Innovation: First Mover Advantage Isn’t What You Thought

All this talk (including mine) about reinvention.  Well you have to consider all sides and this is an important one.

Innovation does not need another advocate. It has acquired divine status, with even politicians promoting its virtues, promising that “we will innovate our way” out of any mess in which we find ourselves.

There is, however, one little problem: evidence. A close scrutiny of the empirical work suggests that the market supremacy of innovators is questionable, often distorted by biased assumptions and inadequate design. Many of the more rigorous studies show that innovators produce lackluster returns. Even those studies that identify a modest first-mover edge find that it has been receding over time.

Who does capture the benefits of new ideas, products, and models? Imitators. They get a free ride, avoid dead ends, capitalize on the shortcomings of early offerings or tweak the originals to better fit shifting consumer tastes. And yet, imitators rarely get the recognition they deserve: When was the last time someone received an Imitator of the Year Award?

Eli Broad, who built not one but two Fortune 500 companies — KB Home and SunAmerica — would be a good nominee for a lifetime achievement award for successful imitation. This excerpt from Broad’s recent book, which collects the insights and lessons he learned during his career, explains why.  Read More….Strategy and business The Value of Being Second