The Curse of the Market Leader
If your company as a market leader is at the zenith of their power many will vendors will challenge your company as the company has shown the market size and all want to grab opportunities:
- Competitors with similar products or services
- Challengers with innovating competing products or services
- Contenders that focus on a niche segment in the market.
Reasons for The Curse of the Market Leader:
a) Complacency: self satisfaction
The management of the company believes they are the best.
And nobody can take their place.
The management is unaware of actual dangers or deficiencies.
b) The need to:
- protect the current market share
- innovate for new market segments
- keep up with the challenger
- retain the attention from the media
- retain the support of the market by advocates
c) No clue:
The original founders of the company are long gone or moved to less influential positions.
The people with vision have been replaced by people who can execute, but have no vision.
The company management is clueless what to do next as they always have operated within the same constraints.
d) Risk avoidance:
The founders of the company spotted a market opportunity and took the risk to start the company (as they had nothing or little to lose).
Once the company got successful and bigger, risk avoidance became more important than taking risks.
Innovation and new products are a big risk.
Entrenched Player’s Dilemma
Most, if not all, market leaders are faced with this entrenched player’s dilemma:
- The commercial success of the existing business increases the dependency of companies of them.
- The changing marketplace requires product modifications that will only bring marginal results at a high risk.
- New ideas and concepts can only be embraced by abandoning current revenue streams.
It is the dilemma between the proven business of yesterday and today versus the new business of tomorrow with all the risks and uncertainties involved.
Leading companies just don’t take the risk for the apparently small rewards.
Continued leadership requires to re-invent as it is limited in time
Re-invent
Only a few companies have been able to re-invent themselves, like:
- IBM
- GE
- Apple
- Microsoft
- Sony
- Samsung
- …
Limited duration of market leadership
Although it might seem great working for the market leader, but please note:
The duration of the leadership is always limited in time as change is the only constant in life and business.
This is the curse of the Market Leader.
Example: Google as market leader
Currently Google is the market leader in search and many are challenging or teasing:
Amongst others:
- Competitors with similar products or services: Microsoft with Bing
- Challengers with innovating competing products or services: Quintura
- Contenders that focus on a niche segment in the market: WolframAlpha
Has your company incurred The Curse of the Market Leader?
Has management enough vision to counter it?
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