Entrepreneurial Strategies, Part 2

In his book, Innovation and Entrepreneurship, Peter Drucker presented how innovation and entrepreneurship can be a purposeful and systematic discipline. That discipline is still as relevant to today’s business environment as when the book was published back in 1985. The book explains the challenges faced by many organizations and analyzes the opportunities which can be leveraged for success.

Drucker wrote that entrepreneurship requires two combined approaches: entrepreneurial strategies and entrepreneurial management. Entrepreneurial management is practices and policies that live internally within the enterprise. Entrepreneurial strategies, on the other hand, are practices and policies required for working with the external element, the marketplace.

Drucker further believed that there are four important and distinct entrepreneurial strategies we should be aware of. These are:

  1. Being “Fustest with the Mostest”
  2. “Hitting Them Where They Ain’t”
  3. Finding and occupying a specialized “ecological niche.”
  4. Changing the economic characteristics of a product, a market, or an industry.

These four strategies need not be mutually exclusive. A successful entrepreneur often combines two, sometimes even three elements, in one strategy.

“Hitting Them Where They Ain’t” manifests in one of the two ways: creative imitation and entrepreneurial judo.

Creative imitation describes a strategy where the entrepreneur does something somebody else has already done, but the entrepreneur makes the innovation better than the people who innovated originally. The strategy of “creative imitation” waits until somebody else has established the new market, but only “approximately.” It then goes to work and, within a short time, comes out with something similar that would greatly satisfy the customer. The creative imitation has then set the standard and takes over the market.

Like being “Fustest with the Mostest,” creative imitation is a strategy aimed at market or industry leadership, but it is much less risky. By the time the creative imitator moves, the market has been established. There is usually more demand for it than the original innovator can supply, so the creative imitator perfects and positions it. As such, creative imitation starts out with markets rather than with products, and with customers rather than with producers. It is both market-focused and market-driven.

Creative imitation does not exploit the failure of the pioneers as failure is commonly understood. On the contrary, the pioneer must be successful. But the original innovators failed to understand their success completely. This failure gives room for the creative innovator to exploit the success of others.

The strategy of creative imitation also requires a rapidly growing market. Creative imitators do not succeed by taking away customers from the pioneers who have first introduced a new product or service. Instead, they serve markets the pioneers have created but do not adequately service. Creative imitation satisfies a demand that already exists rather than creating one.

The strategy has its risks, and they are considerable. Creative imitators are easily tempted to splinter their efforts in the attempt to hedge their bets. Another danger is to misread the trend and imitate creatively what then turns out not to be the winning development in the marketplace.