The document discusses the concept of 'strategic imitation' as a method for business growth, emphasizing how companies can enhance existing ideas for competitive advantage rather than solely relying on innovation. It highlights various industries, including pharmaceuticals, automotive, and technology, where successful businesses observe and adapt successful strategies from competitors to fill market gaps and address customer needs. The paper outlines key principles of effective imitation, including opportunity scanning, product improvisation, and building strategic alliances, asserting that imitation can lead to significant market gains without the high risks associated with original innovation.

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Board & CEO Advisors, Management Consultants
“Strategic Imitation” road to business growth
It is smart to take an existing idea and enhance it beautifully - Steve Jobs

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Board & CEO Advisors, Management Consultants
In a recent book titled “Copycats: How Smart Imitation is not new. Many US pharmaceutical
Companies Use Imitation to Gain a Strategic companies known for their patents and IP
Edge” Prof. Shenkar states that 98.7% of the owe their technical knowledge to the
value of the innovations is usurped by generous lifting of product knowledge from
imitators. Not a very surprising insight to German companies (Chandler, 2005). In
business thinkers and managers, except the automotive industry too Copycats thrive.
accuracy of findings. Business leaders have Toyota’s Lexus (LS 400) is similar in
always recognized the dichotomy in the appearance to the Mercedes ‘S-class’ sedan.
undue emphasis on innovation and high Hyundai Sonata is a replica of the Jaguar
returns on imitation in real world. By model. Ford’s many models including Taurus
imitation we do not refer to stealing of some are heavily drawn from Japanese, Germans
company’s IP, but engineering a better and Swedes in terms of design and aesthetics
product based on available product (Chatterjee, 1998). Coco cola imitated diet
information. Most species and organizations cola from RC Cola, Marriott International
advance through observation and imitation of bases its loyalty program based on frequent
other successful entities (Niosi, 2012). flier program of airlines including Pan Am
Imitation is a preferred strategy by companies (Schnaars, 1994). Lego, the famous children
when R&D outcome is uncertain, start-up toy company was greatly inspired by
costs are high and returns are uncertain, Kiddicraft. Lego borrowed heavily the
technology requires significant upfront concepts and colours.
marketing and other expenses to inform,
educate and goad the customer to buy and In some industries, imitation is certainly less
finally the competitive pressures are high. risky and profitable. For example, in the case
of pharmaceutical industry, a new drug
Imitation can be in many forms. It can be a development process spanning 12 to 14 years,
pirated copy, a clone or me-too, improved is highly risky – only 20 in 5000 compounds
product or process inspired by pioneer, that are screened enter pre-clinical testing,
improvisations of design copies, and and then only one in five drugs in clinical trials
adaptation of an idea from one setting to receive FDA approval. Development costs are
another, simplification of original product or high, on average about $800 million per new
repositioning the product to another segment chemical entity, and cost of failures or delays
(Valdani & Arbore, 2007). In this paper, we has enormous impact on market value. In
are looking at legitimate imitation strategies contrast, an imitation molecule has a short
such as improved product design, gestation process – 1 to 2 years associated
simplification, and adaptation from another with low R&D costs, about $2 million to
setting or repositioning for another segment. demonstrate bio-equivalence of the drug
In all these imitation projects, there is a (Dimasi, Hansen and Grabowski, 2003).
considerable level of market planning,
technological knowledge and organizational Despite the negative connotation and bias
efforts required to reengineer the product, against imitation, even in glamorous
make functional or structural changes and industries such as software or biotechnology
improve and extend the pioneer product or or Pharmaceuticals, most successful products
process. are simply re-interpretation of existing
products and or their extensions. Wordstar

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was the first word processor, but the Darshini, the first self-help eatery that
Wordperfect and Word overtook the pioneer emerged in Basavanagudi, Bangalore has
by slew of improvements and price cuts. become the industry standard and there are
Google, the market leader in search and more than 1,400 Darshini’s in Bangalore city
advertising is a not a pioneer but a strategic alone. Many internet companies realize the
imitator. Magelllan, Infoseek and Snap were opportunities to replicate or improve a
the pioneers, Lycos earned popularity just as successful service business from another
Netscape was launching its internet browser. geography to their local conditions.
Yahoo! followed aggressively, improvising on Nauki.com is a good replica of Monster.com,
a structured index into resources on the web. Bazee.com emulated ebay, Makemytrip drew
Both firms expanded product offerings into inspiration from Expedia.com, and so on.
providing e-mail and website hosting, country
localisation and news links. Both Lycos and Growth by strategic imitation
Yahoo! generated revenue from advertisers Strategic imitation does not just entail mere
rather than users. Enters Google which copying of another product. It requires the
improvised search algorithm from rule based late comer to take the existing product or
to concept-based and over years emerges the service and reconfigure in a new and unique
largest company in that market. Apple, the way. Strategic imitation is a highly skilled and
venerable icon always acknowledged the creative basis for strategy, requiring
inspiration it drew from Xerox GUI or significant investments. All successful
Blackberry’s smartphone features or Sanyo’s imitators follow four fundamental principles.
portable MP3 player or the tablets from rivals
in creating the best known products. In the 1. Scan for opportunities
flood of e-com, many e-marketplaces that
Generating ideas through environmental
sprang up, Chemdex, Promedix, Petrocosm,
scanning is the starting point of organisational
Metalspectrum, Metalsite, Freightwise,
imitation and competitive strategy. Market-
PaperX, AshphaltExchange, BuildNet,
oriented organisations learn about customers,
Heavyware, Aerospan, etc were too similar
competitors, and channel members in order
and had nothing to differentiate them apart.
to continuously sense and act on events and
Biopharmaceuticals, imitation drugs of
trends in present and prospective markets
biological products with patent protection
(Slater and Narver, 1995). Companies need to
losses, are another classic case of imitation
scan not just their markets but adjacent
vigorously pursued by many German,
markets to see what could be improved and
Canadian, Israel, and Indian companies.
refurbished as new in their markets. Imitation
Imitation is also a much practiced model in opportunities come in many forms.
service industries. Ryanair, which was under
Firstly, opportunity arises when a dominant
the verge of financial distress, pulled itself out
incumbent has not passed on price changes
of misery by copying Southwest airlines. Car
and technological changes to its clients.
rental companies have for long aped the
Cochlear implant market where the market
business model of Zipcar. Retail stores have
leader Cochlear sells its implants for above
always copied from the larger mom-and pop
$30,000 has made lots of enemies. While the
stores and restaurants have copied a
costs of electronics including computer chips
successful model to stay in business. Upahara
dropped by huge margins, the incumbent did

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Board & CEO Advisors, Management Consultants
not pass on any of these benefits to the India’s third-largest mobile phone vendor
customers. Hangzhou Nurotron Biotechnology after Samsung and Nokia according to
a Chinese company seized the opportunity research firm IDC.
and offers similar product at less than
$15,000. Rockland, an Indian hospital group is Thirdly, opportunity arises when the IP is
conducting trails and estimates the implants getting expired or IP regime is stretched.
Recent Supreme Court ruling against Novartis
would costs less than $3000.
Gilvec indicates how imitation can be used as
Secondly, opportunities arise when customer a legitimate strategy against repetitive
pain areas are unaddressed and imitator fills patents of minor tweaks of existing drug.
the gap. Micromax, the dominant Indian Cipla, the Indian generic drug manufacturer
mobile phone and tablet manufacturer which which produces the drug for 1/10 of the
is successfully competing with Nokia, LG and original drug’s selling price choose the
others grew out of its ability to keep a keen opportunity to grow on a blockbuster.
eye on the customer pain areas and delivering
solutions addressing the need. The company 2. Improvise on product, pricing or
entered the market in 2009, a late comer into experience
the crowded mobile market, had no major Succeeding in imitation requires companies to
R&D set up, access to markets, brand recall or reshape their offering (Bradley and Nolan,
access to capital. They realized a need to 1998). Research deeper, understand why
quickly create and own product categories pioneers have failed and seek out areas to
that would address customer pain areas and improve. Companies must extend the features
bring value. With Nokia commanding a of the incumbent product, and capture new
whopping 60% market share, they were value propositions. RCA was the pioneer who
features, niches and categories that could be invented the television with standardised
intelligently carved by late entrant. Their first technology during the early part of the
phone, X1i, emerged out of the realization twentieth century. But it was Sony, a late
that many Indian villages and cities get less comer in 1959 which by employing micro-
than 4 hours of quality power, not enough to electronics technology to introduce ‘Trinitron’
even recharge a phone daily. Micromax televisions later in market, emerged as the
increased the size of the battery to 1800 mAh technology and market leader. In recent
offering a 30 days standby time, at an times, the other late comers Samsung and LG
affordable price of Rs 2100. Their dual SIM a are emerging as strong market makers by
full-keyboard (QWERTY) Q3 model, has introducing small incremental changes
emerged from customer need to keep a including high emission display screens, etc.
constant “incoming number” to receive call, Zynga’s games are heavily borrowed from
while another “outgoing number” can be others and they refine the games a lot based
chosen based on the operators tariff plans. on prior failures and make them go viral.
Universal remote controls were available from
2008 onwards, and Micromax working with its D Mart, the Mumbai based retail chain has
chip vendors like Mediatek realized the systematically chosen low store locations and
benefits of reinforcing the value at affordable best value for money customer experience to
price by introducing the Universal remote gain retail market share. It has bargained hard
control mobile phone. Micromax is now with low occupancy malls closer to highly

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dense middle-income families. To keep its they focus on taxi drivers and travel heavy
costs low, it has shunned the high window customers with affordable meal and large
ground floor main-street locations to portions. Once the property starts getting
convenient and accessible tertiary locations. It recognized and branded, the portions become
has struck chord with value conscious middle- smaller, presentation more exquisite and the
class who prefer its modestly sized stores with prices are increased to attract rich clientele.
better discounts and higher variety to high Taxi drivers and other earlier patron do have a
end malls. Since it pays its vendors within a good recall for the great times they had and
week and stocks less, the vendors pass-on recommend the place to any new comers into
better discounts to D-Mart, which in turn ties town. Many successful imitators across
the customers. Dillard, an Arkansas based industries do seem to adopt the same
retailer recognized the white space between strategy. Success of Tianya, the king of
Macy’s, Kohl’s and Nordstrom. It has targeted Shanzhai (domestic mobile manufacturer)
upscale higher income groups with a tighter captured significant market share with basic
control on quality and inventory. It has product competing against Nokia and other
introduced several in-store brands, reduced branded phone makers. Its target was the
shelf-life and significantly improved customer secondary cities of China and by keeping
service. about $20 difference on pricing, Tianya has
managed to build significant market share and
VPAs like Siri, Rearden, Dothomes, Pageonce, branding in volume segment.
emyBantu or Desti, learnt from the failure of
pioneers like General Magic, E-Speak (HP) and Chinese medical equipment manufacturers
Hailstorm (Microsoft) and have pursued like Mindray, Micorport, Lepu have
focused customer experience to keep their aggressively pursued pricing and segment
product simple and functional. They have expansion. These domestic companies which
evolved into simple recommendatory systems used to produce Class 1 and Class 2 devices
(ex: Get Friday, hi Task, etc), or morphed into have graduated to product Class 3 devices and
specialized vertical focused search and offer their products at much lower price than
support engines building on the information international companies. Mindray which
of all other actors in the business ( for started operations table, surgical lights and
example Rearden, Dothomes,) or smart, other products moved quickly to multi-
history embedded programs like Siri, parameter, Telemetry and ultrasound
machines. Its products are 50% cheaper than
myBantu, Hunch, etc.
While Couchsurfing and VRBO were the early similar machines produced by European
entrants into accommodation market, AirBnB companies like Siemens and Philips.
outpaced them with simple changes to design 4. Bring agility into business, transform
and improve the process to alleviate user distribution
worries.
To succeed in strategic imitation, it is not
3. Enter Bottom up and move to other good enough to identify customer pain areas,
segments but also have an ability to appropriately swing
the supply chain. Karbonn, another mobile
A popular technique purportedly used by phone manufacturing company innovated on
Chinese restaurants in US is first few weeks the distribution channel. Instead of regional

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Board & CEO Advisors, Management Consultants
distributors who manage couple of districts partnership agreements with Pearson,
they went ahead with a district level Everonn, Vriti for content, with Bigflix (for
distributional model. This ensured higher preloaded entertainment) and with Hungama,
availability at district and towns within each Indiagames, Zenga for gaming. Alliances can
district, coupled with right sales and sometime provide credibility (for example an
distribution incentives, the channels helped to improved product developed in association
reach out and close more sales. Distribution with a respected university or a R&D
is another area where Micromax improvised. company). They help in market reach
It adopted different distribution models for (governments and large consumers open up
various products. For Smartphones and LED markets for strategic followers with improved
the company has adopted a 2-tier model, performance and affordable pricing).
while for phones and tablets it has adopted a Alliances can also increase the pace of
three tier distribution model. More than adoption and make follower products as “de
1,30,000 retail stores and 85 independent facto” standards.
large partners distribute the phones and
tablets. A major advantage is effective Bibliography
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Board & CEO Advisors, Management Consultants
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imitation strategies“, Technology Analysis and Browne & Mohan insight are general in nature and does not
Strategic Management, 24 (1): 37-50. represent any specific individuals or entities. While all efforts are
made to ensure the information and status of entities in the
insights is accurate, there can be no guarantee for freshness of
Valdani, E. and A. Arbore (2007): ”Strategies information. Browne & Mohan insights are for information and
of imitation: an insight”, Problems and knowledge update purpose only. Information contained in the
report has been obtained from sources deemed reliable and no
Perspectives in Management, 5 (3): 198-206. representation is made as to the accuracy thereof. Neither Browne
& Mohan nor its affiliates, officers, directors, employees, owners,
representatives nor any of its data or content providers shall be
Westney, E. (1987) Imitation and Innovation: liable for any errors or for any actions taken in reliance thereon.
the Transfer of Western Organizational
Patterns in Meiji Japan, Harvard University
Press, Cambridge.
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