Perhaps it is professional burnout, but lately I’ve been getting extremely tired of all the stupid things people say about innovation. Especially stupid positive things. A great deal of the stupidity in the conversation about innovation is driven by the desperate urge to be original for the sake of being original. There is a pervasive, unexamined assumption that originality is always a good thing. Copycats, by Oded Shenkar is a delightful little book that takes on a project that I strongly support: taking down the holy cow of innovation and extolling the virtues of imitation. Ironically, it is one of the most original business books I’ve read in the last few years. It even manages to say something new about the business case everybody loves to hate: Southwest Airlines.
Imitation vs. Innovation
To understand the soul of the argument, think of comedians who do great impersonations. Andy Kaufmann, (played by Jim Carrey in Man on the Moon) had a famous shtick, where he’d get on stage, pretending to be a thickly-accented foreigner, and do absolutely awful imitations of American celebrities. Just as the audience was ready to slip from bewildered “what the hell is this?” reactions to laughing at how terrible he was, he’d change character in an instant and do a pitch-perfect Elvis impersonation. Then he’d slip back into the foreigner voice. It’s worth watching Man on the Moon for that scene alone. And to add to the artistry, that movie has a comic genius of our time, Carrey, imitating one from the previous generation, doing an act based on imitations.
At the other end of the spectrum, innovation priests often slavishly worship the innovative culture of ancient Greece and turn up their noses at Rome: “the only new thing they invented was concrete; everything else they took from Greece and other conquered lands” True, but which civilization was mostly stuck on a small archipelago, with one failed attempt at world conquest, and which one ruled large parts of 3 continents for several hundred years? Which civilization still has enduring impact today (down to the script — Latin — used in this post, which the Romans copied and adapted from the Phoenicians)?
This is the central point of the book, and all of Chapter 2 (“The Science and Art of Imitation”) is devoted to it: the ability to imitate really well is an uncommon talent. The brains of social animals have highly evolved imitation capabilities, such as mirror neurons, for that purpose. Even less complex organisms use imitation in very complex ways. At an individual social level, most good things spread by imitation (bad things too, unfortunately). At a civilizational level, Rome had very sophisticated philosophies of imitation.
In business, the benefits of imitation are obvious. Somebody else comes up with an idea, pays the capital costs, goes through the painful process of discovering a market and working out operating processes. Then boom, you come in and steal the playbook and build a much bigger, and better business than the original innovator. The original innovator is probably married to its idea, while you can benefit from 20/20 hindsight, unclouded by emotional bonds.
To be clear, Shenkar is talking about sophisticated high-level, skilled imitation, not the low-level illegal stuff (and to be honest, I see value in that as well. I am not a huge fan of overly strong IP laws — give an innovator a small, context-dependent head start, and then open up the game, is my position).
The First New Insight into Southwest in a Decade
Ever since Southwest Airlines became the darling of business case study writers, the example has been worked to death. I now have a “Southwest rule”: if a business book prominently features Southwest Airlines as an example, I don’t read it (an example of failed imitation in business book writing). I almost didn’t read Copycats for this reason, but then I realized there was something fresh going on.
We’ve all heard the stories of bigger hub-and-spoke carriers trying, with varied degrees of success to copy Southwest, and mostly failing. As far as I know, this is the first systematic treatment of the diffusion of the Southwest model, based on a systematic theory of imitation and adaptation. By teasing apart the behaviors of the successful imitators, Shenkar manages to shed new light on both the original Southwest model, and the processes and deep intelligence required for successful imitation.
The book is full of such refurbished examples.
The seven chapters in the book range economically over some fertile and little-explored territory. Chapter 1 sets the stage by examining several examples of failed and successful imitation. Chapter 2 starts with theories of imitation from biology and evolutionary theory, and moves on to propose that business scholarship has lagged behind in truly understanding imitation.
Chapter 3 examines the economy-wide dynamics of imitation. One interesting tidbit is that it often takes just one employee from an innovator to bring over the entire DNA of an innovation to an imitator. All the original pioneers of the laser industry were found to contain employees of the original labs. On the other extreme, sometimes innovators themselves know so little about how they do what they do, the only way to imitate even within a company is to copy blindly and wholesale (as the semiconductor industry does, with fabs). Another interesting tidbit is about “imitation clusters” which, unlike “innovation clusters” do not form around famous universities. They form around industrial zones containing trade schools. Examples are Shenzhen for cellphones and Donggaocun for string instruments.
Chapter 4 examines actual imitation processes in the example cases. As you might have suspected, successful imitators are true imitators. They don’t just copy superficial elements. They unravel the cause-effect patterns in the original (often more insightfully than the original) and rebuild. Failed copycats usually fail by trying to have their cake and eating it too, maintaining old systems alongside new ones. This causes failure for reasons ranging from brand inelasticity to contradictory cost structures.
Chapter 5 is relatively weak. It proposes imitation capabilities and processes (such chapters are always weak in business books for some reason, so it is no great sin). It covers the usual systems, processes and culture/value aspects, and includes chestnuts like “Be Humble.” But the overall point is an effective one. You need to go well beyond neutralizing “Not Invented Here” thinking and actually build a proactive attitude towards stealing the best ideas, wherever you find them. This also goes well beyond the Open Innovation model, because it suggests that it is smart and morally legitimate to not invest in innovation at all, but simply prey on the poor, dumb innovators who don’t understand how to exploit what they’ve found. Like taking candy from babies.
Chapter 6, “Imitation Strategies” is much better, and offers a menu of high-level approaches to imitation. It has many thoughtful points about risk management, costs and approaches (for example, careful discussions of “pioneer importer,” “fast-second” and “come from behind”).
Chapter 7, “The Innovation Challenge” ties the whole thing together and offers final high-level insights, including some rather clever and non-obvious points about overcoming some of the basic defenses of the imitatees. One I found particularly fascinating was the discussion of overcoming “signaling,” a deterrence tactic used by innovators, to puff themselves up as being more unassailable than they really are.
Paint by Numbers
Throughout, the book contains a healthy sprinkling of revealing statistics. Here are some I liked:
- The costs of imitation are 60-75% the costs of innovation
- Imitation took nearly a hundred years during the 19th century. Between 1877-1930, the average “time to imitation” of a new product/service dropped to 23.1 years. This dropped to 9.6 years between 1930-1939, and less than 4.9 years after 1940. In the 1950s it was 2 years. Now it seems to be 12-18 months. From 100 years down to 12-18 months. That’s some massive acceleration of diffusion (random factoid: the Mughal emperor Jahangir (1569-1627) had not heard of the discovery of America more than 100 years after Columbus; partly explains why India lagged so far behind the West for nearly a millennium).
- Pioneers who create new markets generally end up with around 7% of the markets they create. The copycats get the rest.
These points suggest a whole new perspective from which to examine patent and copyright laws. Just because someone was first with an idea doesn’t mean they should be allowed to hold it hostage for arbitrary amounts of time, especially if they are terrible at execution. I think copyright and patent protection time windows should be turned into floating variables, and tuned by governments, just like interest rates. Lower protection when innovations need to diffuse faster. Increase protection when temporary monopoly incentives are too weak to foster innovation. It’s like that cliched scene in action movies when local cops in some podunk little town discover something really valuable, and the FBI march in and say, “we are in charge now.” Sometimes that’s a good thing. Remember, the costs of imitation are not zero. They are 60-75% the cost of innovation. Imitators are adding their own value and creating a market an order of magnitude bigger than most innovators could, left to themselves.
A New Holy Cow
I think we have an innovation bubble going on (I am planning a big post on that). It has become a religion among businesses, and even in tough times, everybody seems to think they need to keep up at least a pretense of doing new things.
I say we should stop. Innovation is important, but only up to a point. Beyond that, the returns to companies, and the economy as a whole, diminish rapidly. Imitation is what typically scales and delivers innovations for the greater good. I’d say many companies would be better off dropping innovation as a strategic priority, and setting up an “Imitation Department” instead, and appointing a “Chief Imitation Officer” (or what would be more delicious, “Chief Thief.” I’d like to be Chief Thief one day).
And I can proudly declare that in this case, I practice what I preach. Wherever possible, I avoid reinventing the wheel. Every good, unprotected idea that I can legally and morally steal and repurpose for my own work, I grab.
For those of you who are offended by the apparent unfairness of this, ask yourself: just how much credit do the on-paper “innovators” actually deserve? New ideas are the result of chemistry among existing ones. Innovation itself is a social process that depends on sharing at a certain rate. Your head is just the accidental crucible. B. F. Skinner once gave an extraordinary, sardonic talk (here’s the MP3, listen to it) about the pretensions of “creative” people. Using an analogy to giving birth, and the idea that your head is merely the accidental womb where stuff from elsewhere reacts, he puts “innovation” in its rightful place. And it isn’t on a pedestal.