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Have you heard about creative imitation? The term was coined by Theodore Levitt of the Harvard Business School. Creative imitation is clearly a contradiction in terms. What is creative must surely be original. And if there is one thing imitation is not, it is “original.” Yet the term fits. It describes a strategy that is “imitation” in its core. What the entrepreneur does is something somebody else has already done. But it is “creative” because the entrepreneur applying the strategy of “creative imitation” understands what the innovation represents better than the people who made it and who innovated.
This strategy is followed by some companies that imitate something already existing but adding value. Often the imitator has the ability to foresee, better than the original creator, how the product or service can be best suited to meet the needs of consumers, changing it to match this observation. Creative imitators do not succeed by taking away customers from the pioneers who have first introduced a new product or service; they serve markets the pioneers have created.
A classic New Yorker magazine cartoon sums this up best with the caption: “What we need, gentlemen, is a completely brand-new idea that has been thoroughly tested.”
Implementation by IBM
The foremost practitioner of this strategy and the most brilliant one is IBM. But it is also very largely the strategy that Procter & Gamble has been using to obtain and maintain leadership in the soap, detergent, and toiletries markets. And the Japanese Hattori Company, whose Seiko watches have become the world’s leader, also owes its domination of the market to creative imitation.
In the early thirties, IBM built a high-speed calculating machine to do calculations for astronomers at New York’s Columbia University. A few years later it built a machine that was already designed as a computer—again, to do astronomical calculations, this time at Harvard. And by the end of World War II, IBM had built a real computer—the first one, by the way, that had the features of the true computer: a “memory” and the capacity to be “programmed.”
As soon as it had finished its advanced 1945 computer—the first computer to be shown to a lay public in its showroom in midtown New York, where it drew immense crowds—IBM abandoned its own design and switched to the design of its rival, the ENIAC, developed at the University of Pennsylvania. The ENIAC was far better suited to business applications such as payroll, only its designers did not see this. IBM structured the ENIAC so that it could be manufactured and serviced and could do routine “numbers crunching.” When IBM’s version of the ENIAC came out in 1953, it at once set the standard for commercial, multipurpose, mainframe computers.
This is the strategy of “creative imitation.” It waits until somebody else has established the new, but only “approximately.” Then it goes to work. And within a short time, it comes out with what the new really should be to satisfy the customer, to do the work customers want and pay for. Creative imitation has then set the standard and takes over the market.
Procter & Gamble acts very much the same way in the market for detergents, soaps, toiletries, and processed foods.
Quartz Crisis
When semiconductors became available, everyone in the watch industry knew that they could be used to power a watch much more accurately, much more reliably, and much more cheaply than traditional watch movements. The Swiss soon brought out a quartz-powered digital watch. But they had so much investment in traditional (mechanical) watchmaking that they decided on a gradual introduction of quartz-powered digital watches over a long period of time, during which these new timepieces would remain expensive luxuries.
Meanwhile, the Hattori Company in Japan had long been making conventional watches for the Japanese market. It saw the opportunity and went in for creative imitation, developing the quartz-powered digital watch as the standard timepiece. By the time the Swiss had woken up, it was too late. Seiko watches had become the world’s bestsellers, with the Swiss almost pushed out of the market. In history, this movement is called the quartz crisis. Because of this, Swiss watch employment fell from 90,000 to 28,000 between 1970 and 1988. Outside Switzerland, the crisis is often referred to as the “quartz revolution”, particularly in the United States where many American companies had gone out of business or had been bought out by foreign interests by the 1960s.
Aim of Market Leadership
Creative imitation is a strategy aimed at market or industry leadership, if not at market or industry dominance. But it is much less risky. By the time the creative imitator moves, the market has been established and the new venture has been accepted. Indeed, there is usually more demand than the original innovator can easily supply. The market segmentations are known or at least knowable. By then, too, market research can find out what customers buy, how they buy, what constitutes value for them, and so on. No one has to explain any more what a personal computer or a digital watch is and what they can do. Of course, the original innovator may do it right the first time, thus closing the door to creative imitation.
The creative innovator exploits the success of others. Creative imitation is not “innovation” in the sense it is most commonly understood. The creative imitator does not invent a product or service; he perfects and positions it. In the form in which it has been introduced, it lacks something. It may be additional product features. It may be the segmentation of products or services so that slightly different versions fit slightly different markets. Or it might be the proper positioning of the product in the market.
Risk Involved in Creative Imitation
“However beautiful the strategy, you should occasionally look at the results.” – Winston Churchill
The strategy has its own risks, and they are considerable. The risk is like misreading the trend and imitating creatively what then turns out not to be the winning development in the marketplace. IBM, the world’s foremost creative imitator, exemplifies these dangers. It has successfully imitated every major development in the office-automation field. As a result, it has the leading product in every single area. But because they originated in imitation, the products are so diverse and so little compatible with one another that it is all but impossible to build an integrated, automated office out of IBM building blocks. It is thus still doubtful that IBM can maintain leadership in the automated office and provide the integrated system for it. And this risk, the risk of being too clever, is inherent in the creative imitation strategy. (Inspired by “Innovation and Entrepreneurship” by Peter Drucker).
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