8.21.2006

Book Review: Fast Second

A good read on a plane trip to see a customer in Baton Rouge, I was able to go cover to cover on this book in a single flight. The authors are the authors of the well-known “Colonizers vs. Consolidators” article that appeared in Strategy+Business back in 2003.

The book focuses on radical innovations – those innovations that change consumer paradigms, markets, and industries. Examples include the PCs, television, and the automobile (among many others in the book).

The authors position their theory in two steps:
• Radical Innovations are brought to the mass market not through
• What strategies companies should employ relative to bringing radical innovations to the masses.

Their key finding (at least how I interpreted their key finding) is not in colonization vs. consolidation, but in the trigger point for mass market adoption of radical innovations: the emergence of a dominant design. That’s the lynchpin for scaling up to the mass market. The authors propose that companies enter the market before a dominant design has emerged, but after an invention has been introduced. Hence the term “Fast Second” as opposed to First-to-Market or Slow Second.

Things I liked about this book:
• Layman’s term writing. Very offer economists write in econo-speak only. I found the everyday writing style easy to consume.
• Numerous examples from numerous industries from numeries time frames

The authors had a few key points:
• History has proven that consolidators, not colonizers, are the ones that bring radical innovations to the masses
• It’s not necessary for consolidators it invent new technology – let others do it
• Since its not necessary, consolidators shouldn’t try to create org structures that develop radical innovations

It’s the last line that I don’t agree with. That history has not been on the side of consolidators bringing radical innovations to market doesn’t mean there’s not a pot of gold waiting for the company that figures it out. History is rife with companies that do something that nobody else does, even in the same industry. Southwest Airlines, Toyota, Dell, are all examples of companies that buck the trend and ignore history.

I did not get the sense that the authors dug deep enough in their data to find counter examples of inventors that were successful in bringing their radical innovations to market.

I get the author’s point, and I understand that data bears out that certain companies are able to being products to the masses that smaller companies have not been able to. And for good reason: consolidators have the brand promise, distribution, financial, and support structures in place for such mass market products.

I think each company has to figure out its own strategy and its own approach to capitalizing on new ideas. AT&T Bell Labs was a research powerhouse. IBM invests significantly in R&D. Cisco buys technology companies and does a masterful job integrating them into the company. P&G invests in its own R&D and leverages external researchers for its new products.

Why can't a company be a colonizer and a consolidator? Crazier things have happened.

2 comments:

Jay Heuer said...

Hmmm. In my experience the main culprit is corporate culture. Remember the MBTI sessions? Consolidators are overwhelmingly staffed with SJs, whereas colonizers are predominantly NTs. Now remember the struggles.

I believe a company that wants to combine those two (chalk and cheese) will spend so much time/effort/resources on the endeavour that is literally dies of "internal bleeding". Others that focus on the business of being one or the other (and world class in those) will beat them to the punch. There is no real consumer benefit in being both!

There is an article I wrote a few weeks back that talks about something similar: http://wiki.sarjay.com/tiki-read_article.php?articleId=17.

James V Reagan said...

I agree with the natural forces that create this paradox. However, I'm not convinced this is insurmountable any more than any other business or social challenge.

AT&T Bell Labs, before the breakup, was both a colonizer and a consolidator. Granted, they were a monopoly, and maybe that was the reason they were successful... given their track record since spinning off Lucent and the telephone market opening up that's a good bet.

Not suggesting every company try to become both. But, I do think certain cultures can give rise to another AT&T.