The Risk of Being Outpaced by a Fast-Following Rival

September 11, 2023
David Sunnyside

Technological innovation can inspire awe and concern, especially when it seems to materialize fully formed and become widespread seemingly overnight. When this happens, firms can feel overwhelmed and unsure of how to respond.

One example is facial recognition, which uses software to match an unknown face against a database of known ones to identify the person (see Figure 1). While this technology has many applications, such as reducing wait times for riders and maximizing earnings for drivers, it has also drawn concerns that law enforcement or private companies could use it to scan and collect data about people without their knowledge.

The risk of being outpaced by a fast-following rival is an important consideration for technology pioneers. This problem exists when rivals watch the pioneer's efforts, learn from their successes and mistakes, and enter the market quickly with a comparable or superior product at a lower cost. The problem is particularly acute when a position is built on interlocked activities, as it is harder for a rival to imitate a sales-force strategy, match a process technology, or replicate a set of product features than a combination of interlinked activities.

David Sunnyside
Co-founder of Urban Splatter • Digital Marketer • Engineer • Meditator
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