Copycat Innovation: A Practical Route to Profitable Innovation

Copycat innovation, the act of adapting a solution that has been used successful in another industry or profession, is a more reliable, affordable route to innovation, suggests Dr. Yew Kam Keong, Ph.D.

Are we taking the wrong route to innovation?

Innovation has been touted by practically every government, political and business leader as the magic bullet to cure all the woes of economic stagnation, governance, social issues, poverty, competitiveness and every other thing you can think of. This is well supported by the media which gives great prominence to innovation in business, entertainment, governance and social entrepreneurship. Many organizations have jumped on the bandwagon, creating countless awards to recognize, acknowledge and award innovations. While all this is well and good, as an innovation consultant, trainer and speaker, I would like to ask, “Are we taking the wrong route to innovation?”

In our relentless quest for innovation, we have forgotten or cast aside the power of imitation. This was beautifully expressed in an article in the Boston Globe entitled, “The Imitation Economy” by Drake Bennett:

“But invaluable though innovation may be our relentless focus on it may be obscuring the value of its much-maligned relative, imitation. Imitation has always had a faintly disreputable ring to it — presidents do not normally give speeches extolling the virtues of the copycat. But where innovation brings new things into the world, imitation spreads them; where innovators break the old mold, imitators perfect the new one; and while innovators can win big, imitators often win bigger. Indeed, what looks like innovation is often actually artful imitation — tech-savvy observers see Apple’s real genius not in how it creates new technologies (which it rarely does) but in how it synthesizes and packages existing ones.”

The best and most efficient route to innovation is not just imitation or copying but copycat innovation. In his much acclaimed book Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge, published by the Harvard Business Press in June 2010, Prof Oded Shenkar cited a study over a period of more than 50 years which found that 97.8% of innovation value goes to the imitators! Isn’t this a revelation as to which direction you should be going?

The copycat/imitation economy

According to Drake Bennett and many others, we are now in the imitation economy. BusinessWeek, in its Aug 26, 2002 issue, also highlighted the prevalence of the copycat economy.

In 2007, an innovation guru Oren Harari wrote a book, Break From the Pack: How to Compete in a Copycat Economy.

Steven P. Shnaars in his book, Managing Imitation Strategies – How Later Entrants Seize Market Share From Pioneers, emphasised that imitation is not only more abundant than innovation, it is actually a much more prevalent road to business growth and profits.

Accenture, the largest business consulting company in the world, published an article entitled Leading by imitation in their Outlook advising that “more and more businesses are grabbing great ideas wherever they can get them – elsewhere in their industries or beyond. But the true high performers are actively creating systemic competitive advantage by elevating their imitation game.”

The prestigious journal Harvard Business Review, in its April 2010 issue, also endorsed the view that imitation is more valuable than innovation. The finding in the article is that “imitation is underappreciated. It can be a more important growth than innovation is. Imitation is not mindless repetition; it’s an intelligent search for cause and effect.”

Examples of copycat innovation

The practice of copycat or imitation in business is not new. The U.S. initially built its economy by copying and then innovating on technologies developed in Europe during the industrial revolution. Likewise, Japan built its formidable economy after the World War II through meticulous imitation of the U.S. and European technologies and practices. Now, it’s China’s turn and the results are for all see: double-digit growth for the past 20 years and overtaking Japan as the second largest economy in the world! In fact Prof Shenkar pointed out that the economic troubles facing the U.S. currently is caused by the loss of its imitation capacity due to an overly focus on breakthrough innovations. Since the U.S. is currently the world’s big innovator and China is the big imitator, the lesson is clear: in a world where imitation is important, China is “well placed to become more competitive,” he predicts.

In the business arena, probably the best example of the copycat economy is Samsung. Samsung founder Lee Kun-hee’s formula of being the first in the market with a copycat product when there’s a new opportunity has helped turn Samsung into a top global brand over the past decade or so, boasting a market value of $143 billion, bigger than Intel and Hewlett Packard and equal to the combined value of Sony Corp, Nokia, Toshiba and Panasonic Corp. This is because being an original innovator and creating a new market requires lots of risk and takes a long time to achieve profitable results.

Because of imitation or copycatting’s negative reputation, it has been disguised under many other names such as franchising, technology licensing, benchmarking, best practice, reverse engineering and technology diffusion to make it more palatable to the public.

Development of a copycat innovation methodology

My inspiration for developing a 7-Step methodology for copycat innovation came from the enduring business guru, Peter Drucker. His concept of creative imitation, described nearly 20 years ago in his book, Innovation and Entrepreneurship, was my starting point. However, as a trainer, speaker and consultant on innovation, the term creative imitation made me feel very uneasy and uncomfortable. I thought to myself, “Why must we harness our creativity to come out with an imitation only and not an innovation?”

I decided to revise the concept of creative imitation to imitative innovation. But it sounds like quite a mouthful. Through exploring other possibilities, I finally settled on the term “copycat Innovation” and developed a 7-step process that can be used by any organization for fast-tracking innovation.

My key philosophy is that whatever problem you have, someone, somewhere in the world has already found a solution. By leveraging on the global brain, it will offer you a winning formula as your starting point to innovation. In essence, you do not start with the unknown and uncertainly that carries high risk but begin your journey of innovation on a success footing.

What is copycat innovation?

Copycat innovation is about adapting a proven solution to come out up an innovation, thereby minimizing risk and optimizing success. In short, it is about taking what works best and improving on it. It is measurable, results-driven, fast-track innovation for any organization to optimize success by minimizing risks, time and resources. Unlike the usual innovation process, it is measurable and can be monitored by using a unique Triple KPI (Key Performance Indicator) process.

Why copycat innovation?

Coming up with breakthrough ideas and innovations is indeed tempting and glamorous. Success could be market domination. However, this strategy carries the biggest risks and demands massive efforts and resources. It is an activity that is complex, costly and with very little promise of a return on investment. Work on the successor of the successful product has to start immediately, which means that the successive research budget must be increasingly higher than the original innovation. Examples of this approach are Intel, 3M and P&G.

With globalization and the advent of the internet, there is an easier, simpler and a proven new path to minimizing risk and optimizing success. Examples of “copycat innovation” approach are Apple in developing the iPod, iPhone and iPad series of products, the book series on Harry Potter (basically borrows ideas from Lord of the Rings) and the movie Paranormal Activity (which copies the production strategy of The Blair Witch Project). Paranormal Activity has surpassed The Blair Witch Project to become the most profitable movie ever made. It was made with a budget of only $15,000 and grossed about $100 million in ticket sales!

In short, copycat innovation offers the best approach any organization in sustaining and growing your competitiveness and strategic positioning in the market –place because:

  • It is measurable
  • It is ethical and respects intellectual property rights
  • It has a low risk as you are adapting or refining a proven solution
  • It is low-cost as the research and development work has already been done for you
  • It requires minimal resources as you don’t need massive efforts and resources
  • It is a fast-track route to commercialization

The 7-step process to copycat innovation

  1. Identifying the Core issue;
  2. Taking the Michelangelo approach
  3. Searching globally for successful solutions
  4. Innovating the wheel
  5. Selling the copycat innovation
  6. Implementing the copycat innovation
  7. Recognition and celebration

The 7-step process has a structured methodology and involves the following skills:

  • Being able to ask the right questions to identify the core issue – identifying the causes and not just the symptoms
  • Clear vision and mission of the final result(s) to be achieved and the use of the triple KPI
  • Knowledge of specific websites, and being able to break down your problem into key components so as to do cross-industry and cross-application searches effectively
  • The innovation process
  • Presentation skills
  • Resource identification and management

Conclusion

Do you want to be a pioneer innovator that carries great risks and get only 2.2% of your possible innovation value or be in the category copycat Innovators that could possibly reap 97.8% of the innovation value? The choice is yours.

A best-selling author and masterful storyteller, Dr YKK is an international speaker, trainer, and innovation consultant to governments, multinational corporations and SMEs. His best-selling book “You Are Creative” has been reprinted 15 times and published in 5 languages. To get a free copy of his 8-page report on “Copycat Innovation”, please email him with the title” Copycat Innovation” to [email protected].

 

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