The Imovator and The Follower’s Advantage by ET
Posted October 9, 2011on:
Steve Jobs himself said it: it’s smart to take an existing idea and enhance it beautifully. Apple did it. So have some of the most successful brands worldwide. The same story can even apply to selling washing powders. ET on Sunday analyses brands, companies and countries that have imitated their way to innovation.
Each time he came on the stage, he promised the world something “new”, “magical” or “awesome”. Each time he delivered: the Mac, iPod, iPhone, iTunes and the iPad, products we craved to touch, own and experience, until he told us it was time for something ‘newer’. Yet, nothing that Steve Jobs (and therefore Apple) unveiled was a first. IBM gave the world the computer, Sanyo a portable MP3 player, BlackBerry invented the smartphone and Microsoft came up with the tablet. That was before Jobs prefixed them all with an ‘i’.
Apple has almost always imitated its way to the top. Starting from the days of Macintosh, when it adopted Xerox’s graphical user interface as its own. Jobs never denied the charge. In fact, he revelled in it: “It comes down to trying to expose yourself to the best things humans have done and then trying to bring those things in to what you are doing. Picasso had a saying…good artists copy, great artists steal…we have always been shameless about stealing great ideas.”
Whether Picasso said it in the same vein is debatable. But Jobs’ interpretation makes great business sense: for some fleeting moments in August, Apple’s gadgets were worth more than Exxon’s oil. Last checked, the company was valued at $350 billion.
But how can an imitator best an innovator? At home and in school, we have been taught to abhor copying. Be original – all the generations living today have been told. How can something wrong give better results than the good?
Ask companies like American Express, Walmart and McDonald’s. Diners Card was the one which came up with credit cards but threw away the first-mover advantage to American Express. McDonald’s copied White Castle and Walmart followed Korvette. We don’t remember the innovators because they didn’t turn their ideas into successes. The imitators did. How?
The Follower’s Advantage
In business, imitation gains potency from amoral quarters. “It is a lot less risky. An imitator knows that his product or service has worked in the market before. He is also equipped with the analysis of how the market received the innovation,” says Rakesh Basant, professor of industrial policy at Indian Institute of Management, Ahmedabad.
Hindsight was leveraged effectively by Hindustan Lever as it took on the craze of Nirma in the 1980s, and came up with Wheel, its own ultra-cheap washing powder. Imitation is really a short cut. Instead of doing the hard work and spending money for years on research and development, just take what others create – and, if you are smart, improve on what exists. So, obviously, illegal rip-off artists don’t figure here. But some really big economies do.
The story of Japan, Korea and China: their companies exploited cheap labour to reassemble and remake products at a fraction of European and US prices.Samsung tore apart microwaves imported from Japan and the US. Hyundai showed down giants like Ford and Mitsubishi by using their expertise shared through alliances. In China, copying can range from specific products to entire stores, including that of, well, Apple.
Betting on Low Costs
The story is the same in this part of the world. Spencer’s Retail brought the department store to India. But Big Bazaar made it big. Zee Networks thought up the Indian Cricket League (ICL) on the lines of European football clubs. However, the Board of Control of Cricket in India (BCCI) stole the thunder. Karsanbhai Patel saw the opportunity in low-cost detergents. But Wheel bulldozed Nirma to capture 21% of the current market pie (about Rs 12,000 crore).
Indian imitators also have a choke hold on the domestic market due to price advantage. Pharmaceutical companies Ranbaxy, Cadilla and Cipla, chiefly in the business of generics, have forced global giants like Glaxo, Pfizer and Merck to slash prices to stay in the reckoning. Some foreign companies have given up the fight. This is why Lipitor, the world’s largest-selling drug, is not available in India. Tens of desi versions come at a fraction of Lipitor’s price. Viagra, the iconic blue pill, had the same fate. Mankind Pharma’s Manforce, sold at a much lower price, has captured half the market.
These companies have also leveraged competitive pricing overseas. For instance, Cipla’s HIV cocktail, much in demand in African countries, comes at almost one-twentieth the cost of its innovator peers.
Innovate on What You Borrow
It is ironic that even though innovation is worshipped today, the environment is most conducive to imitation. Technology has brought people extremely close. They share ideas, information and even have similar sets of needs. So there is ample scope for multiple companies to make it big by copying one another.
But how long can imitators ride on low prices and faster turnaround time? Indefinitely, thinks Oded Shenkar, author of Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge. “The rationale behind imitation is that you don’t have to reinvent the wheel. The company may not build on it further. It can thrive by simply importing the innovation into a new market,” he says.
Other experts believe cookie-cutter imitators have a short shelf life. They must add value to the innovation for surviving in the long run. Raveendra Chittoor, professor of competitive strategy at the Indian School of Business, Hyderabad, cites Biocon and Glenmark as examples. “These companies are evolving into innovators because it is essential for growth. There is no evidence of this transition now. But that is because new molecules are in different stages of development.”
A quick check on the world’s sma-rtest imitators corroborates Chittoor’s view. Apple added an internal hard drive and a classy build to outdo the original MP3 player. Google integrated Microsoft Office functions and unlimited space into Gmail to distinguish it from others. Similarly, all successful imitations have an element of innovation built into them. Be it Big Bazaar expanding Spencer’s Retail’s product portfolio. Or Wheel adding new variants to the low-end detergent. Academics have a new term for such innovation+imitation: imovation.
Still a Dirty Word
If imitation is so successful, why don’t its followers come out of the closet? Is it a secret strategy restricted to executive suites? “No, it is a dirty word. The stigma attached to the concept blots it out of conversations. Avid imitators won’t admit to it and B-schools won’t teach it,” explains Shenkar.
That’s understandable. We aren’t willing to credit imitators with any success either. But if you lay any worth by philosophers, it is surprising how most of them weren’t shy of giving imitation due credit. Be it Charles Darwin when he explained evolution or Aristotle when he included it in the list of ingredients that make a great story.
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