This article is the third part of a series of fives articles on mistakes to avoid when managing a disruptive project, extracted from my new book “A Manager’s Guide to Disruptive Innovation”.
The disruption theory can shed new light on the first mover advantage. The first mover advantage theory states that the first entrant in a new market has the advantage of being able to take leadership of the market and effectively resisting the entry of subsequent competitors. This theory forms the conceptual basis of a popular approach known as “blue ocean”.
By advancing the premise that the main factor of competitiveness is the order of arrival on the market, this theory recommends to companies to go as quickly as possible to be the first. However this theory suffers from a major flaw: it is rarely supported by the facts. Many leading players in their field were late entrants, to name just a few: Procter & Gamble with its disposable diapers, Gillette with its disposable razors, Google with its search engines, and Apple with its iPhone.
Clayton Christensen’s work has highlighted the fact that the main criterion of success in the case of a disruption is actually the player’s motivation. Motivation in this context means the adequacy of the player’s business model to the opportunity represented by the disruptive innovation.
An example of a player that did not have the proper motivation is the Swiss watch industry. In the 1970s, the invention of the quartz technology enabled the creation of cheap, yet precise digital watches. The technology was quickly adopted by Japanese manufacturers such as Casio and Seiko who disrupted the market from the low-end, driving the Swiss watch industry’s market share from 70% down to a few percent by the end of the 1980s. What is interesting is that the quartz technology was actually invented… by the Swiss! But because it had built its reputation for excellence on the precision of its clock mechanisms, and this renowned reputation would be nullified by the adoption of quartz technology, the industry was simply not at all interested in developing the quartz technology. In other words, the quartz watches were not consistent with resources, processes and values of the Swiss watch industry.
In the end, success in a disruptive market is not a question of who comes first. Some leaders, such as Nespresso, have indeed been first movers, but many others have been latecomers. Success depends on the compatibility between the disruptive opportunity and the business model of the company facing the disruption.
Next part: Failing to properly measure the progression of the project. Read the first part of the series: Trying to be the first.