Yahoo! vs. Google, Incumbent vs. Defender, the Role of Imitation

It’s been a while since my last blog post (over a week!) not because of a lack of ethic, but more a lack of original insight. I have been too busy recently to sit down and really think. To take a new perspective on something that I have for so long either assumed to be true, or paid no attention to.

Well I had an insight today.

I had always wondered if there was one thing, one practice that really kept the follower the follower. Could you pinpoint one behaviour that kept the number two positioned incumbent in the number two position? I think so, and understanding this behaviour – and looking back, it holds true (to both the positive and negative affirmation – i.e. where it held true, we were not the leader, and where it didn’t, we were the leader).

This is my hypothesis – an organization which seeks to explore, compile and copy competitor practices (be they strategical, marketing, product, or sales based), will ultimately never be able to outperform the organization’s they are copying, at least until they engage in original and unique innovation themselves. They say imitation is the highest form of flattery, but I also think its the earliest indicator of approaching failure.

It may seem very obvious to the reader – of course if you are duplicating existing practices, you will never be able to overtake the dominant organization. However, I would argue in practice, very few individuals hold true to this statement. Many organizations explore their competitors, see what strategies they are using across functional areas, and seek to duplicate those strategies across their own organizations.

This can have a positive outcome. Think of a new business. It is smart to imitate best practices of the industry leaders – their hiring policies, innovation strategies, and knowledge retaining, whatever it may be. However, when an organization starts to think this will give them a competitive advantage against the group they are essentially copying, the beginning of the end is near. I think this strategy is unsustainable, and essentially a waste of time if it is only for marginal gains, for a few reasons:

  1. No first mover advantage – you aren’t the first company/group to offer the feature or service. The market already recognizes it, so implementing it is at the best playing ‘catch up.’ Most likely the original implementer has reaped all the benefits, be it feedback from customers, acknowledgement for the innovation, or the up-tick in sales and market share gain resulting from that feature
  2. A detrimental mindset – from what I have seen, once you get into that state of mind as an organization, it is hard to get out. When managers, reviewing a project or new strategy ask “well, what is our competition doing?”, all signs point to rough waters ahead. It makes employees passive – instead of coming up with new market insights and creative strategies to leverage those insights, they end up looking to the competition for inspiration
  3. A Decay of Critical Thinking – the best insights, strategies, and ultimately results come from well thought out critical thinking. The base of gathering data, analyzing trends, gathering insights, and then turning those insights into actionable items – that is how companies innovate and success. However, in a firm where the lead is set by the competition, merely to be followed, critical thinking (like any skill that must be practised and taught) dies.

I am sure there are other areas where imitation has detrimental effects, but these were the ones that seemed most apparent to me.

If one positive insight can come out of this, perhaps it is a sustainable and useful form of imitation.

Personally, next time I see a feature/strategy I like, instead of asking “what is it” I will ask “why is it”. I want to understand why my competitor chose to implement that tool, what was their thought process, and what strategic insights can I gain into their overall strategy, rather than just copy it. I can ask myself – is there something I missed?

Overall, I think that imitation may be the biggest canary in the strategic coal mine – perhaps we should re-coin the phrase to “where there is imitation, there is fire”.

And to all those readers, yes, I have read the Imitation vs. Innovation HBR article, but that is imitation with slight innovative tweaks – this article is about pure imitation

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