Technological Leadership and Followership
Industry leaders are those companies which maintain their competitive positions through early development and application of new technologies. However technology leadership imposes costs and risks to the organizations which aspire for maintaining technological superiority or leadership.
Advantage of Technology leadership
(i) First-mover advantage
(ii) Little or no competition
(iii) Greater efficiency
(iv) Higher profit margins
(v) Sustainable advantage
(vi) Reputation for innovation
(vii) Establishment of entry barriers for competitors
(viii) Occupying of best market niches
(ix) Opportunities to learn
Disadvantage of Technology leadership
(i) Greater risks
(ii) Cost of technology development
(iii) Costs of market development and customer education
(iv) Infrastructure costs
(v) Costs of learning and eliminating defects
(vi) Possible cannibalization of existing products
Not all firms are equally prepared to be technology leaders, nor would leadership benefit each firm equally. Whether a firm chooses to be a technology leader or a follower depends on how the firm positions itself to compete, the benefits gained through the use of a technology and the characteristics of the firm.
Technology followership also can be used to support’ both low-cost and differentiation strategies. The follower firm can learn from the experiences of the leader firm and can avoid the costs and risks associated with technological leadership, thereby helping to establish a low cost position. Followership can also support differentiation. The follower can learn from the leader and can adapt the products to more closely fit buyer’s needs.