Forget Innovation. Just Copy.

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Before you mistake this article for an invitation to plagiarize or steal intellectual property, let me clarify: I am specifically referring to copying in terms of imitation. And imitation, aside from being one of the best forms of flattery, is also an effective business strategy.

Consider the following facts:

  • Google was not the first search engine
  • Henry Ford did not invent the automobile
  • Al Gore did not invent the internet

OK, the last one was uncalled for.

Who actually invented the search engine or the automobile isn’t the most relevant point. What is most relevant is that, as followers of technology, those inventors took something they saw that had immense potential and added their own twist to it. Google found a way to monetize search that others hadn’t thought of before, and Henry Ford applied the principles of assembly line manufacturing to automobiles, thereby creating a mass market for cars.

In his book Copycats, author Oded Shenkar makes a compelling case for considering imitation as a creative and viable way to build successful businesses by discussing scores of such examples. He points out  that the business world is caught up in a frenzy of “innovation” and huge amounts of resources are being committed to the pursuit of “innovation” under the notion that teams can come up with something new and different; something that will provide companies with a killer new edge in the marketplace.

But, the business of innovation is more mundane than that.  While truly original ideas pop up all the time, the vast majority of effective innovations are simply incremental improvements on existing products and offerings. So why the fuss and rhetoric around innovation?

Entrepreneurs and other smart business people are constantly looking to create value for customers in ways that are better and cheaper. Apple found a way to deliver music digitally and cheaply on pocket-sized devices; the iPod has since been hailed as a hugely innovative product. However, digitizing music wasn’t new – it existed way before Apple combined hardware and software to deliver it, and gave it a twist by selling one song at a time for a buck a piece instead of locking the consumer into the full-length format of the CD album. Before the iPod, there was the Sony Walkman in the eighties (if you’re too young to know, ask your parents how they listened to their music when they were young). Apple took everything that went before it – personalization, miniaturization, digitization- and combined it in a novel way, added its own twist, and created a market for the iPod.

Not every entrepreneur has the same resources as a company like Apple, so you may be thinking: how does this example help a bootstrapped start-up? My point here is simply this: you don’t need to be the highly original  inventor of some cool new gizmo. You can build a business by creatively combining the various elements of a customer experience. If you look around you, that’s probably what most successful start-ups are doing anyway. They are creating new customer experiences from the familiar, tried, and trusted technologies and marketing approaches to build their businesses.

The really smart ones do it in ways that go beyond the obvious, and here is where the element of genius (or serendipity, if you will) comes into play. I attended a recent Technori Pitch and the keynote Nick Kokonas, a restaurateur with an options trading background, found a unique way to solve the problem of overbooking in restaurants during peak hours. His solution was to take a basic principle in trading (i.e. creating a single, unique match between a buyer and a seller for a security), and apply it to restaurant reservations. In other words, if there were 20 tables in the restaurant, there could only be 20 reservations at 7 PM on Saturday – the system wouldn’t allow any additional reservations. The result?  Patrons know that if they walk in at 7.00 pm, their table would be ready and waiting. I would certainly pay an extra 10 bucks for a top-notch meal just to be assured of a no-wait experience. Wouldn’t you?

I would argue Nick simply copied a basic principle in options trading and applied it in an unheard of context – namely, restaurant reservations.  Think of an application for this very same principle somewhere else- perhaps doctor’s office appointments? If you know anyone working on this, let me know. I would be very interested in meeting them.

Now I am not suggesting that you have to necessarily be the only one or even the first one to successfully apply imitation principles to developing your offering. In fact, being the first can be a huge disadvantage. Pioneers carry the burden of trying to creatw the market for something new and unique that consumers usually need time to adjust to.  Imitators simply ride the wave and in many cases can still walk away with a great prize.  It look a long time for personal computers to take off, but when they did, Dell applied just-in-time supply chain principles and a telephone sales force to lower prices and grab a huge share of the market.

I worked briefly as an advisor to a medical technology company that came up with a very cool product- one that simulates surgical procedures that can significantly enhance the capabilities of surgeons in residency. The company was years ahead of its time, and had difficulty acquiring customers. A small customer base means a high product cost, which in turn usually means fewer sales– a vicious cycle. Is your business operating unnecessarily in the pioneer-sphere?

Selling books over the web was a brilliant idea (in retrospect, of course).  Extending the concept to selling the books in electronic form on e-readers was even more brilliant. These same principles are being applied by an innovative start-up in Chicago, Scholastica, that is trying to do the same thing for the journal publishing industry that American higher education institutions rely heavily on. If Scholastica succeeds, it may effectively destroy the academic journal publishing industry, much the same way Amazon is killing off bookstores. Creative destruction can be gut-wrenching for society, but can it be good business as well.

I recommend reading Prof Oded Shenkar’s book, Copycats, and studying the stories of successful businesses that were built on other people’s original ideas.  Remember: those who forget history are condemned to repeat it.

Photography: Flickr – mrsdkrebs

2 Comments

  1. Paddy – I have read many of your articles and appreciate you taking to time to share them with the community. In addition to Prof Shenkar’s book, I would also recommend Strategic Intuition by Prof Bill Duggan at Columbia. Great read, and supports your thesis about incremental innovations through recombination of successes to overcome issues / meet a market demand.

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