Visicalc did that years ago when it came out with the first electronic spreadsheet. While some firms attempt to create and lead new categories, others spend money trying to leapfrog existing leaders. That's the way Excel came and ate Lotus' lunch in the early 1990s. And that's how Nintendo, Sega and Sony have been competing for the last few years. Just recently, it looked like Sega's Dreamcast might put Sega back in the game console lead.
Firms take large risks by investing to win tremendous payoffs.
The larger the potential payoff from winning a race, the more firms are attracted to that race, and the more vicious is the competition to land up on top. Many of these races have only one winner. Firms altogether invest too much in trying to win a prize that is rarely shared among runners-up. It is challenging for investors to identify the winners in these races. Unlike a tennis tournament, where all participants are seeded according to their individual likelihood of winning, participants of third industrial revolution races can be in the heat of battle, yet have no idea of their future competition.