From follower to leader
Innovation strategies in retail financial services
Business literature is rife with advice on how companies can innovate to become pioneers. The implicit assumption in offering such advice is that the order of entry is a choice—but in reality, most firms act as followers, because completely new product categories are relatively rare. However, despite the fact that followers comprise the vast majority of firms, very little guidance is available on how followers should approach innovation in their quest to overtake pioneers. What guidance does exist rarely focuses on the financial services industry.
We sought to fill this gap with research that addresses two key questions that followers in financial services face:
- What can followers do to achieve market leadership? When we examined cases of financial services followers that overtook pioneers, we found that they focused on making their product or service better than the pioneer rather than (or before) making it cheaper. They did so by adding more non-price value, such as greater functionality or better customer service.
- How can they do this? We found that successful financial services followers created more non-price value than competitors by offering a unique mix of innovations across many of the companies’ attributes.