How Verizon can Defeat AT&T's First-Mover Advantage

Last Updated Jan 10, 2011 1:13 PM EST


There is nothing more beautiful to watch in business than a company exploiting first-mover advantage. Without competition, at least for awhile, first movers enjoy the fruits of premium prices, free publicity, and a chance to control a high-growth new market for years to come.

Just ask AT&T, which five years ago beat out #1 wireless carrier Verizon to sign an exclusive iPhone distribution deal with Apple. The move didn't allow AT&T to dislodge Verizon from the top of the market, but AT&T has enjoyed subscriber growth advantages in every quarter since the iPhone was introduced.

This week, however, Apple is expected to announce that Verizon will become an authorized carrier along with AT&T. Can Verizon overcome AT&T's FMV?

According to Harvard Business School professor Rosabeth Moss Kanter, Verizon has used the interim time brilliantly to become a stronger competitor and positioned to offer consumers a powerful iPhone experience. Any company that is coming late to a desirable market may want to take notice.

"Just because an enterprise misses an enormous opportunity doesn't necessarily mean that they are doomed to lose, even if that first round delivers big returns to competitors," Kanter writes on her HBR.org blog. "There is still a debate in strategy circles about whether it is better to be the first mover or a fast follower, and whether missing out on the first wave of disruptive innovation means falling behind forever. But one thing is certain: Learning from a missed opportunity and then innovating beyond it helps anyone get back in the game."

To do so, you have to use your time to out innovate the incumbent by relying on the initiative, motivation, and teamwork of the people in the field, she says. Verizon has been pouring more money into R&D than its competitors, resulting in creation of its faster 4G network built on the LTE specification. AT&T, which has been criticized by current iPhone users for spotty service, is not expected to roll out its own LTE network until later this year.

Verizon also benefited by creating numerous alliances with technology partners such as Google and Nokia, something that might not have been possible had it been clutched in a tight embrace with Apple. "It forced us to be creative and look for alternatives," Tony Melone, CTO for Verizon Wireless, told the New York Times.

The bottom line being that if you are second to the party, use your time and resources to be better when you arrive. That's how you break first-mover advantage.

(AT&T image by MrVJTod, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.