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Being Early Beats Being Better
Abstract
The study: Henrich Greve and Marc-David Seidel studied the role of first-mover advantage in determining which technologies get adopted and which do not. They tracked the sales history of two wide-body jets: the McDonnell Douglas DC-10 and the Lockheed L-1011 TriStar. The researchers concluded that the DC-10's one-year head start contributed to its greater success in the market despite the L-1011's technical superiority. The DC-10 suffered from design flaws that led to multiple accidents but, nonetheless, was able to recover and keep selling. The challenge: Can first-mover advantage really compensate for an inferior product? Professors Greve and Seidel, defend your research. © 2014 Harvard Business School Publishing Corporation. All Rights Reserved.
... The most important of these is the positive impact of NPD speed (early movers' advantage) on the new product success. Frick [22] studied the impact of quality and early entry on product success in the market. They illustrated the importance of early market entry (even with a lower quality product) on the product launch success in a business-to-business (B2B) context [22]. ...
... Frick [22] studied the impact of quality and early entry on product success in the market. They illustrated the importance of early market entry (even with a lower quality product) on the product launch success in a business-to-business (B2B) context [22]. In their article, Datar et al. [18] put an emphasis on the importance of utilizing customer feedback on newly launched products as a factor of success in the market. ...
The research contributes to the body of knowledge on new product development by considering the potential use of a major emerging production technology in the early phase of final production. Direct digital manufacturing (DDM) methods such as additive manufacturing (AM) have been introduced as a production method for some small and complicated parts, mostly in the aerospace and medical industries (in batches of one or a few). However, it still is not viewed as a suitable method for producing numerous parts in small batch sizes. In this study, we will utilize scenario-modeling based on real-world case data to illustrate the potential of a novel production method which we call " hybrid production " in new product launch. This production method combines DDM with conventional production methods over the product life-cycle. Our case study data is on a toolless production method called Incremental Sheet Forming (ISF) which is theoretically a DDM method. The cases have been analyzed to understand the economic feasibility and benefits of DDM utilization throughout new product life-cycle. Results of our study suggest, while implementation of conventional production from the beginning does not present a significant cost savings over the hybrid production, when product succeeds in the market, conventional method yields a high cost when the success does not materialize on the first attempt. This directly translates to investment risks (related to the cost of tool modification or replacement and inventory obsolescence), in addition to loss of flexibility to respond to market feedback and consequently lower chance of market acceptance. Additionally, DDM at the beginning of our proposed hybrid production can shorten the products' time to market which is considered to be an essential factor for success.
... Frick, (2014) studies the impact of quality and early entry on the product success in the market. They illustrated the importance of early market entry (even with lower quality product) on the product launch success in business to business (B2B) context (Frick, 2014). Datar et al. (1997), in their article put an emphasis on the importance of utilizing customer feedback to newly launched products as a factor of success in the market. ...
Direct digital manufacturing (DDM) methods such as additive manufacturing (AM), have been introduced as a production method for some small and complicated parts mostly in aerospace and medical industries (batches of one or a few). However, still it is not viewed as a suitable method for producing numerous parts in small batch sizes. In this study we will utilize scenario modeling based on real world case data to illustrate the potential of a hybrid production method which combines direct digital manufacturing with conventional production methods in new product launches. Implementation of direct digital manufacturing for initial production runs can in some situations substantially reduce the manufacturers' risks. Our case data is on a toolless production method called Incremental Sheet Forming (ISF). The cases have been studied to understand the economic practicality of DDM implementation in the market introduction phase (early phases in the lifecycle). For our studied cases, while implementation of conventional production from the start does not show a significant cost saving over the hybrid production, when product succeeds in market, it yields a high cost when the success does not materialize at first attempt. This directly translates to investment risks (related to the cost of tool modification or replacement and product obsolescence) in addition to loss of flexibility to respond to market feedback and consequently reducing the chance of success. Additionally DDM can shorten the products' time to market.
The idea of first-mover advantages is frequently used by both managers and academics alike. Despite its importance for understanding the performance of entry in new markets, the evidence remains mixed. Our study advances research on the entry timing-performance relationship by adopting a contingency perspective that includes both micro (competitive strategies) and macro (industry dynamics) dimensions to explain differences in entrants' profitability. In this paper we focus on follower firms and propose that cost leadership is the best strategy for them to successfully entering a market. In addition, recognizing the contingency effect of industry dynamism, we also examine how market growth and technology evolution affect the effectiveness of followers’ competitive strategies. Specifically, we propose that followers will be better off by using cost strategies in growing markets, while when operating in contexts of technological change the performance of the cost leadership strategy will be lower.
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