Early leaders wear big targets

It’s that time of year again – the Tour de France is still fresh in our minds, and when they weren’t not bouncing off the pavement the skinny, hyper-fit riders were racing up the French mountains. Lance Armstrong was the winner for the fifth time.

And just in case you didn’t notice he was the leader from day to day, of course, they awarded him the prestigious yellow jersey after each leg.

And it’s that yellow jersey, the mark of the leader, that got me thinking recently: thinking about how the early lead with a new technology has, in so many cases, been a bad thing for the leader itself.

In fact, I’d go so far as to say that the technology spoils go not to the early leaders, or what the marketing types would call the early adopters, but more to the group that I’d call the “fast followers.” If this were NASCAR, we’d be calling these fast followers the guys in the slipstream.

I think I can see another one coming. I had my first chance to play around with a wireless network and Wi-Fi card a couple of weeks back, at the house of a friend who has his own wireless network. Cool. It worked. But it got me to thinking about instances in the past when the pioneers failed to reap the benfits of their cool technology.

I remember the days when a lot of what are now standard applications in the oil patch were custom built for the bravest of the early adopters.

The deal used to work like this: a sponsor oil and gas company would hire a (usually small) company of enthusiastic and talented developers to build the application in question, and when the application was finally done, the developer would have the right to re-market it to other oil and gas companies, and the original sponsor would ultimately recover their investment through royalties on the resale of the application.

Sounds like a heck of a deal, eh? Everybody wins…after a few sales, the sponsor would end up with a “free” application after royalties – an application, by the way, they believed would be built around the way they did business (but not if the developer, with an eye on other sales, could help it) – and the developer would get an application to sell to other customers.

Except it never worked out that way. The apps were always more expensive and took longer to build than expected, and I don’t think I ever saw a dollar go back to an original sponsoring company i.e. the original oil and gas company who was wearing the yellow jersey.

So who made the money in these kinds of deals? Usually the next oil and gas producer down the line – after waiting for the first sponsor to beat their brains (and pocketbook) out on getting the application developed, they were usually able to pick that same application up for themselves for a very reasonable price, what with the developer being desperate to see more revenue, and the original sponsor wanting to get something back from the buckets of money they poured into it. Here we see the triumph of the fast follower.

Think those days are over? Think they only applied to applications? Think again.

The same thing happened to Apple with the Mac. Apple pioneered the GUI and the mouse on a commercial basis with the Lisa and the Mac. No, I haven’t forgotten that Jobs “borrowed” much of this technology from Xerox PARC, but who followed along shortly thereafter and made all the money? Why, that fast follower Bill Gates, that’s who. Windows was, and to many still is, an inferior interface. But since most of the heavy lifting was done by the Mac development team, Microsoft was there to sweep up the, er, piles of money.

And it happened again with the browsers. Netscape was the first and the early leader with all the neat ideas – and all the investment and blood and sweat and tears and risk. Who is left standing now? That fast follower Bill Gates and his Explorer.

And it happened again with all those early goofy Internet commerce ideas.

Tons of early-leader folks blew their brains out on Internet schemes that really were goofy from the get go (were we ever going to seriously order pizza over the Internet?), before the smart ones figured out where the money really is: Internet dating, classmate reunions and porn. And these fast followers picked up the wreckage of the early leaders for pennies on the dollar – did you see how cheap you could get a high-end Sun server from the wreckage of an imploded dot-com sector?

Which brings me back to wireless. I recently read an article about all the wireless hotspots that are being set up, including at McDonald’s, believe it or not, and then the article in question asked the key question: who’s going to pay for all of this, and where are the applications?

The bleeding edge players are going to pay for it, that’s who, the guys with the yellow jerseys – and then they’re going to crash and then the fast followers are going to come in and make all the money again.

Seems to me that in our business, when you’re wearing the yellow jersey, you may as well paint a target on it at the same time.

Hanley is an IS professional in Calgary. He can be reached at [email protected].

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