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In business, innovation is the ultimate game changer.  Real innovation (not just tiny tweaks or insignificant modifications) can overcome a multitude of company failings and disadvantages, including not being first-to-market.  In fact, an ingenious way to improve a product or service can make being a second-mover, third-mover or even tenth-mover in the market irrelevant.  Whether first or last and regardless of company size, innovation allows a business to:

1. Improve an existing product and/or service that better meet the needs of customers by making them more effective and/or user-friendly.  For example, Google was not the first company to make a search engine, but it was the first to make it easy to use and comprehensive, with better-quality results. As a result, Google became the dominant player in the search engine market over AltaVista, Ask Jeeves, Lycos, Web Crawler, Yahoo and some others.  Even now, Google is still the 800-lb gorilla in the search space.

• Create a new product or service that generates an additional revenue stream.  For example, Redfin, a real estate company founded in 2004, originally provided online real estate listings and services. However, in 2013, Redfin added a new product called RedfinNow, a service that allows homeowners to sell their homes quickly for a fair price. RedfinNow has been a success, providing an additional major additional revenue stream for Redfin.  RedFin was not the first to enter the online home sales space, but their innovative process and marketing approach allowed them to overcome the fact that they weren’t fist-to-market.  In 2016, RedfinNow’s revenue was over $100 million.

• Reduce costs by finding new ways to produce a product or deliver a service more efficiently.  Large-scale retailer Walmart was able to reduce its costs by using a system called “cross-docking.” Using cross-docking, Walmart stores its products in central locations and then ships them to the surrounding stores as needed.  This has helped them reduce the amount of money spent on transportation and inventory storage.

• Increase productivity by finding new ways to do things more effectively.  Fast-food burger chain McDonalds was able to increase productivity exponentially by innovating the way food was prepared.  Embracing the “assembly line” method for cooking, employees were made responsible for one specific task in the cooking process. This reduced the amount of time it took to cook food, allowing them to sell more while spending less on labor through economy of motion.  McDonalds was the first-to-market, creating both the fast-food industry and the real estate franchise industry.  Their system radically changed the restaurant industry.

• Improve customer satisfaction and profitability by listening to their specific needs and innovating based on those concerns.  For example, Zappos is one of the most successful online shoe and clothing retailers in the world because of its strong focus on customer service. Founded in 1999, Zappos is unique in that not only are customer service representatives known for being friendly, helpful, and knowledgeable, but are also empowered to make decisions on behalf of the customer to ensure that they are satisfied with their experience.  For instance, a Zappos rep once received feedback from a customer who said that they were frustrated with the process of returning shoes. Zappos responded by creating a new policy that made it easier for customers to return shoes. This change was well-received and improved customer satisfaction.  As a result of their intense focus on customer service, Zappos sales and profitability soared. In 2019, Zappos had revenue of $3.5 billion and net income of $286 million.

• Increase market share by delivering a product that has a competitive advantage over rivals… the proverbial better mousetrap.  In 1903, Ford Motor Company built the Model A car, which was a commercial success and launched an entire industry.  A century later, after hundreds of other makers and models of cars have come to market, another company is revolutionizing the industry through innovation:  Tesla. Tesla is a great example of how a company can increase its market share by delivering a product that has a competitive advantage over rivals even though they were not first-to-market. 

Founded in 2003, Tesla was not the first-to-market with cars or even electric cars, but it was the first to offer a truly competitive product.  Tesla’s are stylish, fast, and have a long range. They are also backed by a strong warranty and a network of superchargers that make it easy to travel long distances.  As a result, Tesla was able to go from selling just over 22,000 cars in 2012 to over 936,000 in 2021.  Tesla is now the world’s leading electric car company, and it is well-positioned to continue growing its market share.  And Tesla is continuing to innovate, always looking for ways to improve its products. For example, Tesla was the first car company to offer over-the-air software updates, allowing customers to update the car’s software without having to visit a dealership.

• Generate new business opportunities by opening up new markets and creating new demand for their products and services.  For example, fast-food chain Kentucky Fried Chicken was able to grow its company exponentially by expanding into new markets and creating new demand for their products. The secret to their success lies in their innovative approach to expansion. They:
• identified and targeted new markets by gaining a strong understanding of the different cultural and culinary preferences of consumers in different parts of the world.  This allowed them to tailor their products and marketing campaigns to those different audiences. 
• built strong relationships with local partners, who provided access to local markets, expertise, and resources.  This allowed them to expand more quickly and efficiently.
• invested in local communities by supporting local charities, sponsoring local events, and providing jobs for local residents. This helped build goodwill and trust with local communities. 
• adapted their products to local tastes in the markets where they operate, such as offering a vegetarian version of its chicken in India, and a a version of its chicken that is flavored with soy sauce in China. These adaptations helped them to appeal to a wider range of consumers.

As a result of these innovations, KFC now has over 25,000 restaurants in over 150 countries, and is one of the most successful fast food chains in the world.

In short, innovation can help businesses to grow, succeed, and thrive in today’s competitive marketplace, even if they are not first to market.

Second-Mover Success Stories

Besides Tesla, Zappos, McDonalds, Walmart, KFC, Redfin and Google, there are many other examples of companies that were successful because of innovation, even if they weren’t first-to-market. 

• Apple was not the first company to make personal computers, but Steve Jobs was the visionary that made them user-friendly and stylish. As a result, Apple became the dominant player in the personal computer market.
• Microsoft was not the first company to make operating systems.  Initially, home PC’s were sold in retail outlets like Atari, Commodore and even Apple that had the Operating System built into the machine and booted up into a version of Microsoft Basic for each OEM. Pc’s used Motorola -based processors.  Bill Gates was the first to be savvy enough to make them compatible with a wide range of hardware. As a result, Microsoft became the dominant player in the operating system market.
• Amazon was not the first company to sell books online, but it was the first to make it easy to find, review and buy books online.  They then even added self-publishing to their services.  As a result, Amazon became the dominant player in the online book retail market.  And then expanded that to music and every other product imaginable.

These are just a few examples of companies that were not first-to-market but ended up being more successful than those that were first-to-market.  But, besides the reasons listed above, there are a number of reasons why companies that are second or third or even tenth-to-market are more successful than those that are first-to-market. One reason is that they can learn from the mistakes of the first-movers.  And, they can come to market with a better marketing strategy.

Of course, there are risks associated with being a late-mover. One risk is that the market may be saturated by the time the newcomer comes to market. Another risk is that the first-movers may have built up a strong brand and customer loyalty. However, if there is a way to overcome these risks with innovation, there is a good chance that a late-comer can more successful than the first-movers.

Here are some tips to be a successful second-mover.

1. Do deep research. Before entering a market, understand the needs of the customers and the competition thoroughly.
2. Find a niche. Don’t compete head-to-head with a first-mover.  Instead, find a niche to differentiate from the competition.
3. Be creative. Think outside-the-box and come up with new ideas.
4. Be patient. It takes time to build a successful business. Don’t expect overnight success.

If you follow these tips, you can increase your chances of success even if you aren’t a first-mover to market.

Quote of the Week

“The only way to survive is you continuously transform into something else. It’s this idea of continuous transformation that makes you an innovation company.” Jeff Bezos

© 2023, Keren Peters-Atkinson. All rights reserved.