mover and many fast followers. Thus, it's not entirely surprising that at least one fast follower would dominate the leader.

Secondly, the failure rate calculations are highly suspect due to historical redactionism. If a first mover fails, it will still be remembered due to it's contribution to the field. If a fast follower fails, it becomes hard to even discover that it existed in the first place.

Think of this in terms of car companies. Ford was the first mover but, up until the 1920's, there were almost a thousand different car companies started by various people: http://en.wikipedia.org/wiki/List_of_defunct_United_States_a... . 99% of them failed, some had moderate success and a few like Toyota & GM had enough outsized success to eventually beat Ford. Being a "fast follower" in this case almost always meant you were dead.

Some of the examples are also weak.

Ford was not the first car company in the USA. Daimler Motor Company beat it by over a decade.

He did not sell the first commercially successful gas powered automobile in the USA. Alexander Winton holds that honor.

Ford did not sell the first mass produced automobile in the USA. Ransom E. Olds did.

Ford wasn't even Henry Ford's first automobile company. The Detroit Automobile Company was. Ford was his third company.

The most common justifiable claim about how Ford was a first mover was the invention of the assembly line. Even so there is dispute. The concept was patented by Olds in 1902. According to Henry Ford, Ford's reinvention was based on William "Pa" Klann's observation of the meatpacking industry's "disassembly lines", which had been invented in 1867. However Ford certainly perfected it, and manufacturing has never been the same since.

This is a paraphrase of some of the things Michael Porter said in his book,Competitive Advantage: Creating and Sustaining Superior Performance - http://www.amazon.com/Competitive-Advantage-Creating-Sustain... : There is not much gain in having a first mover advantage by itself. But, if the first mover locks up key resources for success then that gives a sustainable advantage. This can be done by fast followers also. The competitive advantage strategy should be to capture resources so that competitors can't access them. For instance, he mentioned Walmart strategy of buying key locations before their competitors figure out that these location were necessary for success.

Other means of locking in resources may include contracts with suppliers and with authorities or patents. The main theme is to block competitors from resources they need for success.

  First Mover: 47% failure rate
  Fast Follower: 8% failure rate

This last statistic is a bit misleading. It implies that you can increase your chances of success by waiting until someone else enters the market. But it fails to account for those who declined to follow because the incumbent market leader held such a strong position.

To put it another way: followers only follow if they have some reason to believe they'll succeed. So yeah, they still do well. It does not lead to the conclusion that you should avoid being first.

Pioneers always design armour where there _weren't_ arrows before?

Lol. That is all.

Case in point for this would be Wesabe. Interesting recent article and discussion here http://news.ycombinator.com/item?id=1746832

Speaking of fast followers, I've just started reading this book last week titled 'Copycats' by Oded Shenkar http://amzn.to/cG7vm3 - which basically talks about using imitation slash innovation as one of available tools in your repertoire. Read up to chapter 2 but so far I like it and recommend it, on the topic of fast followers.

Not to argue the point that Google won in the PPC arena, but it's a little disingenuous to compare Google's current market cap with Overture's sale price in 2003.

Statistics on how many startups fail because of X is dubious. Who's to say whether doing the opposite of X would improve any businesses chance at succeeding. Even a large margin of small businesses fail in the first 3-4 years.

Are the slow starters more successful? Do THEY get as big as the "get big fast" companies? Don't just shake the fail stick because you can do it in either direction.

I don't think the intended lesson is "You have to be a fast follower." There are probably many fast followers that fail. Rather, it's "You don't have to be first."

His argument is that being first is not correlated with success. If that's true, then you probably don't need to fret about being first.

> Who's to say whether doing the opposite of X would improve any businesses chance at succeeding.

Well, if you read the article, you'll see that is dealt with explicitly. 47% of pioneers failed, according to the cited study, as opposed to 8% of fast followers.

> Are the slow starters more successful? Do THEY get as big as the "get big fast" companies?

The example of Ford vs GM would indicate that they can; or at least that there's no advantage in being first.

> Don't just shake the fail stick because you can do it in either direction.

Only if you can come up with numbers to refute the study, or a better argument than "I don't believe this is measurable" to render it null. Otherwise you're just waving a twig in the air.

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