First Time Right

I had not heard this term before: “First Time Right”

It describes that situation where switching costs are so extremely high you had better get it right the first time you choose.

I saw the term used in a deck describing a problem faced by modern device makers.  More and more devices are being made that absolutely must have connectivity to the cloud.  Examples of these devices include: power meters, security systems, eBook readers, navigation systems.  Quickly this is becoming everything.  Typically do this using the cellular networks.  The problem for the device maker is that once they pick the cellular vendor to use they can not switch.  Even if they pick a GSM vendor they can’t switch to another vendor unless they swap the SIM cards in all the devices, devices they probably do not have access to.

I like this term and it’s fun to enumerate things that feature a strong element of “first time right.”  Your native language, marriage, where you settle after college, where you site your factory, the programming language you become fluent in.  More often than not these are things with strong network effects.

2 thoughts on “First Time Right

  1. Edward Vielmetti

    Is there a strategy for dealing with this early lock-in problem in the development phase? Consider the organization with few resources which is uncertain of its market and wants to maximize its chances of survival without locking in to a course of action until it knows more. It would have to design its thinking around making decisions as late as possible, but would also have to know that as soon as the die was cast it would have to discard all previous contingency planning and start in a new world.

    This is one of the reasons that people put a value on options on the purchase of real property. A purchase option might only be for a year, but it would allow you to get “first time wrong” and let the option expire rather than be stuck with an extended commitment.

  2. bhyde Post author

    The text book advise is all variations on “Don’t you think you should try living together for a while before you tie the knot?” or “Beware free samples.”

    I like this example since it is such clean example of how communication standards have such potent network effect lock in.

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