Bigfoot and the fast follower strategy have much in common. Namely, they’re both myths. Bigfoot, of course, is that Chewbacca-like beast that supposedly has roamed North America for thousands of years. And he (or she?) surely must be real because of all the television shows dedicated to his discovery. For example, there’s Expedition Bigfoot, Finding Bigfoot, and Chasing Bigfoot.
Meanwhile, after all these years, after all these efforts – we still do not have any documentation of an actual Bigfoot. Nor has he moved into a suburban home or even a zoo (not sure which is more appropriate). And yet, the enthusiasm of groups such as The Bigfoot Field Researchers Organization is as high as ever. I’ll go on record now to say that two things shall continue: 1) Their enthusiasm will never wane; and 2) They will never find Bigfoot. It turns out that while it’s easy to prove that something does exist, it’s quite another to prove that something does not.
Likewise, it’s difficult to prove that Fast Follower strategies are misguided. After all, corporate CFO’s like to point out that R&D departments have poor measurable returns. Therefore, they conclude, “We shall be a fast follower!” While this seems sound, it’s misguided. Let’s look at why. We have four internal and three external reasons.
The four internal reasons why the fast follower strategy is misguided are: 1) ignorance about what to follow, 2) limited learning from competitor products, 3) lost time and 4) having the capability to actually follow fast. The first is based on a poor assumption. That we’ll know what to copy and what to ignore. And, how could we?
I recall a personal example from time in marketing for commercial mowers. We promoted that ours were superior because it had heavy blades that turned (relatively) slowly. That meant less machine wear and greater momentum to cut thick, wet grass. Meanwhile, a competitor touted that they used light blades, turned rapidly. They claimed this system of fast blades cut better; and also provided better grass dispersion across the lawn.
In our heart of hearts, we feared that our competition actually had the better case, so we began developing a mowing system with lighter blades that spun faster. Even though, we continued to market the slow, heavier method.
About the time we launched the new system, our competitor, the one with the fast blades, announced that they too were releasing a new mower. And guess what: they had switched to heavier, slower blades. Each company had copied the other. A waste of time and development. This results when you blindly mimic your competition. Unsure about what should have even been copied in the first place.
Next, when a competitor makes the first move, they’ll learn far more than those on the sidelines. They’ll get calls about service and warranty. Distributors will tell them what is and is not working. From a hundred places, they’ll be bombarded with market information about how the product hits the mark (or doesn’t). Providing the road map to version 2.0. Those on the sidelines are left guessing.
Which brings us to the third internal reason, the lost time after the entrant’s product. As we begin on version 1, the entrant has already begun on version 2. It’s nonsensical to think that we’ll have the same insight as to what version 2 should be. And not just from a market insight perspective, but from the time to refine the supply line, manufacturing, operations, etc.
This brings us to the last, and most painful, internal reason: we’re probably not a fast follower at all. Instead, we’re a slow follower. Or even a no follower. If committed to be a “fast follower”, then we must have legions of engineers ready to execute…. and quickly. We need an army of B2B product managers scouting the competition. They need to have been trained in what to even look for. We must have a massive patent search team. Our portfolio management view must show that we have these resources on the ready. We must adopt the mentality of a custom-shop, ready to go at any moment. If claiming to be a fast follower, then we have to build these internal capabilities with quick reaction times. We have to create the system to follow fast. Otherwise, it’s just a story we tell ourselves to feel better.
But, even if we could respond quickly, there are also three external reasons that make this difficult.
To begin with, there are network externalities and distribution to set up. That is, we need an ecosystem for our new product to live within. “Network externalities” aren’t always a major factor, but they can be.
For example, if you’re the first to build the DVD player, you need other companies to create DVD movies. Also, you need compatibilities with cables, televisions, etc. Meanwhile, distribution will, of course, always be important. If you let competitors establish distribution channels first, then you must either convince those same channels to take your product, establish your own distribution, or promote the concept to your current channels. All of these take time and effort. But time is the big killer here. When products are changing rapidly, the days, weeks and months pile up. With any hesitation on our part, the first mover builds an even greater lead.
Next, customers will quickly associate the brand of the first mover with the new product. If it’s a new category (such as the first “iPad”, first “Gameboy”, etc.) then this association will be even stronger; making the new product more difficult to displace.
Finally, if pursuing the fast follower strategy, how will our product compete? On what dimension of competition? We have two options: 1) exploit a weakness of the new product, or 2) compete on price. To exploit a weakness, we need market insight.
And this reveals a logical flaw for those who claim the fast follower approach: the statement of “we’re a fast follower” is typically used as a rationale for not committing to a customer insight program (such as New Product Blueprinting). Therefore, corporate market knowledge will be poor. Leaving us with a poor alternative, competing on price in a race to the bottom.
The impact of the “first mover advantage” was studied in the 2008 research study “The Impact of Product Portfolio and Innovation Strategy” by Wooseong Kang and Mitzi Montoya. This paper is a great resource for those tasked with growth through innovation. It presents some inconvenient truths for the fast follower advocates:
Pursuing product leadership can feel risky. However, leaders must ask, “Risky as compare to what?” The research in “The Impact of Product Portfolio and Innovation Strategy” provides unbiased evidence for a contrarian idea: there is a first mover advantage. But truly, isn’t this intuitive as well? After all, there must be a reason for the stability amongst major brands. And yet, the myth persists. But why?
I personally believe it’s because executives still do not fully understand the success from a customer insight program. We are all biased to some degree. And our individual background make us more vulnerable to some tilts than others.
If an executive rose up through the sales ranks (common in B2B), then they have succeeded by “hitting the numbers”, and “closing the sale”. In other words, by accomplishing short term objectives. Whereas, customer insight is a longer term investment, and therefore, less attractive to the ex-sales professional.
How about the CFO’s? Directors of accounting? On the whole, those who came up through the financial ranks are not comfortable with uncertainty with the ROI for voice of the customer. They see more value in cutting costs, which appears safer since it’s easier to quantify.
How about the former engineers? Leaders who came up through the technical ranks? For sure, some value the importance of well-defined market problems, but unfortunately others fall in love with technologies a bit too much. They’re the ones launching strategies about the latest trends such as “artificial intelligence” or “internet of things”; pushing solutions for imaginary problems.
So, who’s left? The marketing folks. Theoretically, they should understand the value of market knowledge, but they can also get too excited about the website redesign or next product launch.
Sales, finance, engineering, marketing. Each has its own traps, blinding us to the power of customer insight – and the wisdom a product leadership.
Regardless of the executive’s background, it takes leadership to drive vision and a plan. To make that future a reality. Think about it this way… We teach children the value of delayed gratification. If they make a few dollars, we encourage them to save a portion. Invest it. Earn interest. It’s hard to explain the power of compound interest. Quite frankly, it’s tricky for anyone to understand. A company’s VoC program is similar in this way. It’s an investment in the future. Also paying compound interest, which is likewise, difficult to comprehend.
With market insight, we can be the first mover, safely. We’ll know what problems to be solved. When needed, we’ll act decisively to make technology investments. And in the event that our competitors do move first, we’ll know what to copy (and what to leave alone).
In the future, there are two certainties. First, we’ll be more profitable when customer insight points the way to make the first move. And second, the Bigfoot chasers and fast followers will still be around; and with similar results.