Is first-mover advantage still relevant in today’s society when digital disruptions happen faster and more frequently? According to McKinsey, digital disruptors who are first to market can reap up to twice the rate of revenue growth compared to companies with slower reaction times.
Winner takes all in digital disruption
Digital disruption creates a few big winners and many losers when winning market share according to McKinsey. First-movers and some fast followers that execute digital strategies quickly, experience growth in revenue, while others see no return on their investments.
What distinguishes first-movers from laggards is their ability to learn rapidly and execute quickly. Early movers, in particular, understand the importance of embedding information across their business model to create faster feedback loops.
What’s the catch?
Disruptive technology doesn’t guarantee immediate market adoption. First-mover advantage becomes exclusive to those with deep pockets who are prepared to pay-to-win the long game.
For example, sales of Sony’s first digital camera, the Mavica, stagnated due to slow market adoption. Sony was only able to maintain their first-mover momentum due to its financial moat.
The difficult truth about digital disruption
If digital disruption is reserved for the goliaths of the industry, then why would anyone bother with digital innovation?
For context, the companies listed on the S&P 500 index have an average age of 22 years, down from 61 years in 1958. Meaning that incumbent companies are better off reacting to digital disruption than not or risk becoming obsolete.
Whether or not going digital is the right move depends on if the value created for customers is unique and sustainable. In order to evaluate this, companies must track metrics that signal the health of their digital strategy.
A faster feedback loop can be achieved when business metrics are embedded into their applications and business models. Timely data on user adoption, consumption volume, and retention are just some of the metrics companies with first-mover advantage utilized to execute faster in today’s digital environment.
The Trufflow Advantage
Trufflow is a software platform that makes it easy to tie business value to enterprise software, including homegrown applications, commercial SaaS offerings, data, and everything in between. The Trufflow platform provides IT product owners key metrics used across the software industry like active user counts, month-over-month revenue retention, and churn. With Trufflow, you can increase the efficiency of your technology spend and gain unprecedented visibility into your IT value chain.
