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Innovative Followers

By February 1, 2011Article

I love watching people fuss over false dichotomies.  Liberal/conservative, Republican/Democrat, Sane/Congress …
This week’s dubious duo are Innovators and Fast Followers.
In all industries, but in exaggerated form for high tech, there is a need to innovate.  Mankind was built through innovation that allegedly improved life (fire did improve living though Twitter remains debatable).  Many companies thrive on innovating while other lay in wait for innovation to occur and then compete through plagiarism.  It can (and should) be argued that Microsoft rarely innovated anything, but made a tidy living by hijacking innovations from CP/M, Lisa/Mac, WordPerfect, and other also-rans.
Microsoft was the fast follower model to follow.
This is not to decry the innovators.  Apple grows consistently and has high stock price multiples not by dominating every market (aside from MP3 players) but from perpetually rethinking products.  Collective gasps were heard when they introduced the Lisa (the Mac’s antecedent) because it completely rethought the nature of user interfaces (and truth be told, Apple kinda swiped the idea from neighboring Xerox Parc, making Apple both an innovator and fast follower).  But collective yawns were also echoed by Apple’s innovative Newton.  Still, people buy Apple for quality engineering, intelligently designed UIs and an overrated coolness factor.
There are advantages and distinct disadvantages to being one or the other.  Innovators have first mover advantages, though this requires more marketing savvy than engineering prowess.  Apple makes a good living being first with the best and earning fat margins on 5-10% of a market (over the long run).  Fast followers have lower margins but substantially lower risk, allowing Apple-like companies to invent duds as well as dynamite.  Money can be made at both ends though the risk side clearly favors fast followers.
Late followers get nothing.
With the exception of the patent trap, whereby innovators may earn 17 years of monopoly status for their inventiveness, being a fast follower is the better business and marketing strategy.  Innovators assume R&D and market development risk whereas savvy fast followers learn from all the innovator’s mistakes, and have the option of improving upon the original concept.  They do so with far less capital, much short time-to-market and the benefit of someone else proving that a market actually exists.
The marketing lesson is really a business lesson.  With each method of earning market share, there are risks and rewards.  If you have little to risk, don’t.  Watch other companies as they innovate, listen to the social networks to see how they are doing it right and wrong, then start your move when their buzz reaches the point that a market has been clearly identified.  Let your competitors slave away and earn only the early adopter share while you keep expenses low and dominate the rest of the market.  Be like the Microsoft of the 1980-90s or the Google of the new millennia.
Guy Smith is the chief consultant for Silicon Strategies Marketing. Guy has lead marketing strategy for a variety of technology companies vending high-availability backup software, wireless middleware, enterprise software, infrastructure software, mobile applications, server virtualization, secure remote access, risk management applications, application development tools and several open source ventures. Before turning to marketing, Guy was a technologist for NASA, McDonnell Douglas, Circuit City Corporate Headquarters and other organizations.

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