Almost 10 years ago I wrote an article called “Fear of Firstness,” which discussed the apparent need to find a precedent for every action taken by a product team. This still seems to be the case. Every year, business teams expend tremendous amounts of money and effort in benchmarking and analyzing case studies of “analogues” to help them to make recommendations or decisions. While analogues are useful in this way, as with most tools, the way you use them is crucial. Too often, analogues are used to avoid risk rather than to learn useful lessons. Many in the industry fear being the first to do much of anything—despite the often-repeated corporate declaration that “innovation is one of our core values.” The simple truth: Most companies reward people for following—not leading.
It seems people in the industry will only take an action if it has precedent. Many seem to fear being the first to try something, but most seem eager to copy what has already been done. This mindset presents two basic problems: First, somebody has to be first to get anything done. Second, and perhaps more important, when copying someone’s actions, it is critical to understand their motives, resources, execution and results. Copying what somebody did for the wrong reason is a huge, and common, mistake.
In many cases, the company that takes the first step has a specific strategy in mind to meet a specific need. No matter, if it was good enough for Company X, it should be good enough for us. I’ve seen firms that want to use another’s actions as a model—in spite of the fact that the strategic intents of the two companies are polar opposite. For instance: One firm wants to set their launch price for a “lifestyle drug” based on a competitor’s very high price—when the competitor is about to lose patent and is simply “harvesting” the last of the value they can. In a predominantly cash market (as is the case for many “lifestyle” products) this constitutes pricing yourself out of the reach of potential new customers.
“Authorized Generics” is still the current rage—but why? Some firms with generic divisions may be able to make extra money through authorized generics of their own products, but the majority of the time these deals simply devalue the brand and reduce the profitability of the product. But people still do it, apparently because others have done it. It requires some pretty amazing assumptions—which seldom come into being—for this “strategy” to do anything but knock the value of everything down more quickly.
The questions to ask before jumping into the pool with everyone else are simple:
- Is it right for this product?
- Is it right for the market?
- Will it be more profitable if we do it?
- What are the implications if we don’t do it?
- Do we understand exactly why and how it was done before?
Answering these five questions before following someone else’s lead will save a lot of time, effort and money. Failing to ask and answer them will likely result in losses of the same resources. The question is, do you want to be the first to ask them?