The key to competitive advantage.
Amazon and Google are universally familiar names. They are the undisputed kings of their realms, with no-one else even in a remote second place.
However, how they came to be in those positions is a completely different story.
Amazon was the first of its kind, a major online book store.
Google entered a well-populated browser and search market, with long-forgotten names like AltaVista, Excite, and AOL. They certainly weren’t first, but they were faster and produced more accurate results. In simple terms, they were better.
And with those two giant examples, we have a clear indication of how to secure competitive success.
Be first or Be Better.
The Advantage of Going First
In 1988, a pair of scholars based in the US, publish a paper on “First Mover Advantages”. In the paper, David Montgomery and Marvin Lieberman investigated the advantages and disadvantages of being the first player in a market.
In completing their work, they identified that there are three main primary advantages of being the first-mover company.
The first, technological leadership, results from advantages derived from the learning or experience curve and success in patent or research and development races.
The 2nd advantage occurs when the pioneering firm is able to preempt rivals in the acquisition of scarce assets such as physical resources or other process inputs.
The 3rd advantage arises when buyers incur costs when attempting to switch from the first-mover brand to the brand of a late entrant in the market.
Each of those advantages allows a new company to be a few steps ahead of any subsequent competitors that may arise.
Amazon, for example, within a matter of just a few years had built a brand name, physical and online presence, that accelerated them to a point now where they have no rival. The ability to just “Get it from Amazon”, has become a part of the public psyche.
The fact that they have been around longer, has given them the privilege of stamping their authority on the sector and make it nearly impossible for another company to come along a simply dethrone them by doing the same thing.
If You Can’t Be First, Be Better
Google in comparison was coming into a market that was already brimming with competition. The internet was starting to take off and become more accessible in the residential setting.
Rather than being the play toy of the attendees of university computing clubs, the ordinary person was now gaining access to cheaper home computers and residential internet connections. Remember 56kbps dial-up anyone?
As a result, more people were using search engines to find the information that they needed. In response search companies like Excite, AltaVista and Yahoo grew rapidly. With their success, they focused on scaling or diversifying, rather than innovating.
Then Google came along.
Google started in 1996, as a research project by Larry Page and Sergey Brin, while they were at Stanford University.
They looked at the technology that underpinned current search engines and saw that a lot of it was underpinned by inefficient indexing of web addresses, or even human curators.
They then set about creating algorithms that would identify and present accurate and fast search results.
Or in simple words, they did search better.
The speed of their innovation and the resulting success, saw them quickly surpass the incumbents and rocket to number one position, from which they spread and eventually became a verb!
Being first or being better are the two plain choices in front of any new company or product.
You need to understand where you sit in that equation and pour all your resources into doing the appropriate one to the best of your ability.
Thanks for reading.