Down with Innovation, Up with Imitation!

by Venkat on August 3, 2010

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 Book

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.

Canute August 4, 2010 at 6:55 am

Sometimes imitation is the way to go simply because the principles of the discipline haven’t changed. I co-teach a course in solar design with one of the veteran architects in the business. He does a presentation on his own work of the past 40 years. He always prefaces his own work with examples of solar architecture such as prehistoric Anasazi cliff dwellings, 18th century New England farmhouses, and 19th century factory buildings. Our ancestors had to take advantage of the sun because they didn’t have cheap fossil energy. We are moving back towards expensive fossil fuels and the sun is still following its old habits. Some principles never go bad.

On another front, there is the example of a company called Celanese. Robert X. Cringely wrote about them in an essay on death by professional management. (http://www.pbs.org/cringely/pulpit/2002/pulpit_20021024_000750.html) Mostly what Celanese did was figure out better ways to do existing chemical processes. One of their researchers came up with an improvement on making ibuprofen, which is now the dominant method in the industry. Innovation of a sort, but copycat innovation. It’s a good living.

At a company I worked at we talked about “leading edge” technology vs. “bleeding edge” technology. We stayed a step back from the bleeding edge and let others burn money and bang their shins.

Robert August 4, 2010 at 7:54 pm

I’m not sure we really “know” how to innovate, anyway. I say this because, as linear thinkers, institutional innovators seem to be trying to create a new solution linearly, as opposed to heuristically (tinkering). An example of real innovation is this vertical axis windmill design, developed by an “amateur”: http://www.thestarphoenix.com/technology/Canadian+spin+windmill+design+touted+green+energy+breakthrough/3346937/story.html

I also feel that IP law is too stringent. I remain unconvinced that developed nations should try to enforce IP protection within developing nations. I feel that knowledge should be free (as much as possible) because, as you stated so well, “New ideas are the result of chemistry among existing ones.” It means some individuals will amass smaller fortunes, but we will all benefit to a greater degree.

Paul Rodriguez August 4, 2010 at 8:32 pm

The Latin script derives from the Etruscans, who took it from the Greeks. (You can tell: it has vowels, which are a Greek invention.) The Hellenistic empires, in aggregate, also ruled parts of three continents for several hundred years. I am a great admirer of Roman civilization, but the success of Rome is inconceivable without its apprenticeship to Greece. Still, Rome is a good example: it took the promiscuous imitativeness Romans to open the closed circle of Greek culture.

Kay August 4, 2010 at 9:55 pm

Not sure Google would agree with you but at least in business terms we see where some of the most hyped innovations are going quickly – which is too bad if only because I loved your trialogue about Wave.

SMc August 5, 2010 at 1:52 pm

Written with a business focus… but slide on the scientific lenses and you get “I stand on the shoulders of giants”.

Thomas Lindgren August 7, 2010 at 2:43 am

I’d add that much of the productive work in science or technology has been in the “precompetitive” phase, also a time where there is a lot of imitation to check proposed solutions, converge on best practice, etc., all without having to lock horns too seriously. Not to mention that imitation with a dollop of commentary works as a discreet way of getting up to speed in an exciting new field.

Your thesis makes some sense — perhaps a lot of sense — yet makes me uneasy, properties which I tend to find very interesting.

Brutus August 9, 2010 at 8:23 am

I am unconvinced that innovation and imitation are the discrete categories your post suggests. Another commentator has already noted that improvement falls somewhere in the middle, and I suspect that that is in fact where a lot of the action is. True game-changing innovation occurs only periodically. Incremental improvement occurs all the time.

Intellectual property laws are certainly behind the times (especially copyright), and they certainly act as a brake on the efficiency of business cycles, but it’s too simplistic to characterize IP law as holding ideas hostage for arbitrary periods of time. In addition, copyright law in particular has yielded to political influences that betray the law’s essential function: to allow innovators and creators to derive financial benefits from their efforts without imitators swooping in and cutting into their markets. So it’s a little unfair to blame the law when, on one hand, there are so many flagrant infringers, and on the other hand, a few influential lobbies muck things up.

There are obvious tensions between openness, efficiency, and market protections. Our current mood is to sweep away our legacies with the cheap, efficient, digital processes of the computer era. The tradeoff is that many industries have been destabilized and are teetering on the verge of collapse. A similar argument can be made about the general culture. Rapid change,. whether innovation or improvement, has too many nasty and unpredictable effects to embrace uncritically.

ionavideo August 11, 2010 at 11:21 am

I really liked the concept of imitation as good and better than innovation, but I think I agree with Brutus that improvement is where the action is. I think perhaps the post is lumping improvement in with imitation, and that’s not quite right.

I think of imitation as reverse engineering for”engineered” commodities, and imitation as “knockoff” for things like clothing and accessories.

So you can get that Rolex in China for $50, or you can pick up the Gucci bag in Taipei for $10, and that is imitation but that’s not improvement.

And this is an old chestnut but the classic samurai masters of imitation as reverse engineering are the Japanese. Their cultural similarities and appreciation of the Germans, not to mention their Axis alliance, led to them reverse engineering German camera optics and, I suspect, cars. Hmm. Where did that lead? In their post-WWII beginnings Japan’s reverse-engineered manufacturing was synonymous with “cheap” (at least in America). But after about 20 years, the Improvement phase kicked in and they took over the world, at least in terms of consumer items such as cars and cameras.

Of course one can argue that improvement is implicit in imitation, but I’m just saying that it ain’t necessarily so, all the time, and it’s the Improvement that is key to success.

Chris August 24, 2010 at 5:33 am

Great article! I appreciate the amount of time and effort put into it, as well as the candor. I’m not too short on it these days. That said, if a company innovates for innovation’s sake, the imitators will eat their lunch. Also, if the innovators haven’t created a plan to imitate themselves and eat their own lunch, they have just wasted a lot of time and money.

Innovation is an awesome competitive tool in a company that plans and is aggressive from a competitive standpoint. If launched right, there is a window of opportunity an innovator has before a competitor can knock off their new stuff. Knowing this, the innovator should plan a pre-emptive strike with the next thing around the same time as the expected imitation. What? Yes, you guessed it. They need an actual roadmap that includes new products, enhancements and cost reductions. I know that it seems too much like work; however, if they don’t, they become one-hit-wonders….and I’m not going THERE!

ziweb September 10, 2010 at 5:47 am

Imitation works in some industries but not in all. It worked for Schick for many years, but its not going to work on the web. The web is winner takes all. Reddit gets a lot of traffic and their platform is open source. Anyone could start another Reddit, but even if you do, your not going to get much traffic. The drive for innovation might come from the winner take all competition on the web.

Josh W October 4, 2010 at 8:37 pm

Or conversely, perhaps the winner takes all element makes copying better? The archetypal example of this being zynga:

http://www.sfweekly.com/2010-09-08/news/farmvillains/?repost

Do what they do with better marketing and outgrow them, and it doesn’t matter they did it first.

Personally I consider investing in effective innovation a social good, which (in the absence of strong patents/IP protection) puts you at a competitive disadvantage unless your time put into developing an idea gives you a sufficient advantage in taking advantage of it, which is not at all guaranteed to be the case. I’m not sure that innovation is something that just happens to happen, a random gift of your positioning in a social and information web, instead I think it requires a strategic choice to work experimentation into your use of resources, including time, and test things out.

As I see it , successful innovators are doing a service to all their imitators, and I’d be happy to see them rewarded for it, even as other people get to use their ideas. On the other hand some forms of innovation are easier than others, and some are mostly about being in the right place at the right time.

My ideal situation would be where people happily rip off the person who had the idea first, but the originator of the idea gain rewards both on the basis of the effectiveness of their research and the relative disadvantage compared to their competitors they have by doing that research (ie the winner of a research race for a straightforward patent would get less). Unfortunately I know of no system to achieve this.

Trivial solutions are something along the lines of patents having a default royalty rate, based on the number of similar patents applied for within the same time frame, (more means lower). One problem with this system is that it doesn’t distinguish effort invested, as a fast group investing very little effort can beat out others by observing a need faster, and there are others.

I totally agree that people need to translate ideas from other businesses to themselves, and I’d say that sometimes “innovation” is about a particularly long ranged form of imitation; recognising structural similarities across very different fields, and importing a solution in such a way as to account for all the differences. I’d say we need imitation, for reasons that seem to me to be so obvious as to be self evident: Because the duplication involved in working without it is just a waste of our effort, and defies the synergistic opportunities of global communication to actually improve our lives!

Clay Cheever March 1, 2011 at 11:41 am

I am but a mere mortal but also look at MySpace and Facebook. Or whatever came before MySpace for that matter. One came up with an idea, the other mutated into the other, Tom was the man and out of nowhere Zuckerberg kicks him in the sack and runs off with his lunch money. Hello billions!

Comments on this entry are closed.