last-mover advantage

n.

The advantage a company gains by building its business slowly and then benefiting down the road from improved technology or lower costs, especially during an economic downturn

Example Citation:

Dynegy's announcements even included a dig at Enron's "first-mover" braggadocio. Dynegy would take advantage of ever-accelerating advances in technology to capture what it called the "last-mover" advantage.

— Michael Rieke, "Enron Envy Costing Dynegy Big Bucks," Dow Jones Energy Service, May 6, 2002

Earliest Citation:

Broadcasters hope to present FCC with proposal by end of week to accelerate schedule for buildout of network-owned digital TV (DTV) facilities in top-10 markets, industry officials said. . . . Accelerated schedule also would help offset "last mover advantage," official said. Stations that switch to DTV later probably would have advantage of lower equipment costs and more DTV sets in market when they launch.

— "Networks discussing response to accelerated DTV schedule," Communications Daily, March 5, 1997

A more general sense of the phrase — the advantage a person gains by being the last to perform an action — appeared a bit earlier:

Second, although our model somewhat arbitrarily allows the defender of the status quo a last-mover advantage, this can be supported as an equilibrium result in a more general model in which neither vote buyer is given such an advantage.

— Tim Groseclose; James M. Jr. Snyder, "Buying supermajorities," American Political Science Review, June 1, 1996

Notes:

It's easy now to look back upon the defunct dot-com era and laugh at the silly business plans and the 18-wheeler's-worth of cash that previously smart venture capitalists would throw at those startups. But at the time the frenzy was fueled by a single imperative, a three-word mantra repeated endlessly and extolled as the path to wired success: first-mover advantage. If you got in before anyone else, costs bedamned, you could lock up "mind share," build your "brand," and become the unassailable "market leader." Profits? They were for "sissies."

Sometimes this strategy actually worked, although for every Amazon.com success there were a thousand Pets.com failures. So now the business gurus, their hindsight glasses firmly in place, have begun to look not to the hare, but the tortoise. Could it be better, they muse, to try for the last-mover advantage, instead? It's a risky course, but last movers boast a number of advantages over first movers. First movers must often buy all or most of their technology up front; last movers buy over time as they build the business, and so reap the benefits of later technologies that are better and cheaper. First movers compete with other startups for talented workers; last movers often get to cherry pick from a larger pool of available talent (or even poach the best from the first movers). First movers make mistakes as they learn their market; last movers learn from those mistakes. First movers build their businesses from scratch; during a downturn, last movers can build their businesses by purchasing entire companies whose stock price has plummeted. Does it work? Well, that's the thing: with last movers, only time will tell.

Related Words:

Amazon

Dell

disruptive technology

dot com

e-business

e-commerce

first-mover advantage

Categories:

Buzzwords

E-commerce