The Myth of First-Mover Advantage

Elon Musk is well known for his overly optimistic predictions on how long it will take to deliver on a project. In fact, if you compare his projections to the actual delivery date, the multiplier is roughly equivalent to the Martian year compared to an Earth year (1.88 years), confirming he is already on Martian time. Now, in his defense, he has also stated his projections are based on how long it should take based on the information at hand, but unforeseeable problems are inevitable and cause timelines to slip.

Endeavoring to build something brand new is filled with all sorts of uncertainty that can set you back. Which begs the question, how do you accurately predict a launch date? To answer that, we need to explore what First Customer Ship (FCS) actually represents and why it may not matter as much as you think, given that first-movers often aren’t the companies that achieve long-term market success.

As an engineer, FCS marks the moment when the product—as it was specified—is complete. With new products, this this is also the beginning of your assumptions being truly tested by customers and the market at large. And it’s often the time when companies who have rushed their product to market just so they can be first are exposed.

In describing why many first-movers fail, Steve Blank has stated, “first Movers tend to launch without fully understanding customer problems or the product features that solve those problems. They guess at their business model and then do premature, loud and aggressive Public Relations.”

The focus should not be on being the first company to market, but rather the first to get the right product to market. And to get there, you need to validate any assumptions you’ve made through rapid learning and iteration for three key aspects of your product.

Technical

The first, and most obvious, is that your product has to actually work. This is an issue that has plagued early models of 3D printers. They simply take too much maintenance, too many repairs, and, in many cases, the printing process outright fails midway through.

technical-3d-printing

Credit: Tony Buser/Flickr

The good news is that this is a relatively straightforward problem to avoid. Testing your product, either through simulation or with physical prototypes, should iron out many of the technical glitches before you ship.

Customer

The second set of assumptions are those about your customers. How well do you really understand their problems? And how certain are you that the set of features you have developed into your product are the answer they are looking for?

Unfortunately, there’s no software application that you can use to simulate this. And it requires that you think of your product specification as a hypothesis that can be tested and changed based on what you learn, rather than something that is set in stone.

The only way to validate your ideas is to get out from behind your desk and actually talk to the folks who you want to buy your product. Getting them involved from the earliest stages of design is a great way to avoid wasting time developing features that are simply of no use or don’t solve the real problems they face.

Business Model

This same concept also needs to be applied to your business model. Specifying a distribution strategy, marketing message, and price point without validating that it is appropriate for the product you are selling and the people you are selling to is an easy way to make even a great product fail.

This typically falls outside of the scope of responsibility for engineers, but the teams making the products should put pressure on marketing and sales organizations to adopt the same learning and iteration approaches they take towards development of the business model so they can go capture the market quickly.

First to Get it Right

If your objective is to be the first company to market with a product, then you may wind up in the same situation as Saehan and Rio (first MP3 players), Atari (first video game console), Apple Newton (first PDA), and, more recently, Coin.

But if you take a different approach to FCS—marking it as the point where you have validated your assumptions about the technology, customers, and business model, then it really won’t matter what order you entered the market.

Brian Sather is a product marketing manager at Autodesk. An engineer by trade, he likes taking things apart and putting them back together. Half the things in his home work twice as well as they should, and the other half don’t work at all.


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