Why Imitation Bests Innovation

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So says Oded Shenkar, a business professor at Ohio State University, in a new provocative book called Copycats: How Smart Companies Use Imitation To Gain a Strategic Edge, published by Harvard Business Press. Shenkar previously wrote The Chinese Century, which looked at China's changing role in the world.

Shenkar's new book in part is an extension of his previous one. Since U.S. is currently the world's big innovator and China is the big imitator, the lesson is clear: in a world where imitation is important, China is "well placed to become more competitive," Shenkar said in an interview. "China is not opposed to imitation. They know how to do it." By contrast, "the U.S. ability to imitate has eroded. But to be successful, you have to learn how to both imitate and innovate."

Shenkar makes it clear in his book that he isn't condoning the theft of intellectual property. Rather, what he has in mind is a product, process or business model that can be legally duplicated. The barriers for imitating globally have collapsed with the adoption of the Internet and easier transportation in recent decades.

The argument that imitation is smarter than innovation is borne out by numbers. He says innovators as a group get only a small fraction of the value of an innovation. Typically, the better returns go to businesspeople often derided as copycats.

Backing that up, Shenkar provides examples of companies that innovated new products but lost out in the marketplace to others afterward. Among them, Diners Card created credit cards but lost the market to MasterCard and Visa , EMI created CAT scans but the market today is dominated by General Electric .

Shenkar also cites executives and reports involving famous companies that you'd think would be big champions of innovation, yet suggest that innovation isn't the end-all, either. Explaining Pfizer 's decision to enter genetic drugs, for instance, David Simmons, general manager of the company's newly formed "established products" business, once said: "We're always about innovation, and it will always be the lifeblood and sustaining element of Pfizer, but we don't see it as the be-all and end-all," Shenkar writes, citing The Wall Street Journal.

It's not just in the modern world and in business that imitation has a bad name. Shenkar shows how scientists for a long period derided imitation as "a low-level ability, a behavior typical of the mentally weak and the childish and a process much less demanding than individual trial and error," he says. Nineteenth-century naturalists considered imitation to be "characteristic of women, children, savages, the mentally impaired and animals" who had "little ability to reason for themselves."

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Eventually, imitation picked up some respectability from scholars. In 1926, Ellsworth Faris, a renowned scholar at that time, was questioning the view of imitation as "a primary instinct." Instead of an inferior and mindless "cheap trick," Shenkar says, imitation came to be recognized as a form of intelligence. Now biologists agree that imitation is essential to evolution, he writes. Business scholars have been left behind, and businesses, especially in the U.S., have lost the ability to gain from imitation, Shenkar says.

Companies, rather than just imitate, should combine creativity and imitation, and come up with their own competitive advantage. This group of businesses is what Shenkar calls "imovators."

An example of their thinking is stated by one executive in Shenkar's book: "Where there are elements of parity, if someone has figured out a better way to do something or deliver something, you're gonna use it; you're not gonna feel a need to go out and invent some other way to provide the particular aspect when there are no tangible or perceived consumer benefits."

Sounds more like someone from a Chinese company than an American one; but, says Shenkar, it's wisdom from a former executive at Proctor & Gamble. No surprise, then, that it's long been one of the most successful companies in the U.S.

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