By Robert W. Bradford
Note: This article was first published in Compass Points in April 2003. The info is still relevant today, and it will be nostalgic reading the examples from 2003. Part One was an introduction to this series from Bradford’s article The Easy way to Innovate is – the Hard way! In Part Two we will discuss the First reason that competitors do not copy innovations: They are unable to copy the innovation.
First — and this is one of the best — competitors sometimes are simply unable to copy a new product or service. The reason this is a very good situation should be clear — if you do something valuable for your customers that your competition cannot copy, you have created something that looks an awful lot like a strategic competency, which we all know is practically a license to print money. Unfortunately, this situation is less common than we would like to think. Additionally, we may embark upon a project expecting that our competitors will be unable to copy us only to find out, much to our disappointment, that this is not true. The worst thing about such a disappointment is that it is likely to turn up only after we have spent strategically significant amounts of time and money. However, if you want to avoid this disappointment, there is a key choice you must tend towards in your strategic decision-making: you need to focus your efforts on the hard stuff. The reason that difficulty becomes strategically attractive here is that it increases the likelihood that our competitors, in fact, cannot copy our innovations.
What are the things that will make a competitor completely unable to copy an innovation? In general, these will be technical issues — issues of know-how and capability, quite distinct from intellectual property issues, which are properly dealt with below. Let’s take a look at issues that will completely prevent competitors from pursuing an innovation:
- The competitor does not understand the innovation
- The competitor does not have the correct equipment or people
- The competitor cannot afford the investment
- There is a trick to the innovation that the competitor cannot copy
The first three of these can be related to the others, and — to some extent — they all boil down to resources. With deep pockets, most deficiencies in capability can be eliminated. This is not always the case with the first issue, however — if you don’t understand the innovation, you may end up investing in equipment and people that are inappropriate for success with the innovation. It is possible, however, for an intelligent competitor to invest in (1) — understanding, so this is not insurmountable. It is also possible for a competitor to correct (2), by spending to get the right people and the right equipment. The last two issues may be insurmountable. If investment is required, and a competitor cannot get the required capital, that competitor is, for most purposes, shut out of the market.
The fourth issue — the clever trick — is the dream of most entrepreneurs. If there is a clever trick involved, you can maintain a monopoly on the innovation almost indefinitely, or at least until your competitors figure out a way to steal the secret from you. A good example of this was the formula for gunpowder, which was a closely guarded secret for the first decade or so of its use in Europe. Everyone could tell that charcoal and sulfur were involved, but the use of saltpeter, and its proportion in the mix was a secret that took years to leak out, effectively giving the monks who discovered it a monopoly on its manufacture. Thus, while Roger Bacon is credited with the European innovation in the 13th century, the first European use of guns in warfare was not noted until nearly 100 years later.
In Part Three we will discuss the Second reason that competitors do not copy innovations: They choose not to copy the innovation.
What innovations has your company developed that your competitors are unable to copy? Attend the Simplified Strategic Planning Seminar for more in-depth instruction on this subject as well as all other aspects of Simplified Strategic Planning.
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