Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets (J-B US non-Franchise Leadership) [Hardcover]

This book is about why big, established companies should aim to be "Fast Second" rather than pioneers of radically new markets.

The authors challenge the new hypothesis that big firms need to be "ambidextrous" (i.e. able to use either hand with equal skill). An ambidextrous organization has successfully put in place multiple, contradictory structures, processes, and cultures within the same organizational infrastructure. By developing strong shared values and by putting in charge managers capable of managing variety and ambiguity, ambidextrous organizations can successfully balance the conflicting demands that the simultaneous pursuit of being First Mover (or colonizer) and being Fast Second (or consolidator) would place on them.

The skills, competencies, mindsets, and attitudes needed to succeed as a First Mover versus a Fast Second are like chalk and cheese. From First Mover to Fast Second, these are the 16 differences according to the authors:
1. From engineering or technology skills TO marketing, customer segmentation, and retailing skills
2. From emphasis on novelty, quality, and focus on lead users TO understanding of average user needs, good at spotting consensus
3. From young, restless, fascinated with science, technology, and the leading edge TO more interested in making money than in developing the latest technological wonder
4. From roots in science TO commercial roots
5. From focus on technological achievements and creating the best-performing product TO focus on price and quality and willing to settle for a product that is "good enough"
6. From manage information network in science community TO manage network of feeder entrepreneurial firms
7. From entrepreneurs who prefer autonomy and freedom and do not want to work in a big company TO organization people, happy within the structures and constraints of a large organization
8. From fast, agile, risk-taking experiments TO people who defend the existing business and don't take unnecessary risks
9. From entrepreneurial culture TO functional organization, formal management control systems
10. From first, fast mover TO judicious mover
11. From small is beautiful TO need resources to build the brand and distribution
12. From good at management of product design TO mastery of process engineering, procurement expertise, and mass-market management
13. From a culture of innovation and experimentation TO a culture of discipline and cost-control
14. From flexible TO disciplined
15. From short-term oriented TO long-term oriented
16. From fluid structures that allow easy flow of ideas and learning from mistakes TO managed hierarchy, focusing on mass marketing, customer segmentation, and manufacturing excellence

Not only are the necessary skills for each activity different, they also CONFLICT with each other. This means that firms that are good at being First Mover are unlikely to be good at being Fast Second. Looking at the list above, it's obvious that big firms have the skills and mindsets to be good Fast Second market players. Trying to teach them the skills of a First Mover will not usually work because their existing skills conflict with many of the skills they need to develop. Big firms should focus on what they are good at - the consolidation of radical markets into mass markets (Fast Second). They can achieve this by adopting an acquisition or network strategy with young start-up firms.

I got the book from Amazon the other day and finished it last night. It usually takes longer to read a strategy book, but this one is slim with only 170 pages. Being a business development manager, the topic of strategic innovation is very familiar and the arguments are surprisingly clear ... and very thought provoking, indeed. I'll highly recommend this book. It's a bold challenge to the conventional wisdom of the need to build radical innovation competence for big firms. It makes you rethink what you aim for ...

If you're interested in strategic innovation, do also consider Kim & Mauborgne's "Blue Ocean Strategy", Slywotzky's "How to Grow When Markets Don't", and Markides' "All the Right Moves".

Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business

The bad news: if you are a highly inventive upstart in a radically new field it is unlikely that you will ever hit the jackpot alone. If you are a successful established firm, dabbling in avant-garde novelty you are probably wasting your money.

This well-researched and highly readable book argues that firms cannot be at once "colonizers" (pioneers) and "consolidators" (large-scale producers of hi-tech). The authors offer a lot of evidence to suggest that the large profits are taken by the "consolidators"- companies who succeed in identifying, consolidating and launching dominant designs to a mass market at appropriate prices. High profitability is achieved not by the first movers, but by those who scale up the business through mass production, marketing and distribution and much more- they might even have to help develop complementary goods and services on the way. Once the enterprise is successful, they will need to beware of smart differentiators and find sensible ways of updating their wares and outsourcing processes and activities as may be necessary.

"Consolidators" and "colonizers" are fundamentally different in structure, style and culture. As in Markides' previous book (All the Right Moves) there is emphasis on the need for hard choices in strategy. And in radical innovation, timing is of the essence, though the emphasis is on "fast" not "first".

Of course "consolidators" need to be as creative as original inventors, if not more so, underscoring the importance of creativity in all aspects of business- not only at the invention stage. An excellent book.

In his previously published All the Right Moves (1999), Constantinos Markides asserts that "superior strategy is all about finding and exploiting a unique strategy in the company's business while at the same time searching for new strategic positions on a continuing basis." First he explains how to create and execute such a strategy and then locate its most favorable position; then he explains how to prepare for strategic innovation which will strengthen that position. In the final chapter, he concedes that "designing a successful strategy is a never-ending quest. Even the most successful companies must continually question the basis of their business and the assumptions underlying their 'formula for success.' (In fact, in one way or another, this is what most successful companies have done to get where they are.) New who/what/how positions are constantly popping up around the mass market, and established companies must be on the lookout for them. Like a modern-day Christopher Columbus, each company must set out to explore its industry's evolving terrain, searching for new and unexploited strategic positions."

In this his newest book, Markides and co-author Paul Geroski explain what a "fast second" strategy is and how to formulate it as well as how "smart companies" using that strategy have been able to bypass radical innovation to enter and dominate new markets. They identify and then examine four quite different types of innovation: Major, Radical, Incremental, and Strategic. "Our thesis is that it is impossible to offer proper advice on how to create or colonize new markets without first understanding where new markets come from, what they look like, and what it takes to succeed in them." They focus on demand and supply-side influences, arguing that, in the main, "most radical new technologies are pushed onto the market from the supply side." Therefore, radical innovations are by nature disruptive. For both customers and producers. Moreover, radical new markets are rarely created because of demand or customer needs. "Instead, they are created in a haphazard manner when a new technology gets pushed onto the market."

Others have their own reasons for why they admire this book so much. Here are two of mine. First, Markides and Geroski (in effect) call for a "Time Out!" on initiatives to create or respond to disruptive technologies, suggesting that less heat and more light are needed insofar as assumptions about such technologies are concerned. In this book, as noted, they identify four types of innovation and explain the significant differences between and among them. Each requires different strategies and tactics. This is especially important before decision-makers "set sail" in search of what Chan Kim and Renée Mauborgne characterize as "blue oceans" (i.e. uncontested market space). Without really understanding the nature of the given technology and market, decision-makers will be victimized by what Jeffrey Pfeffer and Robert Sutton characterize as the Doing-Knowing Gap." This book will be invaluable to those who struggle to get appropriate align of strategy and market.

I also admire what Markides and Geroski share because their insights challenge another durable but questionable assertion: that larger, established organizations can become more "entrepreneurial" by developing cultures and structures of much smaller, start-up firms. This challenge will, I hope, require decision-makers to re-evaluate their own assumptions about pioneering, creating new products and/or services for new markets, the proper role of internal R&D, etc. With all due respect to Markides and Geroski's material, however, I think it would be a fool's errand to implement, without rigorous scrutiny, all of their opinions and recommendations.

It remains for each reader and her or his associates to formulate what Markides and Geroski refer to as a "dominant design," one which lays the groundwork for the rapid expansion of the given market and which not only shapes the nature of the near-term competition in that market but will be a significant influence on market competition thereafter.