Whether in business schools, firms or in the specialized press, innovation is a highly praised value. What if it were a myth? The road to success could also lie in the art of imitation. The examples stand before us: Apple, EasyJet, and Wal-Mart are well-known innovative companies. And yet, their success was largely built on their ability to combine both innovation and imitation.
ParisTech Review: In our world which praises innovation above everything else, you publish a book entitled Copycats, on the benefits of imitation. Doesn’t this sound as a provocation?
Oded Shenkar: I didn’t intend to be original. In fact, I open my book with a quote from Theodore Levitt, professor at Harvard, who wrote back in 1966: “Imitation is not only more abundant than innovation, but actually a more prevalent road to business growth and profits.” However, you’re right in saying we live today in a culture which constantly and universally promotes innovation, as if it were the be-all and end-all of successful business.
In fact, things are quite different and that’s what I precisely wanted to point out in my book. Seen this way, my intention indeed was to provoke a cultural clash. For companies and more generally, for global economies, it’s a major struggle to consider the world as it is and not as press magazines or business schools want it to be. I’ll consider my goal achieved when the culture of thought behind these places evolves, even slightly.
Nothing is certain, though, as long the dominant culture of thought keeps promoting innovation. In the US especially, we are constantly summoned to innovate. In the current crisis, innovation is presented as the ultimate solution to all problems. This leads to a sort of fiction, a biased image of the economic world where we only perceive what grows in one direction and neglect all the rest. And precisely, the rest really counts!
Namely, there are two categories of facts we completely neglect nowadays. The first concerns the success of followers, those who step in once the innovating pioneers have paved the way. Think of it: it was White Castle who invented the first fast food company in 1921, but it was McDonald’s who reaped the benefits. Diner’s Club launched the first credit cards; take a look at their market share today. The second category of facts concerns companies known as consummate innovators– Apple, for instance– and yet, who are also and principally, talented imitators.
In fact, the imitators’ success relies on very solid edges. Of course, they come in later. But instead, they win a free ride on research and development, as well as marketing. They also benefit from hindsight and avoid all costly teething troubles.
A good example is the pharmaceutical market. The generic drug makers only manufacture “winners” who have been FDA approved. Roughly, only one out ten drugs makes it past the approval stage. Imitation is clearly the smart strategy considering the costs and also the fragile dependence of firms to their leading products, once these enter the public domain.
Clearly, the innovator, seen as a free pioneer who hits a brand new, virgin market is over-exalted. The costs and risks of innovation are rarely recorded – not to speak of its failures. Failures show less and tend to be forgotten, whereas success is widely publicized. Our view is completely by biased by the fact we only pay attention to those innovation that have survived. And most importantly, imitation carries a stigma, which is why most imitators avoid using the word “imitation”. All in all, imitation becomes virtually invisible.
At a start, you’re an expert on China. To what did your knowledge of Asia influence your thought?
You’re right. Although the China denies imitating products when they speak to the West, imitation is far more accepted, socially speaking, in Chinese contemporary culture. It isn’t a weakness as we see it, rather a sign of intelligence.
I published several years ago a book entitled The Chinese Century where I described the factors which led to China’s rise to prominence as an economic power. At that time, the main issue was copyright infringements and counterfeit goods. Looking closer into the matter, it appeared that much of Chinese work proceeded from legal imitation. Today, China’s dramatic growth is closely tied to its consummate talent as imitator.
Don’t take me wrong, I’m not saying imitation is the key to all problems. We need to understand the specific edges of imitation without oversimplification: how it works, what capabilities it requires, as well as the specific strategies it applies to. It’s not about deciding overnight that imitation is more beneficial. We need to understand why it is beneficial, use it as intellectual tool in the academic field and as a strategic object in company management.
On this particular point, I’d like to stress that business management – and other related fields, are among the last not to take in account imitation. Anthropology and biology have admitted long ago its leading role in survival and success. And although most companies are willing to use the idea, universities and management schools don’t pay it enough attention. It’s a pity considering a thorough work should be done to describe the most efficient models.
That’s precisely what your book is about.
Yes, but it would help to dig in this field further than in one book alone: we also need debate, research; this culture of thought would benefit from a global research, stimulated by controversies and competition between peers. More generally, empirical facts need a complete and precise description: we can’t afford overlooking them. It’s a favor we return to the real actors, as a critical and intellectual response to their experience.
Without appropriate intellectual tools, without a culture guiding them, many imitation strategies are led without … a genuine strategy! Theodore Levitt already noted that imitation is often led by amateurs. Intuition and general ideas may be enough to achieve limited success, but a good method wouldn’t do any harm.
More specifically, it could help to define better strategies. I’ll take an example: nowadays, even business models have their copycats. But either we consider these models as too complex to be copied or else, we replicate them identically. Surely, a better method would consist in planning a well-thought imitation strategy which combines copying some features with innovating others.
We’re getting back to what you call in your book “imovation”, a term made of two words: imitation and innovation.
Indeed; keeping in mind the fact that this term is only a label which designates an empirical reality.
My work focused on examples of “innovating” companies who are also in fact, imitators. What do companies such as Apple, Microsoft, Visa, Walmart or McDonald’s have in common? All of them have taken over and improved ideas found by others. It’s precisely this ability to imitate and improve a model initially launched by others that made them so successful. By observing the way they work, we can describe their method as the following: first choose a model, avoid oversimplification, and adapt it to your own strategic needs… And this demands so much work, energy, talent!
In a way, my book is a call to think beyond the archaic dichotomy between imitation and innovation which, as I see it, is no longer working. Some facts show us why: quantification, for instance, conveys to knowledge its extraordinary ability to be communicated, transferred, understood … and also, replicated. Global standards, such as those set by the ISO (International Standard Organization) play a leading role. Globalization is another driver in this dramatic increase of imitation. The segmentation of the value chain leads new players to borrow features brought by their predecessors and produced by subcontractors. The innovation effort consists in smartly combining features developed by others. In my book, I analyze many examples in the field of new technologies where the segmentation of the value chain enabled newcomers to save costs that only a few years, would impede them to enter the market.
The rise of imitation was also made possible by the multiplication of alliances and partnerships which have led either to sharing technologies or else, to elaborating a common language as well as slowly formalizing parts of hidden knowledge. To protect themselves, some companies have even decided to prevent any alliances; this, however, is very difficult considering the global scale at which companies operate nowadays. In the same way, university exchanges have incremented knowledge share and have spread business models. No to mention the turnover of big companies’ employees and the development of industrial clusters.
All of these elements have weakened dramatically the leading role of “proprietary” knowledge and thus, of the innovators. Against these new threats, traditional protections such as trademarks or licenses are clearly not enough.
From my point view, the very concept of technological advance has lost all relevance. The speed of imitation has drastically increased over the years and it is now quite fast. It took a millennium for Europeans to figure out how to imitate porcelain, a Chinese invention. China had invented it as early as 618; Europe finally figured it out in 1663. From 1870 to 1939, it took about 40 years to imitate something. Now, it takes an average five years; generic drugs only take an average two months.
Very simply, “imovators” are companies that instead of trying to resist to a tendency by trenching up, have decided to play the game. Interestingly enough, the most advanced “imovating” fields are also the most fragile in the antique model. I’m thinking of the drug industry: nowadays, almost all companies produce generics; and also of the new technologies sector. In these fields, innovation still remains an essential piece although a focused use of imitation is the only strategy of survival. Someone like Steve Jobs understood this perfectly well and Apple was from its beginning a champion of imitation by recombining otherwise existing products.
That requires some talent…
Exactly! And it’s interesting to compare winners with losers. Low-cost airline companies or the computer market offer very relevant examples. Generally speaking, the losers are those haven’t been able to deconstruct the models they were imitating, instead replicated them “as is” by neglecting some secondary features.
The winners, on their side, understood the key principles of the model which they reconstructed, from the ground. Their copycatting keeps the core features but also tweaks the product in a way that differentiates from and improves over the original.
Some of the major successes were realized by adapting a product or a service to another environment. In this case, imitation reminds us of what Levitt defines as innovation: rather than absolute innovation, it’s more about a product being adapted to a particular field or market.
We can look at the problem in the following way: who, what, where, when and how to imitate? To answer these questions requires talent or at least, certain capabilities. These capabilities can be the fact of individuals (this certainly hints towards the recently discovered mirror neurons) or of companies. In the latter case, it’s more about a new management culture (accepting imitation) but also, about strategic capabilities such as referencing (choose the right target and look beyond the obvious already known models), understanding of the context (uncover the hidden features of a model), and an ability to understand complexity – in a word, what I call deep diving. It’s also about reconstructing correctly the series of cause and effect. And last but not least, the capability to integrate borrowed features in a working setup. None of these capabilities are granted. And companies who wish to succeed should learn using them.
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