Why being a Me2 is the best innovation strategy

There is an old saying that “Pioneers get all the Land” entrepreneurs often use this expression to explain why they do what they do.

There is also another old saying that “Pioneers get all the arrows”. Investors often use this expression to explain why being first in any new field endeavor is such a risky undertaking.

Take a look at the big winners in Silicon Valley and you’ll soon come to realise that being the innovation leader is a recipe for failure. The real secret is to be there with the Me2 when the market reaches ignition.

“[Steve] Jobs is undeniably a gifted marketer and showman, but he is also a skilled listener to the technology. He calls this “tracking vectors in technology over time,” to judge when an intriguing innovation is ready for the marketplace. – The New York Times

For example; Microsoft has a long and proud history of revolutionising the market with innovative Me2′s (Think: Windows vs Apple’s Mac and Excel vs Lotus 123, IE vs. Netscape). Likewise  Google didn’t invent the search engine. They just launched a much improved Me2. Today we see the rise of Facebook as the dominant Me2 innovator in the Valley. They didn’t invent Social Media but they have surpassed MySpace by systematically launching the best Me2 Social Media Platform of the past 5 years.

Me2s are safer and more profitable that being “First to Market” or i1′s as I call them.  This is because the problems facing i1′s are generally insurmountable. To begin with you have to expend most of your energy and capital on educating and motivating the market on the benefits of your new innovation. This normally means if you are operating a Start-Up you will have run out of cash, ideas and energy by the time the market ignites. Plus, in this critical time when the market rapidly begins to come alive with customers, you will face fresh competition from the next generation of more innovative Me2′s.

You may have made the market but the competition will take the market simply by timing their entry into the market.

This diagram explains why being a late to market Me2 is a more rewarding innovation strategy.

All companies move through an innovation “s curve” from the point where they invest in product R&D and then realize a return on their investment before growth slows and they have to reinvest in new product R&D.

At the same time the market take up of any new product or technology moves through a bell curve of early adopters through to late adopters.

The winners hit the market with product at the point the market ignites and the market begins to display explosive growth. Enter the market to early and you’ll lose money waiting for the market to ignite. Enter to late and the you’ll miss the early growth phase that is critical to achieve market leadership over the long-term.

Further Reading

• Should I get my wallet out? More notes on thinking like a VC
• Don’t think strategy: Think like a venture capitalist!

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