During the board strategy retreat I referenced last week, there arose a heated debate about whether the company needed to develop “unique” products never seen before or could consider improving on some that were already in the marketplace. Proponents of the “unique and never seen before” innovations supported their position with arguments raging from potential brand and industry leadership that could be generated from such a move and the opportunity to set industry standards and define the parameters of competition. They also suggested that such a move could generate an opportunity to capture significant market share before competitors enter the fray, resultant customer loyalty and the ability to gain early feedback amongst other reasons.
Proponents of improvement of existing products argued that despite the benefits of being first in the market, the company stood to gain a lot by refining or improving offering current offerings. They cited reduced exposure to strategic risk due to an opportunity to learn from the past experiences, utilizing insights into consumer preferences and market dynamics already learnt through interaction with users of existing products. They also argued that the company could leverage existing technologies and ideas as a foundation for innovation and use the same to address the needs of untapped market segments. In addition, they argued that by avoiding being the first to introduce an innovation in the market the company could develop more refined strategies for success.
The two groups had valid points and real-life examples. For example, the group in support of being first movers had the revolutionary M-Pesa money transfer service from Safaricom as well as less revolutionary ideas such as M-KOPA Solar, the pay-as-you-go solar energy model and Twiga Foods’, digital platform that connects farmers with retailers to streamline the supply chain for fresh produce as good examples of companies in Kenya that reaped big from being the first in the market with an innovation. They also had non-Kenyan examples such Netflix streaming video and Uber Taxi App amongst others.
Proponents of improvement of existing ideas gave KOKO Networks and Branch International, none of whom were pioneers in their products. For example, KOKO networks did not pioneer clean energy solutions since they only combined technology, distribution, and financing to make clean cooking affordable and accessible to low-income households. On the other hand, Branch came into the Kenyan financial market when mobile lending services were already popular. Branch differentiated itself by using machine learning algorithms to assess creditworthiness and offer personalized loan products thereby providing fast and convenient access to credit. They also had non-Kenyan examples such as Apple’s success with smartphones despite not being the first in the industry as well as the Google search engine.
The foregoing shows that an institution need not be the first in the market with an innovation. First movers however need to ensure good quality, demonstrate a good understanding of the market, be flexible and agile, leverage on strategic partnerships and invest in effective marketing and branding. For example, Google’s search engine revolutionized internet search by providing more accurate and relevant results compared to other search engines at the time while AirBnB understood the growing demand for unique and affordable accommodation options. In addition, Netflix changed from a DVD rental service to streaming based on client feedback and identification of an opportunity due to improvements in internet bandwidth and technology. Tesla also succeeded in the electric vehicle market through not only offering innovative technology but also by marketing itself as a disruptor in the automotive industry thereby appealing to environmentally conscious consumers and tech enthusiasts.
In order to succeed, late movers and other followers need to clearly identify and address gaps that could have been overlooked by the first movers, improve on existing solutions, offer a unique value proposition and be aggressive in their branding and marketing. They could borrow a leaf from AirBnB’s ability to identify and address the need for affordable lodging options not adequately addressed by traditional hotels and Google’s ability to improve on existing search engines by ensuring accuracy and relevance. They could also learn from Samsung’s aggressive marketing upon entry into the smartphone market dominated by Apple where it promoted its Galaxy series thereby positioning itself as a viable alternative to the iPhone.
Dr. Weru Mwangi is the CEO & Lead Consultant at Ultimate Management Solutions, a firm specializing in training & consultancy in Finance, Governance, Strategy, Risk Management and Leadership Development. He can be contacted on weru@umslgroup.com
