April 26, 2022 • By Keith Giles
Whether your organization is a first mover or a fast follower, the question of where to launch is often more perplexing than when or how quickly. Companies often wrestle with whether it’s better to be the first to enter a new market or to wait and learn from their competitor’s mistakes. But other key factors play into these decisions, such as whether it’s better to launch all at once, on a global scale or to start in your home market where conditions are more familiar. Others debate the advantages of trying to gain market share where the competition is most significant versus targeting markets with more sophisticated consumers."
To investigate, associate professor of strategy John Joseph of The UCI Paul Merage School of Business partnered with fellow researchers Ronald Klingebiel, professor of strategy at the Frankfurt School of Finance and Management and Valerie Machoba, doctoral student at Frankfurt School of Finance and Management. Their findings, published in an article titled "Sequencing Innovation Rollout: Learning Opportunity Versus Entry Speed" forthcoming from The Strategic Management Journal and covered in Harvard Business Review, reveal factors that play into a company’s decision-making processes.
“There’s a lot of literature already out there about first-mover advantage,” says Joseph. “Many are of the opinion that being first is better because this allows you to establish brand recognition and build market position. But others suggest that second movers have more advantages because they don’t have to invest in the R&D and incur fewer market risks.”
In a previous paper, Joseph and Klingebiel found that being first or second made no difference to the overall performance of a company. “Our research showed that contingent on a firms innovation strategy, a firm could be just as financially profitable as a second-mover into a market,” says Joseph. “As an example, Samsung was a fast follower in the mobile device market for many years and was quite successful. So, there is no advantage either way in that sense.”
Joseph and his co-authors were most curious about the differences between a simultaneous versus a sequential product roll-out. But, as you might imagine, getting access to global launch data is not very easy. “One of the problems in our field is that you often have only a U.S.-based study or a European study where behaviors may vary,” Joseph says. “So, it’s not easy to draw conclusions about industries that involved launches and competition worldwide.
Since Joseph and his co-authors needed access to global launch data, they decided to rely on their prior relationships within the mobile device industry. “Fortunately, my co-author and I had already collected plenty of data [in this industry], and we had both already developed prior relationships with several managers at multiple firms over time,” he says. “This made it much easier to conduct interviews and process the information for this study.”
What they discovered about the success rate of companies in the mobile device industry was also more generalizable for other industries outside of the consumer electronics market.
Sequential or Simultaneous?
“What we needed to ensure was that we could nail which mobile devices were launched, with what features, at what time,” says Joseph, “and in which international markets.”
Leveraging their prior relationships within the mobile industry and a small army of research assistants who could verify nuanced details within various markets, they slowly but surely began to see the answers emerge. “Going into the study, we had our hypothesis and a sense of what outcomes we expected to find,” says Joseph, “but ultimately, our paper comes down to this: When do companies launch in sequence, and when do they launch simultaneously?”
Two Key Findings
Here’s what they found: “One, that companies really do want to be in markets where there’s more competition and, second, that they need to be where there are more sophisticated consumers,” says Joseph. “Looking at all of the firms in our study, on average, this is what we see. Companies thrive in competitive markets, and they prefer consumers who don’t give them a free pass; they want to tap into those early adopters. So, it’s all about those tough consumer, high competitive markets first and then rolling out to other markets after that.”
Not surprisingly, managers care about these sorts of things. “You only have so many dollars to spend on distributing and marketing products,” says Joseph. “So, for managers of products in a global industry, these are practical questions to answer, with a lot riding on the outcomes.”
The biggest takeaway from their research overall is in terms of how companies approach learning within the organization. “The reality is, every company wants to learn. They all want feedback on their products, and they all want a better understanding of how to improve quality and create more appealing products for their customers,” says Joseph. “It turns out that there isn’t one learning style that’s the right one. It all varies depending on the organization’s experience, the novelty of the product or technology, and, ultimately, where is the learning potential going to be the greatest.”
John Edward Joseph is an associate professor of strategy at The UCI Paul Merage School of Business. His research examines organizational designs for better technology development, strategic planning and growth, which is published or forthcoming in the Strategic Management Journal, Organization Science, Academy of Management Journal, Academy of Management Annals, Long Range Planning, Advances in Strategic Management, Academy of Management Proceedings and other peer-reviewed publications. Joseph is also a senior editor for Organization Science and co-editor of the Journal of Organization Design. He serves as an editorial board member of the Administrative Science Quarterly and Strategic Management Journal.