Strategies for Creating New Markets: Choosing Your Target—Time to Market Versus ‘‘Time to Market Acceptance’’

The most critical resource that you have is time. Time never moves slowly for a business, and for one that wants to establish a new market, time moves much too quickly. C. Michael Armstrong had a vision of creating a new market in communications when he took over as CEO of AT&T Corp., one of the world’s strongest companies. He was willing to bet the business on that new market, a risk the board accepted. Ultimately, AT&T failed. As Armstrong put it, ‘‘I knew coming in that my biggest enemy was time. My enemy hasn’t changed.’’ For either the established business or a start-up, time has the highest priority. While most manufacturers focus on time to market, you should not make it your key concern for new markets. The reward is for being the first company to achieve ‘‘time to market acceptance’’ (a phrase coined by Regis McKenna, a Silicon Valley marketing consultant and author). Do not assume that simply being first to market will gain you dominance over that market. You need look no further than your word processing software for an example.

Today, Microsoft dominates the market for PC office software suites, and little is left for WordPerfect/Corel and IBM/ Lotus to divide. Earlier, it was different. Before Windows became popular, WordPerfect was the dominant supplier of word processing software in the DOS market—so dominant that neither Microsoft (Word) nor IBM (DisplayWrite) could use their significant market presence to make an inroad with their offerings. As the first to market acceptance, WordPerfect won that contest and held a dominant position for years. Then a few things began to change.

The most critical change was that users started to move from DOS to the Windows operating system (OS). Although the overall Windows software was easier to use, no word processor worked well in Windows. Technically, this should have been an easy problem to solve. It became a business problem.

Although both WordPerfect and IBM had an advantage in market penetration with word processors, the companies were slow to invest in the Windows versions, and slow to garner acceptance on Windows. Microsoft worked assiduously to gain corporate customers. The company was not first to market, but it was first to gain  market acceptance. Today Microsoft controls more than three-fourths of the market. The company and product that were first to market acceptance became the victor, even though they were not first to market.

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