Glamor Economics

Chapter 60

Chapter 8, Section 7 You can still take the lead if you start later——Second serve advantage

In 1949, the British German?The de Havilland company developed the Comet, the first jet aircraft.The plane can reach speeds of 450 mph, twice as fast as propulsion aircraft, and it flies smoothly and quietly. In 1952, the model made its first commercial flight.Orders poured in from all over the world, eclipsing other aircraft manufacturers for a while.

But the good times didn't last long, and Comet planes began to have frequent accidents.The first air crash occurred in Calcutta. The plane suddenly fell apart while flying at high altitude, killing all on board.The explanation at the time was that the plane was struck by lightning.But a few months later, two similar accidents occurred one after another in the skies over Italy, causing high vigilance in the aviation industry.An investigation found that the Comet aircraft used the same metal material as previous propeller aircraft, but due to changes in flight altitude and speed, the endurance and lifespan of the metal was greatly reduced.Germany?Haviland paid a heavy price for these three air crashes.Just as the company was digging into redesigning the plane, Boeing introduced the 707.Of course, the new design draws on Comet's lessons and circumvents this design flaw.Although Boeing has lagged behind Germany?Haviland five years, but with the help of the opponent's mistake, it quickly jumped to the forefront.

In this case, Boeing was not constrained by others because of its late development. On the contrary, it made full use of its advantages and avoided some mistakes in product design.

The first mover can rely on the first product to occupy the market and win the first opportunity.But at the same time, it will also face greater market risks, because the market often has both interests and risks.In this sense, the first movers are the paving stones and test plants for the latecomers. Relatively, those latecomers have less risk of exploring and exploring, and the advantage of the latecomers is called the second-mover advantage.

The second-mover advantage is based on the risks and uncertainties of the market, because the problem that any first mover must face is the uncertainty of the market. A large number of facts in business history have proved that the accuracy of market forecasts is very low.For example, when the telephone was first invented, it was predicted that it would be a new medium for advertising, which turned out to be nothing like that.Before the Internet became "changing the way humans work and communicate", it was also unknown in the government, military and universities for more than 20 years.Sometimes, if a valuable idea is not presented at the right time, it will also become a trap for the pioneers.

In addition, even if the first mover launches the right product at the right time, there is still room for late movers.Because newly developed products often have major design flaws, latecomers can take the opportunity to launch better products and steal market share.Even if the first movers make no obvious mistakes, latecomers can still win by updating their products or marketing methods.Technology is always changing, but people's perception of products is basically the same.Grasping the main technological trends and selling old products in new ways can often get twice the result with half the effort.

In the PC market, for example, Dell has been dominated by Compaq. In 1994, Dell withdrew its computers from retail stores and began selling them directly online in 1996.The way of purchasing computers has changed. People can customize computers freely. The warranty and technical support of the products are also undertaken by one company, so there is no need to run around when problems arise.This move greatly changed the competitive landscape between Dell and Compaq. Dell's market share quickly surpassed that of Compaq and became the overlord of the PC industry.

[links to related words]

As a management term, first-mover advantage first appeared in the early 20s to describe the significant relationship between a company's first entry into a new market and its success.

(End of this chapter)