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July 9, 2020

The Big Secret of Tech Innovation

Summary:

You don't always need to innovate. You can first copy. If need be, you can then buy the innovator. (But never steal the intellectual property.)

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The chairman of Reliance Industries, Mukesh Ambani, recently announced a video-conferencing tool, JioMeet, that looks just like Zoom. On social media, Indian entrepreneurs are panning him for copying; one person tweeted that he should have called it “Jhoom” because that is how it would be pronounced locally. But it isn’t Ambani who is out of touch with the way the tech industry works, it is Ambani’s critics. They don’t understand how tech innovation works.

Although this may sound strange, copying is good for innovation. This is how Chinese technology companies got started – by adapting Silicon Valley’s technologies for Chinese use and improving on them. The Chinese routinely monitor what app is achieving success elsewhere and duplicate it before they start adding features and innovating; they learn from the best and improve.

It’s how Silicon Valley works, too. Even Zoom is a knock-off of the technologies it is competing with: WebEx, Skype and BlueJeans.

Steve Jobs built the Macintosh by copying the windowing interface from the Palo Alto Research Center. As he admitted in 1994, “Picasso had a saying, ‘Good artists copy, great artists steal’; and we have always been shameless about stealing great ideas.” Almost every Apple product has features that were first developed by others; rarely do its technologies wholly originate within the company.

The iPod, for example, was created by British inventor Kane Kramer; iTunes was built on a technology purchased from Soundjam; and the iPhone frequently copies Samsung’s mobile technologies — while Samsung copies Apple’s.

Mark Zuckerberg built Facebook by copying from MySpace and Friendster, and he continues to copy products. Facebook Places is a replica of Foursquare; Messenger video imitates Skype; Facebook Stories is a clone of Snapchat; and Facebook Live combines the best features of Meerkat and Periscope.

Now, Zuckerberg is trying to copy WeChat by integrating private messaging, groups and payments. This is why he is so focused on getting WhatsApp Payments approved by the Indian regulators. Before purchasing the company, he desperately tried to copy WhatsApp, but repeatedly failed. So he ended up purchasing the company, which had almost no revenue, for an astonishing $20 billion or so, which was about 10% of Facebook’s market cap.

This is another one of Silicon Valley’s secrets: If stealing doesn’t work, then buy the company.

By the way, they don’t call this copying or stealing; it is called “knowledge-sharing.” Silicon Valley has very high rates of job-hopping, and top engineers rarely work at any one company for more than three years. They routinely join their competitors or start their own companies. As long as engineers don’t steal computer code or designs, they can build on the work they did before. Silicon Valley firms understand that collaborating and competing at the same time leads to success. This is even reflected in California’s unusual laws, which bar non-competition agreements.

In most places, entrepreneurs hesitate to tell others what they are doing. Yet, in Silicon Valley, entrepreneurs know that, when they share an idea, they get important feedback. Both sides learn by exchanging ideas and developing new ones. So when you walk into a coffee shop in Palo Alto, those you ask will not hesitate to tell you their product-development plans.

Neither companies nor countries can succeed, however, merely by copying. They must move very fast and keep improving themselves and adapting to changing markets and technologies.

See also: A Quarantine Dispatch on the Insurtech Trio

Apple became the most valuable company in the world because it didn’t hesitate to cannibalize its own technologies. Jobs didn’t worry that the iPad would hurt the sales of its laptops or that the music player in the iPhone would eliminate the need to buy an iPod. The company moved forward quickly as competitors copied its designs. I expect Jio will do this, as well: learn from what works best in the Indian market, and come out with better technologies.

There is a line here that should never be crossed, however, and that is intellectual property theft. China’s Huawei was sued by Cisco for its “systematic and wholesale infringement of Cisco’s intellectual property,” for example. Huawei’s 5G technologies were likely stolen from Nokia and others. The core of many of China’s most advanced technologies is based on such theft. This is never good for innovation and leads to even more destructive habits and the types of blowback that Huawei is seeing all over the world as countries rightly ban its technologies.

My simple message to Indian entrepreneurs is to imitate before they innovate – but don’t cross any ethical lines.

This article first ran in the Hindustan Times.

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About the Author

Vivek Wadhwa is a fellow at Arthur & Toni Rembe Rock Center for Corporate Governance, Stanford University; director of research at the Center for Entrepreneurship and Research Commercialization at the Pratt School of Engineering, Duke University; and distinguished fellow at Singularity University.

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