Speed to Market and Competitive Advantage

by | Monday, August 27th, 2012

While Wall Street and the rest of the world debate whether the Apple patent victory ruling versus Samsung is good or bad for innovation, RE:INVENTION is busy contemplating “SPEED TO MARKET.”

Does the Apple/Samsung ruling suggest that speed to market offers clear competitive advantage? Does the ruling imply companies should focus on first mover disruptive innovation and surging ahead? Speed at all costs (ala Lance Armstrong)?

Nope. Time for a refresher course…

According to business guru Jim Collins, there are three scenarios in which speed to market does guarantee a sustainable advantage like that gained by Apple over Samsung: (1) if you can secure ironclad patent protection (2) if you can set a proprietary industry standard, or (3) if you can use your lead to establish such a beachhead that even if better options become available, your customers will find it too much of a hassle to switch.

Way, waaay back in 1997, an unassuming white paper titled “Speed to Market and New Product Performance Tradeoffs” by Barry Bayus (then a Marketing Professor at University of North Carolina Keenan Flagler Business School) appeared in the Journal of Product Innovation Management. Bayus concluded that speed to market was only optimal under the following conditions: high performance products, long product lifecycles, a relatively long window of market opportunity, relatively high sales, stable margins, and relatively flat development costs. Only given these conditions, can companies generate sufficient revenue to offset the increased costs incurred with speed to market and “disruptive innovation.”

These aforementioned conditions rather accurately define current day Apple. If you’re a big corporation trying to capitalize on cloud and mobile technologies, speed to market can sometimes make sense.

Replicating the speed to market rigor of Apple will be tough for most other companies. And lest we forget, iPod was not the first MP3 player, the iPhone wasn’t the first smartphone, and the iPad wasn’t the first tablet. Apple copies too. Apple ENHANCES.

The reality is that most successful companies out-execute the competition with a new twist on an existing product or service. Companies should see competition as an opportunity to improve products and customer service. Make connecting with customers in the marketplace your ultimate goal, not speed to market or disruptive innovation.

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