Is fast follower strategy passé?
When I worked at Alcatel one of my favourite companies that were masters of the fast follower strategy was Adtran. Truly a great company with the ability to execute a fast follower strategy better than any others I have come across. This worked well in the telecom market where companies sold basically big chunks of iron. A competitor spends years developing a product and then releases their masterpiece. The fast follower, looks at what you have done, finds ways to improve it spends ¼ the time developing it and comes to market with a superior product at a lower price point. The fast follower is a great strategy for a market that requires a large amount of R&D to get products to market.
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However, the year is 2009, telecom is a commodity and light weight web apps are rapidly gaining traction. Today’s market loves a leader. Getting to market faster and gaining traction is key to success. Once you build up a loyal user (paying) base it is very difficult for someone to take the users away. There is only room for so many Facebooks or Twitters in the market today. I mean really how likely is it another platform like Facebook to gain traction … not very.
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IMHO one of the only ways to be successful today is to lead and there often isn’t room for second place. The caboose never gets any closer to the engine once the train starts to roll.
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Ian Graham
It depends on the type of application. eBay is hard to beat, because sellers and buyers have years of reputation stored there and simply won’t budge. Facebook has some lock-in, because people have complex social networks that they don’t want to rebuild elsewhere, and because everyone else they know is there (and not on MySpace). Amazon has much less stored value — mainly just their wealth of user reviews — and could easily fall into oblivion if they stopped running on the treadmill. And search engines, which have no user lock-in worth mentioning, can fall from grace in the blink of an eye — remember Lycos and AltaVista? Who’d have thought there’d be room for Google? They paused on the treadmill, though, and Google flew past them.
Twitter is closer to the Amazon/AltaVista end. Twitter followers aren’t two-way social networks or eBay reputation, and are easy to replace if something more compelling than Twitter becomes available. And there’s no technical reason that micro-blogging can’t be distributed, like blogs or e-mail, rather than concentrated on a single platform. Twitter and Google have to keep running frantically on the treadmill, like Amazon, just to stay in the same place, while eBay or Facebook can sit back and rest at least once in a while.
I’d say that facebook, amazon, twitter were all fast followers in their own right.
Just executed better.
Sunk cost in an application is a great point David. ToMatts point about successful fast followers; have you heard of GoTo.com … perhaps not but Google has and bettered their adword model. Perhaps there is still aplace for fast followers, like anything there are shades of grey rather than black and white.