Chaim Pikarksi, CEO of ZINK Holdings and C&A Global

Today’s headlines are littered with details of billion-dollar mergers and acquisitions (M&A). For some companies, M&A is a primary source of growth. For others, it’s a means of taking out the competition.

In many instances, larger corporations will buyout smaller, struggling groups to acquire innovations at a bargain-basement price. For the attentive entrepreneur building their business, the opportunity to innovate can present itself in the form of another’s distressed assets.

You’ve heard the saying, “hindsight is 20/20.” In business, second-mover advantage is akin to operating with the benefit of hindsight – at somebody else’s expense. Finding a better use for, or application of existing technology can have a shaping influence on a company’s ability to reach the proverbial “next level.”

Venkatesh Shankar and Gregory Carpenter, in Kellogg Insight, shed light on second-mover advantage. They note how in one study, pioneers were more successful than late movers in just 15 of 50 product categories. Late movers, they write, have a competitive advantage, too, when the cost of imitating a product is low. For example, imitation costs in the chemical, ethical drug, electronics and machinery industries are about two-thirds the product development costs that pioneers incur.

“By waiting and entering later,” Carpenter explains, [a company], “can cash in on the pioneer’s efforts in creating the market, and outmuscle them”—a strategy that Microsoft, for example, has used to great success in the computer software market. While the pioneer pays a steep price in creating the product category, the later entrant can learn from the experience of the pioneer, enjoying lower costs and making fewer mistakes as a result.”

Nothing happens in a vacuum. Keep your eyes and mind open.

Opportunities usually present themselves to insiders who have a finger on the pulse of their industry. Awareness, when free from pre-conceived judgement, allows business owners to identify areas in which specific bottlenecks to core process could be improved, or where synergies from the addition of another company’s technology could solve a problem.

Companies in a distressed state, such as bankruptcy proceedings or insolvency, are most often looking for a way out. Desperation breeds opportunity; their assets can be purchased for bottom dollar.

If you have an open mind and pay close attention to the comings and goings of organizations in your space, opportunities will organically present themselves. Companies leading the digital transformation have innovated so dramatically since their respective launches, that they would be otherwise unrecognizable if not for brand recognition.

Netflix, for example, started out by mailing DVDs to people who either didn’t want to own videos or were tired of leaving their house to go to Blockbuster. Its big innovation: utilizing the U.S. Postal Service. Today, Netflix is an award-winning studio that produces some of the most popular “TV” programs and multimedia content. The success of its streaming services stems from developing an online means of content delivery; executives identified a legal alternative to the Napster model, foresaw the continuing ubiquity of accessible broadband, and the rest is history. By closely monitoring consumer motivations and aligning behavior with advancements in technology, Netflix’s leadership team expanded the scope of their company’s offerings and capitalized on the ubiquity of broadband and online video consumption.

Amazon started out as a used bookstore, a far cry from its current role as the world’s e-commerce overlord. And unless I’m missing something about cloud computing and services, it’s safe to say Amazon’s billion-dollar cloud infrastructure services business has little or nothing to do with selling books online.

Netflix and Amazon present two of the highest-profile success stories of our generation; each exemplifies the dividends of open-minded thinking in growing a business.

In 2015, C&A Global was, among other things, the largest Polaroid licensee. ZINK Imaging, a Polaroid spinoff that invented ZINK Zero Ink®, an inkless digital printing system used in Polaroid instant cameras and printers, was in distress. For C&A, ZINK’s demise would hinder its ability to sell Polaroid devices and weaken its bottom line. To prevent this scenario from becoming reality, C&A’s founders created a sister company, ZINK Holdings, through which they purchased ZINK assets. Not only did this acquisition help maintain the momentum of Polaroid’s resurgence, it also showed the reward of taking a calculated risk.

The executives’ confidence that demand for instant-print cameras, mobile digital photo and label printing would continue to grow is why today, ZINK forecasts shipping 40 million packs of printing paper this year. Their gamble paid off, as ZINK Zero Ink now powers instant cameras and mobile printers for HP, Kodak, LG, PRYNT, Canon and of course, Polaroid.

In part 2 of this article, to be published tomorrow, we will explore how second-movers can Identify when a failing business venture merits investment. Be sure to check back tomorrow!

Chaim Pikarski is CEO of ZINK® Holdings, LLC, the inventor of ZINK Zero Ink® printing technology, and the manufacturer of the award-winning ZINK Paper®, the first fundamentally disruptive printing technology in nearly 30 years. ZINK®, which stands for Zero Ink®, is a full-color printing system that eliminates the need for ink cartridges or ribbons; all the color required for printing an image or text is embedded in the ZINK Paper® itself. Pikarski is also Co-Founder and CEO of C&A Global, an online retailer headquartered in Edison, New Jersey, with offices in London, China, and other locations around the world. As one of Amazon’s largest retailers, the company offers one of the industry’s most extensive and diverse inventories of products, ranging from innovative electronics, to intelligent housewares to fun gadgets. C+A Global is also the exclusive licensee for Polaroid instant digital cameras and action video cameras, IP home security cameras, and camera accessories.