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Business Strategy: Innovation Versus Imitation

  Apr 30, 2021
 

The pioneers and innovators of our generation help to shape the world we live in and their efforts are lauded by modern society. Over the centuries, creative thinkers were ridiculed and scorned for straying from conventional norms and branded as outlandish and even downright dangerous. However, in today’s business world, innovative companies are capitalizing on that ‘first mover advantage’ by introducing exciting new products and services. Technology gurus and business titans are closely followed on social media and have become celebrities in their own right. Unfortunately, most business pioneers find themselves being imitated rapidly by their competitors while they bear the brunt of research and development costs. Although imitation is a stigmatized phenomenon, there are many companies that use that strategy. In order to survive in this technologically competitive world, leaders are faced with the dilemma of adopting pioneering or imitation strategies. As global competition increases the pressure to gain and retain market share is growing.

As the pandemic accelerates the rate of global adoption of technology, some industries are finding that more global competitors are entering their arenas and competition is becoming even more fierce. Zoom used to be a brand that most technology enthusiasts were familiar with. However, following the pandemic, Zoom has become a verb much like Google and Uber. Installations of Zoom have skyrocketed globally since 2020 as demand increased. Companies like this continue to fine-tune their services and user experiences constantly. Customer centricity is a key component of their strategy. Their focus is on how technological innovations can solve problems for a variety of users. In order to retain market dominance, companies like Zoom cannot afford complacency. By ensuring that the customer experience remains at the heart of their creative efforts, innovative companies will not only reap the benefits of early adoption driven by demand but retain their market share as imitators emerge on the horizon.

Although there are only a few innovators such as Google or Oracle in some industries, there are thousands of companies that can generate huge gains from using innovations from pioneers. Imitators must avoid the theft of intellectual property and maintain good business ethics. However, in the spirit of ‘not reinventing the wheel,’ and capitalizing on trends, imitations are prevalent in the automotive, textile, cosmetics and fashion industry as well as service-based industries such as banking, hospitality, and tourism among others. Baradello and Salazarro (2012) outlined two forms of imitation; duplicative and creative imitation. Duplicative imitation, as the name suggests, refers to the production of identical goods to those of a competitor. On the other hand, creative imitation makes improvements to the previous versions of the product or adapts it for novel use. Milan et al. (2014) suggest that creative imitation can be a smart quest for improving the functional and other characteristics of products or services rather than simply copying.

Imitation may be considered the cheaper option for companies that cannot afford to invest in expensive research and development initiatives. Oded Shenkar suggests that although innovation is a highly praised value, sometimes the road to success could entail the art of imitation. In his book, ‘Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge,’ he says that typically the better returns go to business people often derided as copycats. Shenkar suggests that companies should become ‘Imovators,’ and rather than just imitating pioneers they should combine creativity and imitation to derive their own competitive advantage. The digital music service Spotify was not the first digital music service, Instagram was not the first image community and iPod was not the first music player. By refining and evolving existing solutions in the market, imitators can themselves derive profitable innovations.

When parity is achieved by competitors in an industry, the company that has figured out a better way to deliver value even by introducing small adjustments to the product and consumer experience, will delight customers and increase their market share. The intangible elements of brands must be considered beyond a product or service’s functional benefits. Powerful brands evoke emotional experiences for their users. Brand values that resonate with consumers will make them less likely to jump ship to a cheaper competitor if they identify with a brand and use the brand to express their own identity.

In conclusion, imitators should develop capabilities to learn more from benchmarking and imitate in a more innovative way. It may be difficult for small and medium-sized businesses to pioneer given the capital required, however, local market demands may be different. By adopting a customer-centric approach and tailoring products and services to the unique requirements of customers or adapting products and services for novel uses, smaller companies can still thrive. However, duplicative imitation is not healthy for any brand and patent rights must be respected. Maintaining ethical business practices are important for the long-term survival and reputation of every brand.

Pioneers must accept that other companies are bound to imitate them if they are profitable. Seek legal protection of your ideas by all means but products are always replaceable. Build brand loyalty, consumer trust, and offer superior customer service. By avoiding complacency and realizing that delighting customers is the key to success, pioneers can still maintain their competitive advantage.

 

References:

1) Shenkar O. (2010). Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge, Harvard Business Press.

2) Baradello, C.S. and Salazzaro, A. (2012). The Role of Imitation in Global High Technology Product Development, Symphonya Emerging Issues in Management, 1, pp. 57-71.

3) Milan, R., Iryna, S., Karl, S. (2014). Creative imitation- Risk or Opportunity? International Journal of Economics and Law, 10, pp. 103-108.

 

Article by Shailja Sharma, Executive Fellow, and Coach

 

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