Be an early move: an "early mover" strategy has the advantage of time, allowing options for decision-making to create enterprise value. Failing to attain such a status can lead to lagging performance and prove fatal to an organization.

• Author: Deloach, James
• Position: Read for CPE credit

An "early mover" is a company that quickly recognizes a unique opportunity, or risk, and uses that knowledge to evaluate its options before it becomes widely known. Early movers have the advantage of time, which brings with it more options for decision-making as market shifts either create opportunities for entering new markets, introducing new products and initiating new innovations, referred to as "market exploitation opportunities."

Or it can invalidate critical assumptions underlying their strategy, such that the strategy no longer reflects marketplace realities--a condition known as "industry dissonance," the risk that strategic assumptions lag behind industry realities and the corporate strategy does not reflect the new conditions.

A market exploitation opportunity is a chance to advance an existing strategy and business model to create enterprise value. Industry dissonance requires management to revisit the strategy to avoid taking a company to the proverbial cliff's edge and risk losing enterprise value. Failing to attain "earlymover status," as defined here, can result in laggard performance. Even worse, it can be fatal.

Early Movers Aren't Necessarily First Movers

In the context of this discussion, the early mover distinction is broader than the traditional focus on "first-mover advantage," which typically refers to the initial significant occupant of a market segment. A marketing concept first-mover advantage is often gained through technological leadership, entry into a space with room for only a limited number of profitable firms and the creation of significant switching costs.

When a first mover cannot capitalize on its advantage, it leaves the door open for another firm to gain second-mover advantage. There is a body of knowledge around first movers and second movers and the advantages and disadvantages of each. The transition from mainframes to minicomputers, from minicomputers and workstations to personal computers, and the current transition from personal computers to notebooks, tablets and smart-phones are illustrative examples.

By contrast, the context for early movers is broader as it relates to detecting early signs of market shifts pointing to either market exploitation opportunities or industry dissonance and making decisions on whether to act on those signs. Thus, an early mover can include a second mover.

Apple, for instance, was an early mover with such products as the iPod, iPhone and iPad, but not necessarily a first mover. Therefore, the dichotomy is not "first" versus "second." Rather, it is "early" versus "late," with the market deciding what "late" means. The stakes of being an early mover can be as high as preserving the company's right to play.

Driven by both the desire to create enterprise value and the need to protect enterprise value, early movers understand that changes in the business environment could alter the assumptions and risk/reward considerations management initially considered when establishing strategic direction.

[ILLUSTRATION...