There’s a myth in business that the “first mover” in a new product category always has the advantage. While being first has its advantages, the myth isn’t always true–and here are some counter-examples:

• Google came along and took over the search engine industry that had been dominated for years by players like Yahoo and Altavista. Anyone even remember Altavista?
• Microsoft moved into the personal computer industry after Apple was already seeing success. After Apple then introduced the Mac, Microsoft came out with Windows to compete. And who got the most market share?
• Internet Explorer went from obscure web browser in the age of Netscape to the dominant browser.
• Facebook was relatively unknown at the height of Myspace’s success–and then went ahead and killed it.
• Gas Stations, Restaurants and Coffee Shops tend to cluster around each other. Ever wonder why they’d want to be second to arrive at the intersection? Because there’s already a traffic of qualified sales leads who want the product. The first to arrive has already had to generate traffic. It reduces the marketing from “find people who want this product” to “convince them that we’re the best.”

The reality is that first movers have the advantage of momentum and mind share, but only if they keep getting it right or at least consistently improving. The advantage of being the second company on the scene is that you can look at all the mistakes that the competition has commited to, as well as all of the great ideas the first mover has invested in, and come out with something that learns from those lessons, while saving the costs that go into making those mistakes in the first place.

Stealing Ideas: Mistakes, Too

So stealing ideas isn’t just about using great ideas pioneered by other companies. It’s also about being willing to learn from their mistakes. Knowing the difference is part of the art.

Not New, Just Improved

Most of the best ideas are really just mashups of previous ideas. So look for people and companies who have great ideas, figure out what really works and why, and do a better job. Most importantly, don’t be shy about copying a good idea–within legal bounds of course. And remember, it’s a two-step process: first you take inspiration from a great idea, then you improve on the idea.

Speaking of stealing ideas, here’s where I got the inspiration for this post: How to Steal Like an Artist.

I stumbled on this, another example where strategy of all kinds is “the same at the top.” This is a list of principles created for WWI dogfighting by the teacher of the Red Baron:

http://en.wikipedia.org/wiki/Dicta_Boelcke

I find it really interesting that in business, often it’s about “fractal”-based success. That is, just as fractals are complex graphics based on very simple rules, business strategy is about learning to use a few extremely important maxims extremely consistently. Sort of like, sure 80% of your decisions and actions might not fall within these, but your ultimate maxims decide your fate in those 20% of the decisions that make 80% or more of the difference. The maxims basically prevent you from making really dumb decisions in the situations that are most likely to impact your success.

I think it’s a big thing, the “ultimate maxims” thing.

Part of it, that you can see from the “Dicta,” is identifying the key dynamic. In WWI, one of the biggest things was that whoever got behind the other and started shooting first, tended to win. Once you know that, you build an entire strategy around it, and until the situation changes, you have the most effective strategy. In the meantime, a lot of the other people are just trying to “be really good fighters” and so they lose, since they’re concentrating on 100% rather than being nearly perfect at the crucial 20%.

Surprisingly, the Red Baron wasn’t known for being the most brilliant fly-boy, or the most acrobatic pilot.  He was a good shot, and more importantly, a stickler with the rules. The right rules.

Ultimate maxims teach us a lot about how to actually put the 80/20 rule into practice:

1. Figure out the crucial dynamic.
2. Develop a strategy based on exploiting this dynamic.
3. Create a set of maxims that ensure you never screw up the most important things.
4. Follow the maxims more strictly than you’d like to.