What was the first fast food company?
What was the first credit card company?
Most people probably don’t know the correct answers are White Castle and Diners’ Club. While both companies still exist, they now have relatively small share in what has turned out to be very large markets. As I’ve previously argued, the benefits of first mover advantage are exaggerated:
While being first in category helps, it doesn’t guarantee success. Atari was the first video game, Visicalc the first desktop spreadsheet, and Mosaic the first Internet browser. None are leaders in their categories. This is not just a technology phenomenon. Gablinger was the first low-calorie beer but lost the market to Miller Lite.
In a book called Copycats, Professor Oded Shenkar takes an even more extreme position: first movers have an inherent disadvantage because they have to pave the way for something new. Being first means you have to deal with obstacles that others may not face. Shenkar claims it’s faster, less risky, and more profitable to imitate rather than innovate.
By way of example, Diners’ Club had to invest considerable time and money convincing consumers to use a plastic card instead of cash. They also had to convince merchants to accept these cards and pay a transaction fee. On the other hand, Visa and MasterCard didn’t have these obstacles.
Imitation as a source of innovation is not necessarily a new idea. As far back as 1966, noted economist Theodore Levitt wrote in HBR:
Imitation is not only more abundant than innovation, but actually a more prevalent road to business growth and profits.
Levitt used IBM (computers), Texas Instruments (transistors), Holiday Inn (motels), and RCA (television) as examples of companies that were successful based on imitation, rather than innovation.
As a Silicon Valley-based software professional, I’m not sure I can wholeheartedly embrace pure imitation as a source of innovation. I do agree the valley mindset isn’t usually to create something brand new (despite the persistent myth) but rather to improve on an existing offering (often called disruption). The improvement might be a small yet critical feature, delivering the offering in a more cost-effective way, or a change in the economics of the business model. The rest of the offering might be imitated but this improvement is the innovation that leads to success.
Shakespeare famously said there is nothing new under the sun. Certainly, imitation is more prevalent than innovation and can be a successful tactic. But imitation without differentiation isn’t sustainable. I’ll bet on innovation instead.
Thank you for the post, I enjoyed it. I think it’s part of human psychology to enjoy leading the pack rather than tailing it (imitation). Hence it’s a bitter pill to swallow that imitators are often more successful. I agree, I’ll stick to innovation.
Great thought-provoking post.
There’s a really interesting TED talk by Kirby Ferguson (see link below), where he argues that “Everything is a remix” and perhaps to copy, transform, and combine is a better basis for defining creativity. Using examples from Bob Dylan to Apple, he makes a good argument for how true innovation can stem from previous ideas, and how current patent laws can stifle legitimate innovation moving forward.
Apple has become the cliche example of the innovative company, yet at around the 7:30 mark in the video there’s a 1996 clip of Steve Jobs quoting Picaso, “Good artists copy. Great artists steal. We have always been shameless about stealing great ideas.” Really interesting to read Jobs’ 2010 comments on “destroying” Android for being a “stolen technology” a couple seconds later in the video.
I guess imitation and innovation are not mutually exclusive. But an organization with an innovation culture? Now that’s special.
Well Jobs/Apple did use what they saw at Xerox Parc to create the MacIntosh grahical interface that was such a huge leap forward for personal computing.
And Newton said “If I have seen further than others, it is by standing upon the shoulders of giants.”
Reblogged this on Saga of my first Startup and commented:
If you believe Kris Gale, she pins the imitation as innovation strategy as the source of emerging markets — like China’s — success. Their tenets:
-Build nothing from scratch
-Innovate process at small scales
-Share as much as you can
-Act responsibly in the network
We could debate whether China is truly good at the last two, but certainly these are good guidelines to fuel innovation.
Established countries and companies have a disadvantage in innovation because they suffer from the limitations of their existing practices and infrastructures. IN her words, US companies “were designed to be predictable, not adaptable.” Its more difficult for them to respond to — or even acknowledge — disruptive technologies like cloud, mobile, and social. This is probably why the Millenials are more able to create all of the new and interesting innovations — they don’t have to integrate their past into their work.
Nice article. It explains effectively the established idea’s on innovators, early adopters etc and makes for nice reading. But for me the really interesting part starts where it stops in this article.
What is the common factor that gives the winners an edge? Money? Don’t think so as many innovators never get paid and many early adopters get very rich but only life to work and so on. I am not referring to theory like “from good to great” etc but rather on how insight on how to develop skills that enable us to turn tacit knowledge into insight and a conscious strategy.
Just to reinforce, as someone who is living in an emerging market, Brazil, imitation here is a huge opportunity for success. When a market is behind, it can certainly use solutions that were developed in other places, such as USA, rather than trying to reinvent the wheel. Innovation then happens when one has to adapt the American solution to the Brazilian reality, which is a HUGE challenge on its own.
Great post. Innovation has three business components: invention, execution and adoption. Invention or first-move helps lead the market, but it is always the execution and adoption that brings long term success. Great comments too.