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Entrepreneurial Smart Camp: Imitation vs. Innovation in Business Model Design


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Entrepreneurial Smart Camp: Imitation vs. Innovation in Business Model Design

  1. 1. Copycat, copycat! Christopher Corbishley Entrepreneurial Smart Camp, Imperial College Business School 15th July 2015 Imitation vs. innovation in business model design
  2. 2. LECTURE OUTLINE… 1) Introduction to copycat business models - What is a business model? - Imitation vs. Innovation 2) Case study discussion: MadHead Games BREAK 3) Copycat business strategies: Are they effective? - Guest speaker: Rocket Internet - Q&A
  3. 3. TODAY’S SPEAKERS 3 Andrea Olivari (Guest Speaker) • Imperial College Business School Alumnus • Co-Founder and Managing Director of Rocket Internet, SE Asia and Zalora (a portfolio company) • Head of Operations at Hassle.com Chris Corbishley (Lecturer) - PhD candidate, Imperial College Business School - Research on emerging market entry strategies - London Stock Exchange ELITE programme helping high growth businesses to scale up (e.g. secret sales, graze, naked wines, swoon)
  4. 4. IMITATION IS … human nature? 4 Definition: 1. The action of using someone or something as a model. "learning by imitation“ (mimesis) 2. A thing intended to simulate or copy something else. copy, reproduction, replica
  5. 5. 5
  6. 6. … the diffusion of language, learning and culture 6
  7. 7. 7 “Man differs from other animals because of his greater aptitude for imitation” Aristotle (Poetics)
  8. 8. 8 Definition: - In sociology, an isomorphism is a similarity of the processes or structure of one organization to those of another, be it the result of imitation or independent development under similar constraints. - There are three main types of institutional isomorphism: normative, coercive and mimetic. AT A SOCIETAL LEVEL THIS LEADS TO ISOMORPHISM
  9. 9. vs. Soren Kiekagaard (c.19th) “The Crowd is Untruth”
  10. 10. 10
  11. 11. … sometimes we go wrong 11
  12. 12. IMITATION IS … human nature? 12 Definition: 1. The action of using someone or something as a model. "learning by imitation“ (mimesis) 2. A thing intended to simulate or copy something else. copy, reproduction, replica Dreaming up winners…
  13. 13. … and picking them Oprah Winfrey: How do you keep reinventing? Ralph Lauren: You copy. Forty-five years of copying that’s why I’m here. 13 Oprah Winfrey interviewing Ralph Lauren October 24, 2011
  15. 15. 15 Breaking it down… E.G. THE LEMON STAND
  16. 16. 16 Three key components…
  17. 17. 17 The Business Model Canvas… (Osterwalder, 2008)
  18. 18. 18 What is it for? BUSINESS MODEL CANVAS
  19. 19. 19 Some examples…
  20. 20. 20 Back to the building blocks…
  21. 21. IMITATION
  22. 22. 22 What business model imitation is NOT … fakes, rip-offs, grey markets, intellectual property (e.g. copyright, trademark, patent) infringements…
  23. 23. 23 NOT … process adoption Ford assembly lines (1920s)
  24. 24. “For much of Toyota’s history, we have ensured the quality and reliability of our vehicles by placing an Andon cord on every production line – and empowering any team member to halt production if there’s an assembly problem” 24 Akio Toyoda
  25. 25. ‘COPYCAT’ BUSINESS MODELS “A business model that delivers the same value proposition – with the same resource-base and transactive structure – to reproduce the same competitive advantage” 25
  26. 26. 26 “For Linio, think Amazon for Mexicans; for Zalora, think Zappos for Malaysians; for Easy Taxi, think Uber for Nigerians.”
  28. 28. 28 APPLE Apple’s (innovative?) new streaming service
  29. 29. INNOVATION
  30. 30. 30 What business model innovation is NOT
  31. 31. WHAT IS BUSINESS MODEL INNOVATION? “Novelty in the organizational design, resource structure and/or financial model of the business” 31
  32. 32. 32 • SAMPLE: Survey of 765 global company CEOs conducted in 2006 • SOURCES: Products 46% Operations 30% Business models 28% • RESULTS: Based on operating profit margin, outperformers emphasized business model innovation twice more than underperformers (IBM, 2006) Common sources of business model innovation Benefits of business model innovation Structural changes (65%) Cost reduction 57% Strategic partnerships (53%) Strategic flexibility 55% Shared services (22%) Focus 43% Spin offs (18%) Exploit new opportunities 42% Using third party services (15%) Reduce risk 11% Move from fixed to variable cost 11% IBM: ‘GAME CHANGERS’
  33. 33. 33 • Brewdog is a craft beer company, established in 2007 and funded through 'equity for punks'. • By making use of crowdfunding it is now the largest independent brewery in Scotland, and ships over 700,000 bottles of beer per month to 27 different countries. • It employ 65 people and has 5 craft beer bars across the UK. Current revenues are in excess of £6million. CROWDFUNDING: BREWDOG
  35. 35. 35 “Tell me something that’s true that nobody agrees with you on? … It’s a slightly extreme formulation I have of this but there is this strange phenomenon in Silicon Valley where so many of the successful entrepreneurs seem to be suffering from a mild form of Asperger’s or something like this… I think we always need to flip this around and ask the question, why is it that the people who are not suffering from Asperger’s are at a disadvantage in our society?” (Peter Thiel, Founder of PayPal, Palantir) ‘ASPERGIC’ ENTREPRENEURS
  36. 36. “What great company is nobody starting?” “What great investment does nobody like?” “What worthwhile but unpopular cause is not being funded?” 36 Peter Thiel (Zero to One)
  37. 37. 37 • Globalization without new technology is unsustainable • If you want to create and capture lasting value, build a differentiated business • Proprietary technology must be at least 10 times better than its closest substitute in some important dimension to lead to real monopolistic advantage. • Every start-up should start with a very small market • Every great business is built around a secret that’s hidden from the outside. (Peter Thiel, Zero to One) ZERO TO ONE: KEY MESSAGES
  38. 38. 38 S-CURVES, PRODUCT LIFE CYCLES & DOMINANT DESIGNS are concepts representing different scholarly attempts to illustrate the innovation cycle: • In evolutionary theory of economics, Kirzner argued that following an initial focus on product innovation, process innovation takes over • In population ecology, Hannan & Friedman match the increased entry and exit of firms across the innovation cycle. • Utterback and Abernathy used it to show consumer types and adoption behaviours across the product lifecycle RADICAL VS. INCREMENTAL
  39. 39. 39 PROACTIVE VS. REACTIVE … 4 levels of innovation strategy
  40. 40. 40 FIRST MOVER ADVANTAGE? Depends on the pace of evolution of both the technology and the market
  41. 41. 41 First movers and fast followers: Who wins? If we look at these innovators and their ‘copycats’ or ‘fast followers’, which ones are the winners? OR BETTER TO BE A COPYCAT?
  43. 43. 43 What is their business model?
  44. 44. 44 Zara model applied to design furniture SWOON EDITIONS
  45. 45. 45 Remember these guys?
  46. 46. 46 GRAZE.COM • Founded in 2007 by a serial entrepreneur who had previously started LOVEFiLM. • Graze is an e-commerce subscription service delivering healthy food by post. Logistics model applied to snack industry
  47. 47. MADHEAD GAMES Tower of Saviors or ‘Toilet of Plagiarists’?
  48. 48. CASE STUDY DISCUSSION What are the similarities and differences between TOS and PAD?
  49. 49. CASE STUDY DISCUSSION Effective strategy? Sustainable?
  50. 50. CASE STUDY DISCUSSION Good or bad?
  51. 51. Break… 51