Innovation or Imitation?

Innovation for most businesses is thought to be an activity that is complex, costly and with very little promise of a return on investment.

Even though successful innovation can increase profit margins, global competitiveness and enable a business to experience high growth, the risks and costs involved in developing innovative products or services can be too high a price to pay for some business owners.

After all, business history is full of companies who failed or suffered substantial loss due to innovation failure.

An alternative to the development of innovation is to imitate other successful businesses. By copying innovators, a business can generate significant profits and minimise the costs and risks, usually associated with being the first business to try a new product or service.

Imitation is not to be confused with copyright infringement, innovation is the borrowing and developing of existing technologies and products to gain high visibility in local or international markets. Imitation takes advantage of the research and development carried out by the pioneering businesses to enter markets, gain market share and generate profits.

Asian countries such as Japan, have successfully imitated western companies, without a substantial capital outlay on research and development, for decades. For example, Seiko who imitated the styling of the Rolex, or Canon who copied features from Xerox, are two companies who were able to gain considerable market share through copying

Significant competitive advantage can be gained by employing imitation techniques. Not all first timers who bring innovation to the market end up being the industry leaders. There is evidence of a high failure rate amongst pioneers and in many instances it has been the companies who have entered the market early, following the pioneers, that have become industry leaders and gained the competitive advantage.

When business owners are assessing whether it is better to copy or innovate, the advantages and disadvantages of each option are to be compared. With imitation, risk and costs are minimised due to taking advantage of the research and development that other companies have invested in.

However, if market timing is not right, then the return on investment will be minimal as a market presence will not be established.

If a company is not flexible or innovative enough to keep up with the trends and product developments of pioneers, the chance of success is minimal – at best, they will be forever chasing behind the competition.

© 2005 StartRunGrow


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