Many startups aim to disrupt their industries with bold, groundbreaking ideas, but research from Cornell’s SC Johnson College of Business suggests that the road to success often starts with imitation. Startups that mimic established competitors before pivoting to innovation are more likely to thrive. Skipping this step and diving into innovation too soon increases the chances of failure.
“Imitation isn’t just copying—it’s a launchpad for growth,” the researchers explain. “Once a latecomer gains traction, revenue can fund further advancements and talent acquisition.”
Imitation or innovation?
Using computer models, the study explored how startups allocate resources between imitation and innovation. Firms that lean too heavily on innovation often fail to establish a solid product or build resources, while those that focus too much on imitation risk stagnation. The key to success lies in striking a balance: invest enough in copying the market leader to compete while allocating resources to eventually outpace them.
The findings suggest that startups should initially prioritize imitation. By studying the leader’s processes, reverse-engineering their technology, and adopting proven production methods, latecomers can build a solid foundation. Hiring experienced engineers—especially from competitors—further accelerates this process.
“It’s the people who drive innovation,” the researchers note. “Bringing in talented engineers and incentivizing them is crucial for catching up and overtaking the leader.”
Illustrating the point
The semiconductor industry illustrates this strategy. Taiwan Semiconductor Manufacturing Co. (TSMC), which holds a dominant 68% market share, balances imitation with sustained investment in research and development (R&D). By contrast, Samsung Electronics, a relative newcomer to semiconductors, once held a 20% market share but lost ground after prioritizing innovation too soon. Samsung’s experience underscores the importance of learning best practices before attempting disruption.
This pattern isn’t limited to semiconductors. Industries like automotive, retail, and pharmaceuticals show similar trajectories. Latecomers succeed by mastering what works before developing unique approaches.
When should a latecomer shift from imitation to innovation? The tipping point is achieving a reliable product and stable profits. From there, startups can innovate aggressively to surpass their rivals.
Market leaders, meanwhile, must remain vigilant. As challengers close the gap by assimilating their technologies, leaders must continuously invest in R&D and talent to stay ahead. Nvidia serves as a prime example. With an 80% market share in AI hardware, Nvidia reinvests its resources into cutting-edge technologies, making it increasingly difficult for competitors to catch up.
The research highlights a critical lesson for startups: imitation isn’t a shortcut—it’s a survival strategy. By starting with what works and gradually innovating, latecomers can turn the tables on even the most dominant players.
