Tag: pharmaceuticals

You thought Facebook was the original? Or YouTube? Or LinkedIn? – Get ready for your wake-up call! Break-through innovations are over-rated! Imitators are successful by combining someone else’s innovation with the imitator’s advantage and by doing so they can become innovators themselves!

Who was first?

Believe it or not,

• The first social college network was not Facebook but Network 5460 in China.
• Ecademy in Great Britain was a first social business network before LinkedIn, and
• YouTube followed Israel’s Metacafe.

The list is endless and spans across industries – with Network 5460, Ecademy, Metacafe & Co. losing out on the commercial success.

Wrongly praising the first mover?

Why is it that the pioneer are long forgotten while followers are often more successful?

Media hype about innovation. Even academia prefers to study innovators rather than the early adapters, which rule the marketplace while many originals perished. After all, We Innovate to Implement, to see our ideas become reality and change the world.

Where innovators fail

Over 70% of top managers interviewed named innovation as one of the top three strategic priorities according to Boston Consulting Group. Yet most projects fail especially in companies that focus on radical innovations.

In the high risk and upfront investment driven pharmaceutical industry, for example, only 10% of newly developed compounds survive the testing phase – and even if the market launch succeeds, only few pioneers reap the profits: Yale professor William D. Nordhaus found that they were only able to secure 2.2% of the new innovation’s value. The primary obstacles are skeptical customers and hesitant partners.

Oded Shenkar, business professor at Ohio State University, confirms that copycats often get better returns. While theft of intellectual property (IP) is illegal and out of the question, there lies much potential in the (legal) duplication of products, processes, or also business models.

How imitators succeed

Being an imitator lends itself to benefits inaccessible to the innovator: As a close follower, you can learn from the mistakes the innovator made earlier. Instead of doing all the initial Research and Development, imitators have the advantage to glimpsing around the corner ahead: It becomes easier for imitators to attract potential partners and customers as they already have a whiff of the success potential of an innovation. It can also enable imitators to simplify the original imitation in a radical way and reduce complexity making usage easier for users.

Often customers are not fast enough to recognize something new and its ‘timely newness’ at its early stage. They tend to notice novelty only later, when it already becomes visible in the marketplace or shows up (as an imitation) in another area or industry.

Here lies the power of open innovation and applying novelty successfully to a different industry; think anti-lock brakes for cars that originated in the aerospace industry, for example.

Overcoming the imitators stigma

The word ‘imitation’ has a negative connotation reputation. However, you can look at it as the extension of innovation into other businesses and industries to benefit the customer by applying the novelty, more choices, or lowers prices.

It took companies that rely on novelty products, such as innovative pharmaceuticals, a while to understand the trend but then they opened up to go both ways: discover and develop new medicinal drug products under patent protection but also reap the profits from off-patent drugs in a separate generics business, so not to leave this significant business to imitators alone.

Scaling up

On an even larger scale, countries like China or South Korea are highly competitive and creative powerhouses in the world economy – and they became particularly good at turning imitation into innovation over the past few decades. The underlying pattern shows acquisition of technology abroad, and then to assimilate and improve it building up R&D of their own in a framework of government policy and a supportive socio-cultural environment.

As a strategy, imitation led to innovation. China, for example, is not only known for fast and creative mobile phone adaptations for their fast-paced and spontaneous domestic market. It shows the largest growth of patents filed in 2011, up 33% from 2010, far more than other countries according to the UN’s World Intellectual Property Organization (WIPO). Also South Korea has some of the most advanced companies and institutions on the planet today. The plan worked out.

Two sides of a coin

Innovation is a team sport. Breakthrough innovations typically catalyze at the interfaces of disciplines. ‑ Once the dots are connected in seemingly new ways, who can say what has been there before intentionally or even unconsciously? Does it matter?

Imitation can be flattery; it can be an interpretation and adaptation by an entrepreneur, a venture capitalist, or an executive champion within a company or organization. (More on: How to become the strategic innovation leader?)

We will see how long the legal defense of intellectual property will hold in the global economy where open source, social collaboration, and digital transparency already changed the face of we look at ans conduct business. – In the end, business and progress thrive from both, innovation and innovation.

They are two value-adding sides of the same coin.