Have you heard of Gablinger or Chux? Most likely not, but perhaps you should have since each has an important place in the history of product innovation. Gablinger developed low-alcohol lager and Chux...

Have you heard of Gablinger or Chux? Most likely not, but perhaps you should have since each has an important place in the history of product innovation. Gablinger developed low-alcohol lager and Chux sold the first disposable nappies. For most people, these are forgotten companies because none of them were able to make a commercial success of their innovations. More likely than not the low-alcohol beer you drink is Miller Lite, and the nappies your children are wearing are made by Procter & Gamble. In each of these markets the innovator was swept aside. The business world is not always kind to pioneers. Take EMI as an example. The company’s history is one of a remarkable record of innovation. EMI was a pioneer in television and computing and its CAT scanner transformed radiography. Yet it has not made any of these products for many years. Our televisions come from Sony and our computers from Dell. Contrast EMI’s experience with that of Glaxo Wellcome. Each had, in the 1970s, a product that would ultimately take the US healthcare market by storm. Both the CAT scanner and anti-ulcerants were to win Nobel prizes for the British scientists who invented them. But there the similarities end. EMI was proud to employ Geoffrey Houndsfield, who invented the scanner. It established a US distribution network and manufacturing facility to exploit his innovation 3 and was quickly crushed by the superior political, marketing and technical skills of GE. James Black, who developed anti-ulcerants, did not work for Glaxo, but for SmithKline. Glaxo’s Zantac was an imitative product, second to market. US distribution was initially contracted out to Hoffman la Roche. The superior marketing skills of Glaxo and its partners enabled Zantac to overtake SmithKline’s Tagamet and become the world’s best-selling drug. Glaxo’s achievement was based not on the speed or quality of its innovation but on its commercial skills in exploiting it. It seems that what we take as a first-mover advantage is often only that because we tend to mistake the successful innovator as the first mover. There are two closely related lessons. One is that being first is not often very important. The other is that innovation is rarely a source of competitive advantage on its own. Individuals and small companies can make a great deal of money out of good new ideas. The success of large established corporations is generally based on other things: their distribution capability, their depth of technical expertise, their marketing skills. Time and again these characteristics enable them to develop the innovative concept far more effectively than the innovators themselves.