How Corporate Pride Pays Off
With its Staff Members’ Satisfaction
Corporates try to raise their brand values in the market based on the first record,
the only technology, or the best performance they have achieved.
And that is not because they want to be boastful.
This actually benefits them, and has a positive influence on their staff members.
So, let’s take a look at the mechanism of how a company's record creates value.
the only technology, or the best performance they have achieved.
And that is not because they want to be boastful.
This actually benefits them, and has a positive influence on their staff members.
So, let’s take a look at the mechanism of how a company's record creates value.
Why do corporates want to be remembered as “the first”?
The first postage stamp in the world was made in England, on May 6, 1840. The Penny Black, followed days after by the Two Pence Blue, the first ever stamps, beat out all the other stamps with so many modifiers and have acquired great value. The Two Pence Blue, in particular, was sold in a 2011 auction for £1,053,000 (approx. 15 billion KRW).
There is one other, yet similar, example. Everyone would know that the person who developed tungsten bulbs using filaments was Thomas Edison. However, there was a British chemist who had invented a tungsten bulb a year earlier, and that was Sir Joseph Wilson Swan, although we only remember Edison who first “commercialized” them. This shows that a first record also must have a significant value to be remembered by people.
The first mover advantage gained by developing a new product or technology and introducing it to the market is therefore very important for a company. When you establish strong recognition with "the First," it brings various advantages. This is also called the “framing effect,” which refers to a phenomenon where people’s recognition, decisions, and results differ according to how one situation is presented or given significance.
There is one other, yet similar, example. Everyone would know that the person who developed tungsten bulbs using filaments was Thomas Edison. However, there was a British chemist who had invented a tungsten bulb a year earlier, and that was Sir Joseph Wilson Swan, although we only remember Edison who first “commercialized” them. This shows that a first record also must have a significant value to be remembered by people.
The first mover advantage gained by developing a new product or technology and introducing it to the market is therefore very important for a company. When you establish strong recognition with "the First," it brings various advantages. This is also called the “framing effect,” which refers to a phenomenon where people’s recognition, decisions, and results differ according to how one situation is presented or given significance.
Adding the value of “the Only” to "the First" record
A good example of a company with the first mover advantage is Coca-Cola, which was ranked No. 6 in Brand Value in 2020 by Forbes. Pepsi, which went on sale seven years later than Coca-Cola, could not reach the reputation of Coca-Cola, which was already stamped on the minds of people as the first.
In 1970, Pepsi had prepared an extensive marketing promotion called the “Pepsi Challenge.” It was a blind-tasting test where consumers could choose the taste they prefer. The result, unexpectedly, was Pepsi’s victory, showing that a significant number of consumers preferred the Pepsi taste. Pepsi then launched an aggressive marketing campaign based on this and succeeded in taking over Coke's market share, but this temporary victory failed following Coca-Cola’s counterattack.
Although people preferred Pepsi in blind tasting, many test subjects chose Coca-Cola over Pepsi when they were told that it was Coca-Cola. In other words, people value “what they like” higher over “what tastes better.” Coca-Cola took over the throne again, advertising with the logic that the “Brand value is superior.” This is the advantageous position that the brand with the first record can have.
Of course, not all brand values increase only because they started first or they developed first. It is more important to wisely use the value of the first. Coca-Cola also knew this well. Coca-Cola did not register a patent, and the reason is that when you register a patent, you will need to make the recipe public, although it will be protected for 20 years. After 20 years, anyone could have made cola with that recipe. Therefore, they increased their corporate value by choosing mysticism by adding “the only.”
In 1970, Pepsi had prepared an extensive marketing promotion called the “Pepsi Challenge.” It was a blind-tasting test where consumers could choose the taste they prefer. The result, unexpectedly, was Pepsi’s victory, showing that a significant number of consumers preferred the Pepsi taste. Pepsi then launched an aggressive marketing campaign based on this and succeeded in taking over Coke's market share, but this temporary victory failed following Coca-Cola’s counterattack.
Although people preferred Pepsi in blind tasting, many test subjects chose Coca-Cola over Pepsi when they were told that it was Coca-Cola. In other words, people value “what they like” higher over “what tastes better.” Coca-Cola took over the throne again, advertising with the logic that the “Brand value is superior.” This is the advantageous position that the brand with the first record can have.
Of course, not all brand values increase only because they started first or they developed first. It is more important to wisely use the value of the first. Coca-Cola also knew this well. Coca-Cola did not register a patent, and the reason is that when you register a patent, you will need to make the recipe public, although it will be protected for 20 years. After 20 years, anyone could have made cola with that recipe. Therefore, they increased their corporate value by choosing mysticism by adding “the only.”
Taking the patent and license with both "the first" and "the only"
As you can see, when you release a product for the first time or be recognized for a value for the first time, you have a big advantage of taking the lead in a new market. It influences the industry standard, and a dominant position is given in technological leadership. In addition, you will raise market dominance that leads to royalty, and you will generate significant amounts of profit.
A representative example is Qualcomm, which is the patent owner of original technology of code-division multiple access (CDMA). Cell phone companies are paying trillions of won every year for using their products as communication chips. They secured both exclusive sales and royalties. Through this licensed technology, Qualcomm reached an agreement with Apple in 2019.
That is why most of the corporates consider patents or licenses important for survival in the global market. Patents and licenses can be acquired through cooperation with prominent research organizations or schools, or in some cases, through purchases. This is the essential tool for corporate war and survival. When you have an opportunity for a license or monopolization, you can secure stable growth for the company, and when a dispute occurs, the record or recognition of being "the first" may play a crucial role in winning.
A representative example is Qualcomm, which is the patent owner of original technology of code-division multiple access (CDMA). Cell phone companies are paying trillions of won every year for using their products as communication chips. They secured both exclusive sales and royalties. Through this licensed technology, Qualcomm reached an agreement with Apple in 2019.
That is why most of the corporates consider patents or licenses important for survival in the global market. Patents and licenses can be acquired through cooperation with prominent research organizations or schools, or in some cases, through purchases. This is the essential tool for corporate war and survival. When you have an opportunity for a license or monopolization, you can secure stable growth for the company, and when a dispute occurs, the record or recognition of being "the first" may play a crucial role in winning.
The market can also turn for the Best, if not the first
Does this mean that the companies that did not start first cannot lead the industry? It is important to enter the market first, but more importantly, you need to be “the Best” in the market. The low-priced furniture brand IKEA is a representative example. IKEA was neither the first, nor the only company to use a low-price strategy. The self-assembly system also was not the first. However, IKEA is now a global brand with a strong position.
It is because they had their trump card, which was a technique to pack their furniture. This is the packing method known as Flat Pack. It reduces cost with easy transport, distribution, and storage, and looks more expensive than it costs. By systemizing this flat pack; IKEA turned the whole process of low-price strategy, self-transportation, and assembly which other companies pursued into a system and a culture. They recreated their strengths by joining them with others’ strategies and systems. And this made IKEA the best.
Likewise, Google is not a company that enjoyed the first mover advantage. The first portal site was Yahoo. In 1994, when Yahoo was first founded, there was no concept of portal sites and this caused a big stir. Other companies such as Lycos, MSN, etc. joined one after another, but they could not overcome Yahoo. In addition, Yahoo grew boldly by offering additional services such as e-mail, news, and maps to further expand the gap between the latecomers and strengthen its competitiveness. How then did Yahoo get pushed back by Google? The automated system was the trigger. In 1998, the heyday of Yahoo, Larry Page and Sergey Brin, two unknown computer scientists, suggested automating Yahoo’s search engine with their algorithm program and were refused. Then these two founded Google. What Google sought was to provide an excellent search tool with their own technology. They focused their search technology, their original core technology. Although they entered the market later, the search technology they emphasized was the best and the only. And for this the market has turned.
It is because they had their trump card, which was a technique to pack their furniture. This is the packing method known as Flat Pack. It reduces cost with easy transport, distribution, and storage, and looks more expensive than it costs. By systemizing this flat pack; IKEA turned the whole process of low-price strategy, self-transportation, and assembly which other companies pursued into a system and a culture. They recreated their strengths by joining them with others’ strategies and systems. And this made IKEA the best.
Likewise, Google is not a company that enjoyed the first mover advantage. The first portal site was Yahoo. In 1994, when Yahoo was first founded, there was no concept of portal sites and this caused a big stir. Other companies such as Lycos, MSN, etc. joined one after another, but they could not overcome Yahoo. In addition, Yahoo grew boldly by offering additional services such as e-mail, news, and maps to further expand the gap between the latecomers and strengthen its competitiveness. How then did Yahoo get pushed back by Google? The automated system was the trigger. In 1998, the heyday of Yahoo, Larry Page and Sergey Brin, two unknown computer scientists, suggested automating Yahoo’s search engine with their algorithm program and were refused. Then these two founded Google. What Google sought was to provide an excellent search tool with their own technology. They focused their search technology, their original core technology. Although they entered the market later, the search technology they emphasized was the best and the only. And for this the market has turned.
The value of the corporate leads to the pride of the employees
The reason why corporates pursue the value of "the first" or "the best" is not only their success and survival in the market. It is also important in that the value of the corporate can give a positive impression to their staff members. A member of an organization would have pride for being evaluated positively from outside for its product first developed or a patented technology.
The pride of being with the best company increases satisfaction at work and strengthens the psychological contract. The psychological contract refers to the expectations and beliefs on mutual obligations between an employer and an employee. When satisfaction with the employer is high, the members’ loyalty is also high, and it will increase their engagement in work. Therefore, the first technology, the best performance, or the only key source of the company is significantly important. It is also important to aggressively utilize the strengths inside and outside the company. What type of "the first" or "the best" does my company pursue? And what value does it have? It would be rewarding to ask yourself this question and look at the issue objectively.
The pride of being with the best company increases satisfaction at work and strengthens the psychological contract. The psychological contract refers to the expectations and beliefs on mutual obligations between an employer and an employee. When satisfaction with the employer is high, the members’ loyalty is also high, and it will increase their engagement in work. Therefore, the first technology, the best performance, or the only key source of the company is significantly important. It is also important to aggressively utilize the strengths inside and outside the company. What type of "the first" or "the best" does my company pursue? And what value does it have? It would be rewarding to ask yourself this question and look at the issue objectively.
2021.06.01