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We broadly suggest that the decision to imitate can be attractive when the innovation is incremental and thus imitation is low risk and likely to be congruent with the prospective imitator's existing market knowledge and capabilities. Conversely, the decision to imitate more radical innovations will generally be less attractive. Imitating an incremental innovation is most likely to lead to positive performance outcomes when the innovator firm also has a history of introducing successful innovations to the market. Imitating will minimize the innovator firm's advantage and, hopefully, enable the imitator to hold if not gain market share. The value of imitating a radical innovation by such a competitor remains questionable, however, as past innovation performance is only weakly correlated with future performance. In the context of either incremental or radical innovations introduced by a competitor with demonstrable competency in a particular market space, there is potential benefit from pursuing imitation. Deep market knowledge of the innovator is generally associated with the introduction of innovations that are congruent with current market conditions; thus the risk inherent in mimicking innovation is low, regardless of whether the innovation itself is radical or incremental.

From a strategic perspective, the introduction of an innovation by a competitor is a disruptive event, and will cause at least some consternation among other market actors who will have to determine whether their current offerings are sufficient to compete with the "new." They will have to decide whether to remain with existing products, copy the competitor's offering, or pursue new product offerings that are different from those of the competitor. The overarching challenge, as with developing any competitive strategy, is that the decision to engage in imitation is highly fluid, and likely to be predicated not just on the desire to imitate, the focus in this chapter, but also on the ability to imitate, that is, the capacity to actually put forth a new offering that mimics all or a portion of the innovation. Indeed, it may not be practical or advisable for a firm to shift resources from its ongoing product development foci to counter a competitor's innovation through imitation. Moreover, as mentioned previously, long-term firm performance is not likely to improve by always copying the competition. Nonetheless, imitation can be a useful competitive tool to minimize the potential advantage to the innovator of going first, and to ensure that the prospective imitator does not miss critical market developments by failing to keep pace with the competition. What this chapter has provided is a practical discussion of how to make sense of a competitor's innovation in determining the appropriateness of competitive imitation, and what signals encapsulated within that innovation assist in crafting an imitation response.


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41. Notice the term here is differentiation advantage, and not competitive advantage. We do not mean to imply that pursuing radical innovation will automatically lead to a competitive advantage through a lack of imitation; such advantage would be predicated on market acceptance of the radical innovation.

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