copycats

1. Copycat, copycat!
Christopher Corbishley
Entrepreneurial Smart Camp, Imperial College Business School
15th July 2015
Imitation vs. innovation in
business model design

2. LECTURE OUTLINE…
1) Introduction to copycat business models
- What is a business model?
- Imitation vs. Innovation
2) Case study discussion: MadHead Games
BREAK
3) Copycat business strategies: Are they effective?
- Guest speaker: Rocket Internet
- Q&A

3. TODAY’S SPEAKERS
3
Andrea Olivari (Guest Speaker)
• Imperial College Business School Alumnus
• Co-Founder and Managing Director of Rocket Internet,
SE Asia and Zalora (a portfolio company)
• Head of Operations at Hassle.com
Chris Corbishley (Lecturer)
- PhD candidate, Imperial College Business School
- Research on emerging market entry strategies
- London Stock Exchange ELITE programme helping
high growth businesses to scale up (e.g. secret sales,
graze, naked wines, swoon)

4. IMITATION IS
… human nature?
4
Definition:
1. The action of using someone or something as a model.
"learning by imitation“ (mimesis)
2. A thing intended to simulate or copy something else.
copy, reproduction, replica

5. 5

6. … the diffusion
of language,
learning
and culture
6

7. 7
“Man differs from
other animals because
of his greater aptitude
for imitation”
Aristotle (Poetics)

8. 8
Definition:
- In sociology, an isomorphism is a similarity of the
processes or structure of one organization to those of
another, be it the result of imitation or independent
development under similar constraints.
- There are three main types of institutional isomorphism:
normative, coercive and mimetic.
AT A SOCIETAL LEVEL THIS
LEADS TO ISOMORPHISM

9. vs.
Soren Kiekagaard (c.19th)
“The Crowd is Untruth”

10. 10

11. … sometimes we
go wrong
11

12. IMITATION IS
… human nature?
12
Definition:
1. The action of using someone or something as a model.
"learning by imitation“ (mimesis)
2. A thing intended to simulate or copy something else.
copy, reproduction, replica
Dreaming up winners…

13. … and picking them
Oprah Winfrey:
How do you keep reinventing?
Ralph Lauren:
You copy. Forty-five years of copying
that’s why I’m here.
13
Oprah Winfrey interviewing Ralph Lauren
October 24, 2011

14. WHAT IS A BUSINESS MODEL?

15. 15
Breaking it down…
E.G. THE LEMON STAND

16. 16
Three key components…

17. 17
The Business Model Canvas…
(Osterwalder, 2008)

18. 18
What is it for?
BUSINESS MODEL CANVAS

19. 19
Some examples…

20. 20
Back to the building blocks…

21. IMITATION

22. 22
What business model imitation is NOT
… fakes, rip-offs, grey markets, intellectual property
(e.g. copyright, trademark, patent) infringements…

23. 23
NOT … process adoption
Ford assembly lines (1920s)

24. “For much of Toyota’s
history, we have ensured the
quality and reliability of our
vehicles by placing an Andon
cord on every production line
– and empowering any team
member to halt production if
there’s an assembly problem”
24
Akio Toyoda

25. ‘COPYCAT’ BUSINESS MODELS
“A business model that delivers the same value
proposition – with the same resource-base and
transactive structure – to reproduce the same
competitive advantage”
25

26. 26
“For Linio, think Amazon for Mexicans; for
Zalora, think Zappos for Malaysians; for Easy
Taxi, think Uber for Nigerians.”

27. 27
IMITATION IN OTHER
GEOGRAPHIES…

28. 28
APPLE
Apple’s (innovative?) new streaming service

29. INNOVATION

30. 30
What business model innovation is NOT

31. WHAT IS BUSINESS MODEL
INNOVATION?
“Novelty in the organizational design,
resource structure and/or financial
model of the business”
31

32. 32
• SAMPLE: Survey of 765 global company CEOs conducted in 2006
• SOURCES: Products 46% Operations 30% Business models 28%
• RESULTS: Based on operating profit margin, outperformers emphasized business
model innovation twice more than underperformers
(IBM, 2006)
Common sources of business model innovation Benefits of business model innovation
Structural changes (65%) Cost reduction 57%
Strategic partnerships (53%) Strategic flexibility 55%
Shared services (22%) Focus 43%
Spin offs (18%) Exploit new opportunities 42%
Using third party services (15%) Reduce risk 11%
Move from fixed to variable cost 11%
IBM: ‘GAME CHANGERS’

33. 33
• Brewdog is a craft beer company, established in
2007 and funded through 'equity for punks'.
• By making use of crowdfunding it is now the
largest independent brewery in Scotland, and
ships over 700,000 bottles of beer per month to
27 different countries.
• It employ 65 people and has 5 craft beer bars
across the UK. Current revenues are in excess of
£6million.
CROWDFUNDING: BREWDOG

34. IMITATION vs. INNOVATION

35. 35
“Tell me something that’s true that nobody agrees with
you on?
… It’s a slightly extreme formulation I have of this but
there is this strange phenomenon in Silicon Valley
where so many of the successful entrepreneurs seem to
be suffering from a mild form of Asperger’s or
something like this…
I think we always need to flip this around and ask the
question, why is it that the people who are not suffering
from Asperger’s are at a disadvantage in our society?”
(Peter Thiel, Founder of PayPal, Palantir)
‘ASPERGIC’ ENTREPRENEURS

36. “What great company is
nobody starting?”
“What great investment
does nobody like?”
“What worthwhile but
unpopular cause is not
being funded?”
36
Peter Thiel (Zero to One)

37. 37
• Globalization without new technology is
unsustainable
• If you want to create and capture lasting
value, build a differentiated business
• Proprietary technology must be at least 10 times
better than its closest substitute in some
important dimension to lead to real monopolistic
advantage.
• Every start-up should start with a very small
market
• Every great business is built around a
secret that’s hidden from the outside.
(Peter Thiel, Zero to One)
ZERO TO ONE: KEY MESSAGES

38. 38
S-CURVES, PRODUCT LIFE CYCLES &
DOMINANT DESIGNS are concepts
representing different scholarly attempts to
illustrate the innovation cycle:
• In evolutionary theory of economics,
Kirzner argued that following an initial focus
on product innovation, process innovation
takes over
• In population ecology, Hannan &
Friedman match the increased entry and exit
of firms across the innovation cycle.
• Utterback and Abernathy used it to show
consumer types and adoption behaviours
across the product lifecycle
RADICAL VS. INCREMENTAL

39. 39
PROACTIVE VS. REACTIVE
… 4 levels of
innovation strategy

40. 40
FIRST MOVER ADVANTAGE?
Depends on the pace of
evolution of both the
technology and the
market

41. 41
First movers and fast followers:
Who wins?
If we look at these innovators and
their ‘copycats’ or ‘fast followers’,
which ones are the winners?
OR BETTER TO BE A COPYCAT?

42. IMITATION + INNOVATION

43. 43
What is their business model?

44. 44
Zara model applied to design furniture
SWOON EDITIONS

45. 45
Remember these guys?

46. 46
GRAZE.COM
• Founded in 2007 by a serial
entrepreneur who had
previously started LOVEFiLM.
• Graze is an e-commerce
subscription service delivering
healthy food by post.
Logistics model applied to snack industry

47. MADHEAD
GAMES
Tower of
Saviors or
‘Toilet of
Plagiarists’?

48. CASE STUDY DISCUSSION
What are the similarities and
differences between TOS and PAD?

49. CASE STUDY DISCUSSION
Effective strategy? Sustainable?

50. CASE STUDY DISCUSSION
Good or bad?

51. Break…
51