The Shape of Innovation

Copying is a learning route to innovation. When I published my first article dealing with the topic in 2001, this seemed to be a counterintuitive idea to most. In another article in 2005, I proposed a model of development phases after the imitation stage. And indeed we have now reached a live example of a transition to the next stage: Chinese copies do not any more compete by price alone, but start to compete by new features.

Let us look at an innovation. There is a "long nose" in which the innovation brews, but does not quite reach a critical mass. Bill Buxton states the example of the mouse:

"Think of the mouse. First built in around 1965 by William English and Doug Engelbart, by 1968 it was copied (with the originators' cooperation) for use in a music and animation system at the National Research Council of Canada. Around 1973, Xerox PARC adopted a version as the graphical input device for the Alto computer.In 1980, 3 Rivers Systems of Pittsburgh released their PERQ-1 workstation, which I believe to be the first commercially available computer that used a mouse. A year later came the Xerox Star 8010 workstation, and in January, 1984, the first Macintosh—the latter being the computer that brought the mouse to the attention of the general public. However it was not until 1995, with the release of Windows 95, that the mouse became ubiquitous."

So there is a potentially long time in which the next hit is, in some form, already around (but you likely don't know). Then the innovation reaches critical mass. And then follows the long tail.


What I call the "coathanger" model of innovation combines the long nose, the innovation peak, and the long tail

In the "long nose" there can be several attempts, sometimes in different markets. Here the innovation is in the waiting. The boost comes along in the form of a change in the market environment. This can be 1) an external economic factor, such as he oil crisis of the early seventies which boosted fuel-efficient Japanese cars. This can be 2) another, previous innovation which changed the playing field so that a follower innovation can take place, shown at the example of Windows 95. Or it can be 3) a latent demand condition - an innovation which taps into a latent demand. This is the route to innovation which does not intrinsically depend on external change or another innovation - it sees a latent opportunity and changes the market by itself. The iPhone is a single product which out-innovated the telecommunications electronics competition and is now the dominant design for others to follow.

Innovations change the market environment and make way for other innovations: Windows 95, for instance, changed the playing field for computers worldwide, but was itself a follower innovation emerging from the long tail of the Macintosh. The Macintosh served as an inspiration, and Microsoft changed a fundamental feature: It was made available without a the need for a corresponding piece of hardware. This difference proved crucial, as it allowed Asian manufacturers to mass-produce computers with a useful GUI by simply licensing Windows.

In the long tail, the innovation changes the playing field and results in a multitude of derived products and services. There are principally three routes: Enhancing, competing with related products, and copying.

For enhancement to work, there must an option provided by the innovator to enhance the original (for the iPhone this would be the "made for iPhone" tag or the iPhone apps): This works as long as the secondary producer agrees to the rules set out by the original producer/innovator. If this is not available, or it appears preferable to compete, there will be a competition with related products. These are the related products which have been inspired by the original innovation and need to offer alternatives to compete with the original product: Since the arrival of the iPhone, competing manufacturers came up with similar products such as the Sony Ericsson Ixperia, BlackBerry Storm or Samsung i900. The chance to achieve a follower innovation is only given when competing with related products, although to get there the related product will need to provide a fundamental advantage - a mere tweak of the original will not do. And then there are the copies: Despite being in theory illegal, they usually compete by much lower prices, or, as recent developments show, by new features.

For copies, the price route- think Rolex fakes - works as long as the market knowledge is underdeveloped and a clone is easier accepted. This route is still taken by many smaller producers in China who target developing countries where consumer knowledge is lower. The more interesting clones compete by features. There is an array of Chinese iPhone clones, some of which have features differing from the ones provided by the original: For instance, one has a dual SIM card slot, ideal for people who frequently travel and want to avoid roaming fees.

The iPhone clones' new features do not yet fundamentally improve on the original. Rather the opposite, they struggle with details. Remember, the iPhone was out-innovating the Nokias and Ericssons not because it provided even more additional features, but because it radically improved on user interaction by removing clutter. It is not only the hardware, it is the combination of hardware - also the original iPhone is assembled in China - and smart software which makes it such a pervasive product. Still the iPhone clones which compete by new features are creating new, sometimes local niche markets in the long tail.




iPhone clones: Meizu, iOrgane, CECT Dual Sim, HiPhone, SciPhone.