Starting a new business or venture or launching any new products or service is a risky business. In fact, the statistics would indicate a failure rate far in excess of 90 percent. And of those businesses that actually do succeed in some way, rewards are often small. Occasionally there are some fabulous success stories, and we hear of these over and over again as wealthy and successful entrepreneurs are invited to the lectern to tell us their stories.
It is a pity that we do not get to hear from many of those who led failed ventures. These people are seldom asked to speak of their failure; indeed, we seldom if ever hear of them. Yet, if you examine the credentials of those who succeed and those who do not, not surprisingly the differences in intelligence, capability or mind-set may be insignificant. It’s just that those with the success stories had a little bit of luck, were in the right place at the right time or found the right person to assist and mentor them as their businesses developed. Of course, there are notable exceptions – what may be termed business world champions. These are people with truly exceptional talents, just like exceptional sportspeople or scientists. But by and large, the vast majority of successful people are just ordinary people who took advantage of an opportunity that worked.
If we accept that pioneering may be a risky place to be, is it possible that there is some merit in being a follower?
The strategy of following is founded on innovation, a word that unfortunately has been so badly misrepresented that its very meaning has been lost to all but a few.
The word “innovate” means “change”. Indeed, the best definition of innovation is “change that adds value”. This is the call to action to inspire you to observe what is working in the market place and innovate it, to find a better way, do it better and then to go back to the market with that improved offering, at perhaps even a better price.
This is called “fast second”, and is a model that carries much less risk than being first, and is founded on the certain knowledge that one can innovate the offering of the successful pioneer.
Just observe history to see examples of this fast second strategy in play as second market entrants move to become the big winners.
Henry Ford did not invent the motor car, but when he saw the market opportunity afforded by the first clumsily built and expensive cars, he “innovated” the process for making them and, thus, brought cars to the masses.
The ill-fated COMET jet passenger liner (a revolution in its day), plagued with technology problems, created an opportunity for Boeing, untarnished by the pioneering COMET failures, to win from second place the world market for passenger jets. Concorde is another example of a technology before its time; ultimately, supersonic passenger transport will become commonplace, but not to the benefit of the Concorde pioneers.
The invention of the facsimile machine was credited to Scotsman Alexander Bain before the turn of the 20th century. However, it was not until the Japanese, as late-comers, developed and used this technology within their own businesses that the facsimile machine achieved popular use and success.
The electric light when finally brought to market suffered enormous resistance, especially from the gas companies. In supplying power to the newfangled electric light, Thomas Edison chose to use direct current (DC), and was a brave pioneer. But ultimately, it was the vastly superior second into the market – the alternating current method – that won the race.
Even with the ubiquitous computer, an invention commonly credited to Steve Jobs, who was first to the market with the Apple Mac, the rich rewards went to the second comer, IBM.
When IBM realized the market potential of the first personal computers, it quickly moved into the market, as fast second. In doing so, IBM virtually stole the business, making IBM and IBM compatibility the industry standard.
Further, as computer technology became commonplace and PCs became a commodity that could be built by almost any technology company, including low-labor-cost, third-world manufacturers, IBM exited the desktop market.
However, IBM, did for a time remain in the laptop market, as the market entry price for this business is far higher than for larger tower-and-desktop models.
Ultimately and quite recently, as laptop technology became commonplace and the laptop moved to become a commodity product, IBM also exited that business.
In the case of IBM, their “play” in the personal computer market was a classic fast-second strategy. Get into the business early, and exit before the business is commoditized.
Clearly, you can see the advantage of a fast-second strategy, and the benefit of seeing what is working and innovating the offering, and moving into the market to take advantage of what is clearly going to be the “next big thing”.
Finally, if you wish to challenge the proposition that an existing product or business cannot be innovated to provide a better market offering, or that some things cannot be innovated, modified or improved in some way, then consider the alternative argument. This view would hold that whatever you are considering, product, process or service will remain the same, indefinitely, unchanged, for the rest of eternity. This is a highly unlikely proposition. Thus, we need to consider the strong argument for coming second in the race.
The secret is to remain vigilant, observe what is working, and develop innovated models of that very offering and enter the market with a look-a-like model, but with some innovative features that bring more value than the initial offering. In doing so, the risk is little and the rewards almost assured.
About the author:
Roger La Salle is the creator of the “Matrix Thinking” technique and is a widely sought-after international speaker on innovation, opportunity, and business development. He is the author of three books, director of a number of companies both in Australian and overseas, and has been responsible for a number of successful technology start-ups. In 2005, Roger was appointed to the “Chair of Innovation” at the Queens University in Belfast. TO learn more, visit www.matrixthinking.com.