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Innovators versus Imitators: Who Wins?

on Wednesday, 02.05.2016

Much of business media celebrates innovators for developing the next new thing.  However, imitators, not innovators, usually generate the greatest value from the innovation. A broad study determined that imitators capture a whopping 98% of the total value of an innovation.

We have been socialized to consider imitation as undignified and objectionable, yet in the marketplace of value, imitators generally dominate. McDonald’s imitated a system pioneered by White Castle which invented the entire low-cost, efficient, fast food category; Visa, MasterCard and American Express all borrowed the Diners Club innovation of aligning customers and merchants with plastic cards; Walmart copied many of its ideas from predecessor companies like Korvettes. However, these were not direct mimics, but improvements over a predecessor’s idea to create a winning formula that creates more value.

Huge value creation might happen from simply copying an idea, but odds are that a modification to make it better or cheaper, (and better), can disrupt the innovator by investing in an offering that is based on the market reaction to the original idea. Take-away thought: Imitate to share the market with the innovator – but imitate and improve to be dominant.

Ideas for this article were taken from Harvard Business Review April 2010, “Imitation is More Valuable Than Innovation.