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How To Beat Copycats

There's only one way to beat the copycats, discounters and big companies trying to make money from your idea. And it's brutal.
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The world is full of fast followers. Every new business immediately spawns copycats, riffers, and discounters; cheap knock-offs and traditional players trying to use their brands and size to barge into new markets. In many cases, when you invent and establish a new product, service, sector or approach, you actually make it easier for the guys running right behind you to succeed. Why?

  • They ride on your coattails, your PR and your advertising in every possible way. They’re not pioneers and they’re not inventing anything. They’ve just learned to say, “We’re just like X but cheaper or faster or closer.” Saying, “We’re just like Groupon but better,” saves a ton of time, money and marketing.

  • They lean on your success to establish their own credibility, and to show their customers that the idea or product works and works well.

  • They go to school on your errors and missteps. They save time and money by avoiding first-timer mistakes. They get to enter the product development and delivery cycle at a later and more stable level than you did.

So what’s a hard-working CEO to do?

Simple: You need to keep raising the bar on yourself, and your business, before your competitors do it for you. The acid test is, “What’s the best you can possibly be?” The answer is, “Better, for the moment, than anyone else who’s trying to do the same thing.

Of course, just because no one else has done something doesn’t mean you shouldn’t be aiming for it – you can’t let other people’s limitations hold you back. Entrepreneurship means committing to a life of constant awareness (okay, paranoia), continuous change and extreme flexibility, as well as the willingness to eat and to abandon your “offspring” before they run out of steam. If you can’t do it, someone else will do it for you.

A good example of a great company falling asleep at the switch is Nike. Nike owned the athlete for years. They had the coolest shoes, the coolest endorsements, the best technology and the coolest television ads. When the Web came along, they put up a pretty robust site to show off their ads and their products. Then, having fallen in love with their own videos, they sat on their laurels.

It didn’t take long for competitors to figure out that the real athletes weren’t in it for the ads or the glory. They launched web sites that served the real needs of athletes – providing exercise programs, race training regimens, fitness tracking, online connections with like-minded people, athlete and team meet-ups, etc.

In pretty short order, the real athletes--and plenty of weekend warriors-- totally bailed on the Nike sites. The other sites were far more connected to their interests and represented far better uses of their scarce time. Nike opened the door for small, quick competitors to jump in with simple, straightforward tools and applications that let them to eat Nike’s lunch.

How badly did this hurt Nike? We can track the popularity of Nike’s brand online by tracking their Facebook likes. (Yes, there are some questions about fake likes, but since I’m interested in comparative data, we don’t have to worry about those right now.) True, this is only one way of keeping score, but it’s one of the best we have right now.  So here’s the “likes” math:

Baseline Players                         October, 2010                       September, 2012

Coke                                        15 million                            50 million

Starbucks                                  16 million                            32 million

Athletic Brands

Converse                                    7.4 million                          33 million

Adidas                                        4.8 million                          15.7 million

Nike                                           2.5 million                          10.5 million

When you look at these numbers, it’s clear that Nike really isn’t in the same league as the big dogs.

Raising the bar means that you need to constantly make yourself obsolete and regularly cannibalize your products and services. The rate of change is autocatalytic – each change creates the next at a faster rate, and leads to disruption and radical obsolescence. It’s all driven by virality and almost perfect cross-market intelligence. If you want to stay in the game, keep raising the bar.

Remember: No one cares who made the first version of something. They care about who makes the best version. 

Last updated: Oct 16, 2012

HOWARD TULLMAN | Columnist

Howard Tullman is the CEO of 1871 in Chicago where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V, LLC and Chicago High Tech Investors – both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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