In a world where being first is usually equated with being the best, celebrated management guru and

author Jim Collins article BEST BEATS FIRST debunks the myth of First Mover Advantage. He outlines
with examples, how it is that the apparent Johnny come lately endures in a market that swallows its
very first players. The article, written in August 2000, cites many examples to show that for FMA to be
applicable, there are strict conditions, which rarely hold true in reality and in the authors words
being first seldom proves to be a sustainable advantage and usually proves to be a liability
The author starts by pointing out how the inertia of late movers or followers is not a sustainable
advantage to those who are first to build market share. This is especially true is the followers are
established industry giants who move into a new market much later with their vast pre-existing
customer sets. This often spells end-game for the pioneers who, in their complacence, have fallen prey
to a more detrimental kind of inertia- Incumbent Inertia. Mr. Collins cites the example of VisiCalc, now
virtually forgotten as the first major PC spreadsheet, as the late entrant Excel still reigns supreme.
The author moves on to the now widely referenced example of how the PalmPilot learnt from the
technical and design loopholes of the much-publicized Apples Newton MessagePad. The PalmPilot
entered the market with a product with the script Graffiti which had none of Newtons glitches, thus
capturing the customers attention and major market share. This story whetted my interest enough to
look for more such examples in other industries. I came across a similar instance in a case study of how
the late entrant- pharmaceutical company Roche outperformed the pioneer Schering-Plough in the
market for Chronic Hepatitis C medication in the early 2000s. In brief, Roche entered the market with
its product Pegasys which had a clear edge of Schering-Ploughs Pegintron, which thus far had been the
only drug of its class. The pioneer Pegintron required the combining the drug from 2 components from 2
separated vials using 2 syringes, and required dose adjustment to each patients body weight. Roche
launched Pegasus at a time when Schering-Plough heavily depended on the sales of its block buster drug
Pegintron. Pegasus was offered at an extremely competitive pricing and came with an added advantage
of simplified drug usage- it was pre-mixed in a single vial and required injection once a week in the same
dose to all patients. In its very first year (2003) Pegasys captured 40% of the market and in by its second
year it had overtaken Pegintron.
The author goes on to establish how the followers benefit from the mistakes of the pioneers to improve
their product and marketing strategies to emerge as leaders. He describes how IBM overtook the
pioneer Remington Rand in the large scale computer market; how Boeing became known for its safer,
more reliable jets after the brand-destroying jet crashes of the first mover DeHavilland; American
Express learnt from the shortcomings of early leader Diners Club to build better services and out the
pioneer from the market.
With relevant examples, the author brings to notice that a keen observation and understanding of
consumer preferences and behavior is far more useful than a frantic race to be the first to enter the
market. He reminds us of how Sony introduces VCRs based on Beta format technology with 1-hour
recording capacity.. But it was JVC which understood the consumers' preference for longer recording
and introduced VHS with 2-hour recording capacity and bested Sonys Beta, thus emerging the clear
winner. As I looked for more recent examples, social networking sites seemed to be a valid case in point.
The fall of social networking pioneer Orkut is a proof that while first movers can shape consumer
preferences initially, the ever-changing consumer behavior demands constant evolution in product
variety, customer experience, marketing and competitive strategies to ensure sustained success. It also
indicates that despite current popularity, even sites like Facebook are still vulnerable to relative
newcomers like Pinterest, Instagram, Tumblr, etc.
Mr. Collins also touches upon the rare conditions under which First Mover Advantage is sustained,
namely:
An ironclad patent protection
If the company has set proprietary industry standards, like MS-DOS
If the customer finds it difficult to switch from the pioneer brand either out of habit or when the
quality of the new product in question cannot be gauged effectively.
The author concludes by re-iterating that a process of constant evolution and improvement, i.e, being
the BEST and not necessarily the FIRST, ensures enduring success in the market.
This article, written 14 years ago, using examples from its time and even before, seems fully relevant to
me even in the current times. It is filled with interesting instances and anecdotes picked out from across
history and spanning various industries. It is precise and pithy, touching upon many aspects of the first
as well as second movers advantage. It made me curious to learn more about FMA, its applicability and
fallacies, its disadvantages such as the Free-rider effect, its evolution and Impact of time and also the
growing advantages of Following. And finally, in this age of instant noodles, instant coffee and instant
gratification, it reminded of a bed-time story with and age-old adage which apparently, stands true-
Slow and Steady wins the race.