BOOK REVIEW: Copycats: how smart companies use imitation strategies to gain a strategic edgeBy Oded Shenkar; Harvard Business Press; £19.99 (€24)
IMITATION MAY lack the kudos of innovation but it can be a killer business strategy. One need look no further than Ryanair’s replication of the operating model of Southwest Airlines to see how successful it can be if managed appropriately. Replicating a winning model, however, is not as simple as many think, as this book by Oded Shenkar, a professor in global business management at Ohio State University shows.
Those who manage it well, however, save hugely on R&D investment as well as the marketing costs first movers need to make – and if they observe closely, they can bypass the mistakes made by pioneers to reach their goals faster.
Examples of successful imitators abound. Nintendo was one of 75 imitators of Atari’s 1975 Pong video game but became the industry standard bearer. In the browser market, Netscape eclipsed pioneer Spry before succumbing to Microsoft’s Explorer.
Whole countries and economies are often based on imitation. Economists conclude that innovation-obsessed Americans invested all of their energy in the research portion of R&D, whereas the Japanese focused on developments which involve small incremental improvements, often using an imitated model as its base. Following the second World War, Japanese automobile manufacturers stole a march on US incumbents by copying their designs and later did the same with products ranging from industrial robots to video players.
Firms with well-established innovation records, such as Apple, IBM and General Electric, also employ imitation strategies. Firms that understand that imitation is not opposed to but rather supportive of innovation – are known as imovators. Distinctiveness, as a former Proctor and Gamble chief technology officer is quoted as saying, comes not from new elements but from the way they are put together or what the author says is the assembly, or combinative architecture.
However, imitation is not a simple process but, as Shenkar argues, is a complex, intelligent and creative endeavour that only a few master. Business scholarship has been unfair to imitation, clinging to a view that imitation is a naive pursuit that is unlikely to yield sustainable success. Nothing could be further from the truth, he says.
Moreover, imitation does not necessarily reduce risk – it just substitutes for it. Innovators risk their money in research and development for products and services that may not work but imitators also run risk, including entering markets flooded with other imitators. Imitators may also find out midway, and at great expense, that they can’t replicate the product – the ill-fated Chinese attempt to copy the Boeing 707 is a case in point.
Contextualising is important. Imitation opportunities should not be viewed as isolated atoms but as interrelated parts of the complex systems within which they are embedded and that explains their form and their outcome. Failure to consider context can be a key reason for failure and even otherwise successful imitators may miss the point. For instance, Wal-Mart did not grasp the fact that hypermarkets, an idea that was brought in from Brazil, flourished in Europe and South America because US-style supermarkets and warehouse stores were not available there.
Another key consideration is timing, where the main strategic choices are whether to be: a fast second – a rapid mover, coming in on the heels of a pioneer; a come from behind – a late entrant trailing the first imitators but using strong differentiating factors; or a pioneer – a first entrant in another time and space be it another country or a different product segment. Each strategy has its own advantages and disadvantages and requires its own set of capabilities.
The author combines a rich set of examples of both well and poorly executed imitation strategies with solid conclusions drawn from these cases.
Removing some of the stigma associated with imitation is important and approaching imitation in a strategic manner managed from the top of the organisation is seen as vital.
It is important to assess the repercussions of various imitation strategies. For instance, the acceleration of imitation embedded in a fast-second strategy, carries a considerable cost and increases the risk of failing to target market preferences that are still being formed.
As the author observes, the pace of imitation is increasing as fast as, if not faster than, the pace of innovation and firms ignore it at their peril. Ultimately, imitation is not only consistent with innovation but if it is executed correctly, it is in fact, an enabler of innovation. Shenkar has produced an accessible and well-illustrated analysis of the phenomenon of imitation that market incumbents and bold upstarts will both find fascinating.
Frank Dillon is a freelance journalist and media lecturer
