| The reality is that most innovative organizations exit markets as fast as they enter because of reliance on the hope that their innovation will quickly gain dominance. Spreading innovation is usually slow, being introduced to a small number of users and at a high price.After an innovation is well established, many firms move in and compete on cost and price. However, by that time there are formidable competitors established, and it is probably going to be difficult. The most successful competitors don’t wait until the innovation emerges, but come in when they see the innovation starting to show promise and present opportunities for use in other areas or markets.
In Fast Second, authors Markides and Geroski note that in late 1954, UNIVAC was the dominant leader and commercial pioneer of the mainframe computer industry and had eight times the market size of IBM…mostly the government.
- Six years later, IBM had reversed those statistics.
- IBM knew when to enter and establish dominance by recognizing the emergence of UNIVAC’s dominant design.
- IBM never aspired to have technological dominance but relied on the skills of its sales force to take the technology beyond government and introduce the innovative technology to the established relationships it already had with its vast business user market.
What opportunities exist for your organization? You may feel that “dominant players” already exist in your marketplace. Looking at the computer industry and such established leaders as UNIVAC and IBM we see that, as IBM overcame UNIVAC, Apple, followed by Compaq, followed by Dell, have all successfully dislodged each other from dominance in the PC market.
Ford once held 50% of the U.S. car market and Xerox once dominated the copier industry. Although Ford cut prices by 65% as sales increased, the Model T demonstrated how a company that persists with a “one product fits all” strategy becomes obsolete.
GM sold different cars for different customer segments at different prices and took market dominance from Ford. All of this automotive history is true and demonstrates that dominance has and continues to be taken from those who were, “once leaders.”
Xerox targeted big corporations as its customers, stressing high speed and service. Canon saw emerging growth areas with small companies and individuals who wanted reliability and affordability. Xerox relied on a direct sales force while Canon instituted a less expensive dealer network. Look at their respective positions in the marketplace today.
There are always competitive advantages waiting to be exploited in the marketplace. As GM and Canon, IBM and Dell have done, so can you. One variety never fits all and each market segment has its own unique preferences. |
