Innovation has become a buzzword that connotes respect and profitability. While innovation funds are common, it’s rare to read of imitation funds. Few people ask entrepreneurs to go out there and copy others. Yet, the focus on entrepreneurship training and startup intervention programs has centered on innovation.
And who can argue that smartphone manufacturers aren’t copying each other? Despite all the branding differences, Apple iCloud, Microsoft SkyDrive, Google Cloud Storage, and Dropbox are imitating one another. Even in developed markets like Western Europe and the U.S., companies copy - though with enough sophistication to avoid legal problems. In African open markets, women will switch from selling bananas to selling yams once they notice that their neighbors are making more profits from yams. But, copying others is a reality of doing business. So, from business books to business schools and corporate boards, everyone is talking about innovation. In traditional investing philosophy, the most innovative firms are potentially the most profitable. To mitigate the investing risks associated with eroding market opportunities due to copycats, investors always look for companies with strong competitive resilience or those that are operating in markets with a high barrier to entry. When a new business idea is incubated and executed successfully, cloners naturally emerge and imitate. Nothing breeds copycats like a successful business venture.
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