A fast follower is an organization that waits for a competitor to successfully innovate before imitating it with a similar product.
- Understanding fast followers
- Fast following vs. the first mover
- When does the fast-following strategy make sense?
- How to consolidate fast following into a competitive moat
- Fast follower examples
- Key takeaways:
- The FourWeekMBA Business Strategy Toolbox
Understanding fast followers
Most people are familiar with the term “first mover advantage”, but might there also be an advantage to moving second?
In a landmark 1993 study of 500 businesses across 50 product categories, researchers from the University of Southern California found that just 53% of first movers built a successful business.
Fast followers, who entered the market no more than 13 years after the first movers, were successful in 92% of the examples.
Fast followers are organizations that wait for competitors to release pioneering innovations before releasing their own products.
This strategy is particularly effective in industries where standards and technology are dynamic and evolve frequently.
The fast-follower strategy relies on a company releasing an imitation product rapidly to secure vital market share before the competition.
A failure to imitate with speed increases the likelihood of the pioneering company building an advantage or moat of some kind.
“The pioneers have all the costs for R&D, the failures and the time involved. The fast follower can just cherrypick the best technology that emerges.”
Fast followers can also learn from another company’s mistakes and release a product that better satisfies consumer needs.
Fast following vs. the first mover
In a first mover scenario, a player gets at a very early stage in the development of a market, or actually, it manages to build that market from scratch.
In the tech industry, being a first-mover can be a great advantage.
However, we learned over time that it might be quickly lost if you can translate that first-mover advantage into a first-scaler advantage.
In short, in order to win in the long term, you got to be able to consolidate the market dominance, as otherwise, other new entrants will capitalize on the expensive lessons of the first mover.
Indeed, the most expensive and challenging part for any business is opening up and developing a new market.
You have to help shape the habits of thousands or millions of customers.
When at that stage, scale is what gives a key advantage.
Thus, it’s common, especially in tech, to see new entrants quickly dominating developing new industries, as first-movers cannot scale successfully and maintain their dominant position.
When does the fast-following strategy make sense?
The fast following can be a compelling strategy.
This strategy works if you can execute extremely fast on what has already proven to work from the first mover and twist it to make it scale faster.
This either happens thanks to the ability to execute faster or thanks to the ability to distribute faster.
Or from a combination of both.
Strong distribution, and fast execution, can help organizations become dominant players when entering markets dominated by other players.
How to consolidate fast following into a competitive moat
In other words, while following fast work, initially to gain market shares quickly.
Over time you want to innovate and be the one who leads the market forward to build a competitive moat.
Take the case of Zara, in the fashion industry, and how it started with a fast following.
Now, Zara produces great collections, which (in some areas) can be comparable to those of established fashion brands.
If you take the case today of SHEIN, the company uses a powerful combination of the fast following (through social media like TikTok); and trend-setting (using emerging influencers to launch new product lines).
Fast follower examples
Let’s take a look at a few examples to solidify the fast-follower concept.
Google’s PPC search engine is the undisputed leader in its industry, and many assume that the company came up with the concept.
However, the pay-per-click advertising model was actually developed by Goto.com (Overture) in 2001.
Overture instead used its own PPC model to advertise on websites such as Yahoo and AOL, which meant that much of its advertising revenue was paid to partners.
Google was able to improve on this innovation by subsidizing non-commercial keywords with advertising associated with commercial search terms.
This enabled Google to supplement its paid ad revenue via supplementation and become the dominant force.
Apple has been a fast follower on several occasions. The iPod was not the first music player. The iMac was not the first personal computer.
The iPhone was certainly not the first smartphone.
In each case, the company waited until a rival identified a real consumer need, entered the market, and defined the product category.
It then observed the market to identify product weaknesses and set about developing a solution that addressed those weaknesses.
In most cases, Apple added useful ecosystem features to its products instead of superficial, low-value improvements.
BlackBerry and the iPhone
Let’s consider the Blackberry, a revolutionary product in its own right which was successful for a few short years.
While the Blackberry was a mainstay of the corporate world, Steve Jobs envisioned that the biggest smartphone market would be ordinary consumers and he designed the first iPhone accordingly.
The Blackberry featured a clunky plastic keyboard and a non-ergonomic design that could not be carried in one’s pocket comfortably.
Their popularity among corporate executives also made them uncool with younger consumers and the device was tied to a single network that was subject to security concerns.
When Jobs made an impassioned speech on January 9, 2007, he shared Apple’s vision for three new products: a widescreen iPod with a touch screen, a breakthrough in internet communication, and a revolutionary mobile phone.
He then stunned an enraptured crowd by exclaiming “Are you getting it yet? These are not three separate devices. This is one device. And we’re calling it the iPhone.”
Taking a less than subtle swipe at BlackBerry, Jobs later noted that:
“The most advanced phones are called ‘smartphones’… so they say. They combine a phone and some email capability… and all have these little plastic keyboards on them. The problem is that they’re not so smart and they’re not that easy to use.”
- A fast follower is an organization that waits for a competitor to successfully innovate before imitating it with a similar product.
- The fast follower strategy relies on a company releasing an imitation product in rapid time to secure vital market share before the competition. When successful, the fast follower can avoid the financial and reputational risks inherent to innovation.
- Examples of fast followers include Google, who improved Overture’s PPC advertising model, and Apple, who can attribute the success of many of their most famous products to the strategy.
The FourWeekMBA Business Strategy Toolbox
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