Creativity sucks. Or does it?

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English: Apple iPod mini grey.
Apple iPod (Photo credit: Wikipedia)

The world’s first mass-produced hardware MP3 player was created in 1997 by Saehan Information Systems, which sold its “MPMan” domestically in 1998. In mid-1998, the South Korean company licensed the players for North American distribution to Eiger Labs, which rebranded them as the Eiger MPMan F10 and F20. The flash-based players were available in 32 MB (about 6 songs) storage capacity.

Saehan was the originator and innovator of this breakthrough new product. But look what happened next. In 2001, Apple Computer unveiled the first generation iPod, with far more memory and a new business model. The company took a product already on the market and radically transformed it. The rest is history.

Researchers have found that imitating products and services can be even more valuable than inventing something new. A researcher who has delved into copycats found that almost 98% of the value generated by innovations is captured not by the innovators but by imitator.

Why’s this? Well, the original idea often faces a hard battle because of the investment it takes to educate potential customers about the benefits of the product or service. Then there’s selling and distribution which requires deep pockets. And without scale, which larger companies are usually much better equipped to handle, manufacturing costs keep the product at a high price making it accessible mainly to a high-end niche market. The costs of imitation are typically 60-75% the costs of innovation. MpMan F-10 (1997)

Pathfinders face the hardest road to market. This old saying pretty much sums it up: “You can always tell who the pioneers are because they have arrows in their back and are lying face down in the dirt.” Pioneers have arrows in their backs but fast followers often have the advantage. Half the pioneering startups entering new markets fail. Fast followers enter much later than the pioneers but achieve far greater sustainable success. Pioneers, who create new markets, generally end up with around 7% of the markets they create. Copycats secure the balance.

The real innovation often comes in making the original idea cheaper or better. This in itself requires intelligence and imagination. A knocked-down, cheaper version of a product still requires a lot of creative thinking and design. Let’s not forget about the innovation in marketing. A product no matter how good is still just a product. It takes the creative marketing imagination to draw customers into believing that the product or service fills their needs, wants and desires.

The Diners Club card was the original innovator. The banks borrowed from this card and came up with VISA, MasterCard and American Express. Just imagine for a moment how much value these cards were able to extract from the original idea.

Upfront let’s be clear. We’re not encouraging copying for copying sake. Nor stealing other people’s ideas. Copyright, trademarks and patents are there to protect ideas particularly of the small inventor, venture capital start-up or solo business person. If you want to use copyright material or patented products, you need to pay royalties or franchising fees. What we’re talking about here are the concepts behind products and services that are up for grabs by anyone. You can’t copy a brand name smart phone. That’s illegal. But anyone is free to come up with their own version of a smart phone. Just think of the many private label or house brands. Cake shops, computer shops, garden shops, pet shops all imitate … everyone “swipes” ideas (with modifications, of course).

So what’s this got to do with small business owners? The point is that it can pay to look at innovations that are already on the market and ride on their success. The original founding idea can often be risky. Many new product and service ideas never find their way to market because of the huge hurdles that they have to jump just to get the attention of potential buyers.

Small business owners need not come up with original ideas to make profit. They can take existing processes, practices and even services and turn them into something that will provide benefit for their customers. Remember that your customers, users, competitors and suppliers are still among the most important sources of knowledge that can help you come up with innovations in your business.
It also pays to look outside your own industry and see what companies are doing in completely different industries. Large companies even in slow clock speed industries (facing product life cycles of more than 20 years — elevator and chemical companies, for example) often explore cross-industry innovation. Nike, in a fast clock speed industry, looked to Formula One racing shock absorption technologies to come up with Nike’s Shox shoe with a new shyock absorption system.

The truth is that most products and services can be made better. Whether it’s a better hand-made bread loaf for your bakery, a vehicle accessory such jumper cables made with extra-strength insulation or a cosmetic product with natural, fresh ingredients, the quest for better, faster, cheaper is never ending.

We may have been taught at school that originality counts for everything. Sure, apply that to the schoolroom but leave it there. In the real world of small business ownership, what counts is not always the original but a better imitation.

Stay inspired

Chesney Bradshaw

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