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We should be inventors and monopolists. That is the case columnist David Brooks makes in the New York Times today.
Inspired by the example of Peter Thiel, co-founder of PayPal, Brooks writes that more Americans should disengage from head-to-head competition and instead do an end-run around it. Don’t give the consumer more choices; instead, come up with a monopoly on something so great that no one can resist it.
“Instead of being slightly better than everybody else in a crowded and established field, it’s often more valuable to create a new market and totally dominate it,” Brooks writes. “The profit margins are much bigger, and the value to society is often bigger, too.”
Nice work if you can get it, and Peter Drucker certainly saw the value of having a lock on something, a “niche” to yourself. He also taught that to be successful, an innovation “aims at leadership” in a given market or industry.
But at the same time, Drucker liked to speak up for good old-fashioned competition through aping—what he called “creative imitation.” That’s when the entrepreneur copies something others have already done, but does so with a better understanding of what the innovation represents. “The creative imitator does not invent a product or service,” Drucker wrote in Innovation and Entrepreneurship. “He perfects and positions it.”
Take IBM in the early 1980s. It suddenly decided, based on the competition, that it wanted to produce personal computers. “The idea was Apple’s,” Drucker noted, but IBM acted fast. “Within two years it had taken over from Apple leadership in the personal computer field.” And, he added, “Procter & Gamble acts very much the same way in the market for detergents, soaps, toiletries and processed foods.”
This sort of thing also saves the copycat a lot of trouble. “By the time the creative imitator moves, the market has been established and the new venture has been accepted,” Drucker wrote. “Most of the uncertainties that abound when the first innovator appears have been dispelled or can at least be analyzed and studied.”
Still, that doesn’t mean that creative imitator is always the best way to go. “What it lacks in risk,” Drucker warned, “creative imitation makes up for in its requirements for alertness, for flexibility, for willingness to accept the verdict of the market and, above all, for hard work and massive efforts.”
Has your business ever been a creative imitator? Did it work?