Companies & Industries

The Imitator's Edge


The Imitator's Edge

Photograph by Matt Gray/Getty Images

A recent article in the Wall Street Journal counted more than 250 books whose titles contain the word “innovation” that were published in just the preceding three months. This staggering number should come as no surprise, given the constant bombardment touting the virtues of innovation and offering recipes for it. The litany comes not only from the media but also from academic and corporate ranks, not to mention our politicians, who promise to “innovate our way” out of the current economic doldrums.

At a first glance, this all makes a lot of sense. After all, is it not obvious that coming up with innovative products, practices, and business models will lead to higher sales and faster growth—and in particular, rich margins? It is not. The empirical evidence supporting innovator and pioneer advantage is inconsistent at best; multiple studies show it to be nonexistent, if not negative. Just ask Xerox (XRX), whose research unit generated, among other things, the visual computer interface that was adopted by Apple (AAPL) and later by Microsoft (MSFT), but has not brought a dime to the original innovator.

Who are the beneficiaries? You guessed it: the imitators, the maligned and pesky group we do not like to talk about. Yet with the benefit of hindsight, imitators can capitalize on the shortcomings of early offerings and better calibrate products or services to shifting customer desires. With the innovator paving the way—making much of the research and development, as well as shouldering marketing investment—an imitator enjoys a free ride and avoids dead ends. Without having sunk investment in existing technology, imitators can leapfrog to the next technological generation. Leveraging cheaper costs, they then make competitive moves, ranging from passing cost savings to the consumer to offering superior features, better distribution, and service. Or they can channel the extra margins toward, well, innovation.

Imitators have a further, often-overlooked advantage: They tend to be less complacent about other imitators and are more likely to erect robust defenses to keep them at bay. One example is Procter & Gamble (PG), which protects its Gillette technology as an intelligence organization would. Critical information is controlled, with only a few people having the knowledge required to assemble the complete product.

While there are numerous examples of successful imitators, many fail. Take a look, for instance, at U.S. legacy airlines, all of which have stumbled in their attempts to clone Southwest Airlines (LUV). That’s precisely the point: Imitation requires skills, capabilities, and strategic planning, something many imitators fail to do. Since the message is that only those who cannot innovate imitate, imitation is done in the dark; when this is the case, it is unlikely to be done right. That’s unfortunate and we have only ourselves to blame: Business is the only field still clinging to the notion that imitation is a low level, primitive activity, whereas virtually all the sciences—from history and art to biology and the neurosciences—now view imitation as an intelligent and valuable capability.

One explanation is the stigma associated with imitation, though the same was true in the other sciences before hard evidence convinced practitioners to radically transform their perceptions. In biology, for instance, imitation, once thought as inferior and mindless, is now viewed as an expression of a higher form of intelligence. So isn’t it time to reconsider? History is a study in imitation: Species relied on it to survive and evolve, newborns depended on imitation to acquire vital capabilities, and adults leveraged it to survive in a hostile environment, prevail in the battlefield, make better machinery, or outdo rivals and protagonists. Mankind learned not to reinvent the wheel—even before there was one.

All this is not to say that innovation is not important. In fact, when I looked for companies that were consummate imitators, I realized that quite a few of them were also innovators. This was true of Wal-Mart (WMT), IBM (IBM), Apple, Procter & Gamble, Sherwin-Williams (SHW), PepsiCo (PEP), Cardinal Health (CAH), and General Electric (GE), among others. I call such companies “imovators”—that is, businesses that fuse innovation and imitation. Imovators understand that imitation is a creative pursuit that if done right, can support innovation. They have made a commitment to become, or remain, innovators while simultaneously tapping the benefits that come from imitation. They decide where to innovate and where to imitate, and they have developed strategies and routines that combine innovation and imitation in a way that cross-fertilizes both. These are the companies that will not only survive but will thrive in hard and good times.

Shenkar is the Ford Motor Company Chair in Global Business Management and Professor of Management and Human Resources at the Fisher College of Business, the Ohio State University. His book, Copycats: How Smart Companies Use Imitation to Gain a Strategic Advantage, is published by Harvard Business Press.

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Companies Mentioned

  • XRX
    (Xerox Corp)
    • $13.76 USD
    • 0.08
    • 0.58%
  • AAPL
    (Apple Inc)
    • $117.6 USD
    • -1.02
    • -0.87%
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