Digital Innovation & Entrepreneurship
and that only weak firms imitate. Alternatively, critics conclude that uncertainty promotes imitation, or that there’s only one imitation strategy. These myths oversimplify a complex strategic tool. There are three factors any business must consider when imitating strategic innovation by a potential competitor. 1 Speed Our study of UK mobile phone companies showed empirically that a firm’s imitation speed influences its performance. The advantages of quickly imitating innovation are especially strong in industries where early adopters of new product technologies benefit from ‘spatial pre-emption’. This is a strategic concept where a firm creates barriers for its competitors, allowing it to fill product niches before late adopters can enter the market. Speed also affects consumer perception. Firms that quickly adopt new technologies are seen as more innovative. “Imitation is not just about copying. It is not simply about being first or last” This creates a ‘halo effect’ that boosts sales across their product lines, neutralising the advantage often enjoyed by a competitor that makes the first move. As Levitt pointed out: “There is usually a great premium on speed. One wants not just to catch up quickly with the successful
innovator but, more particularly, to do so faster than other would-be imitators who are also working against the clock.” However, fast imitation can trigger escalating rivalries as firms strive to outpace one another. When Nokia introduced cutting- edge mobile technologies in the 1990s, Siemens was quick to imitate, maintaining competitiveness in the market. But as more rivals imitated these innovations, the pace of technological evolution in the industry accelerated. This pushed all competitors to adapt quickly or fall behind. 2 Your target Who you imitate is crucial. Imitating the market leader can be a risky strategy. Leaders often have the resources and motivation to retaliate against imitators. After the success of the Apple iPad in the early 2010s, the company aggressively pursued lawsuits against imitators. This led to bans on competing products in several countries. That damaged the performance of firms who tried to imitate Apple’s technology. A market leader’s response will usually be more intense than that of their rivals, who do not occupy such a strong position. That makes it crucial for firms to weigh the risks of provoking a stronger competitor before they decide who to imitate. 3 Timing Deciding when to imitate a rival is just as important as deciding who to imitate. The ‘clock speed’ of an industry – how quickly it evolves
TO THE CORE
1. Strategic imitation is not just about copying a competitor, nor is it a sign of weakness. It is increasingly recognised as a key source of innovation. 2. Quickly adopting new technology can make a company appear more innovative and create a ‘halo’ effect, boosting sales. 3. Imitating a market leader can be risky as they often have the resources and the motivation to retaliate. This can lead to bans on competing products, or a rapidly evolving market. 4. Entering the market later can be beneficial in some industries, allowing competitors time to distinguish their own products in terms of price and quality.
what is known as the ‘Red Queen’ effect – a reference to a line from Lewis Carroll’s tale, Through the Looking Glass . The Red Queen tells Alice: “It takes all the running you can do to keep in the same place.” Industries often exhibit similar dynamics. Firms must continually adapt to survive, facing ever- evolving competitors in a constantly changing environment. This relentless drive to maintain relative fitness means that companies often improve as quickly as possible just to stay on par with their rivals. This can enhance short-term competitiveness and offer protection against strong retaliation by competitors. However, it may also diminish a firm’s ability to manage major transitions. Nokia’s shift in strategy during the early 2000s offers a cautionary example. As the mobile phone industry’s clock speed increased, Nokia slowed its competitive behaviour. The firm preferred to wait for technologies to
stabilise before fully committing. This approach allowed rivals like Samsung and Sony Ericsson to capitalise on the latest innovations and gain an edge in the market. Imitation has been crucial in technological advancement throughout history. In 18th century Britain, imitating foreign luxuries inspired firms to develop new commodities such as iron suspension bridges and porcelain. Sometimes imitators followed a ‘fast second’ strategy to follow pioneers before they could establish a monopoly. However, this approach requires highly developed imitation competencies and the infrastructure to conduct reverse engineering. In markets like household and personal care products, where manufacturing capabilities are essential and large firms like Procter & Gamble dominate, this is not always practical. In this case, entering the market later allows competitors time to overcome barriers and differentiate
their products through their quality, price, and appearance. As a senior executive at a large retailer said: “Our policy is to never be the first to try something new; we will only consider the tried and true.” This cautious approach highlights the complexities of an imitation strategy. By learning from history, businesses can better decide whom to imitate and when to do so. Imitation is not just about copying, and it is not simply about being first or last, fastest or slowest. Successful firms use strategic imitation to drive growth and innovation, delivering unique adaptations and improvements. The key lies in understanding your industry, your competitors, and your own capabilities.
T hey say imitation is the sincerest form of flattery. In business, imitation is a powerful and prevalent strategic move. Yet it’s often viewed as a threat rather than a dignified element of strategy. As the economist Theodore Levitt astutely noted in 1966: “Imitation is not only more abundant than innovation, but actually a much more prevalent road to business growth and profits.” Recent research supports this view. Imitation is increasingly recognised as a key source of dynamic capabilities and innovation, which can potentially lead to competitive advantage. However, the conventional wisdom about imitation is often misguided. Common misconceptions include the notions that imitation is easy
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– is a crucial consideration. In fast-moving industries, rapid imitation can lead to
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