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After acquiring a majority stake in the Shanghai Totole Food Company, a leader in the Chinese chicken powder industry, Nestlé faced dilemmas regarding maintaining control over this foreign-invested enterprise (FIE). Despite its 80 per cent stake, and in a departure from past practice, the Swiss company let its minority Chinese partner remain firmly in control. The circumstances surrounding the integration of Totole posed questions about the strategic decisions surrounding investment in a Chinese enterprise by a multinational firm and the challenges of integrating local and global operations. In 2012, Nestlé began talks with the general manager of Totole about acquiring the remaining 20 per cent of the company. Should Totole sell the remaining 20 per cent of shares and, if so, how and when should it do it?

After acquiring a majority stake in the Shanghai Totole Food Company, a leader in the Chinese chicken powder industry, Nestlé faced dilemmas regarding maintaining control over this foreign-invested enterprise (FIE). Despite its 80 per cent stake, and in a departure from past practice, the Swiss company let its minority Chinese partner remain firmly in control. The circumstances surrounding the integration of Totole posed questions about the strategic decisions surrounding investment in a Chinese enterprise by a multinational firm and the challenges of integrating local and global operations. In 2012, Nestlé began talks with the general manager of Totole about acquiring the remaining 20 per cent of the company. Should Totole sell the remaining 20 per cent of shares and, if so, how and when should it do it?

When a product that has been in development for one year can be copied and brought to market in days, first-mover advantage has lost its advantage. Imitation, once stigmatized, is now acceptable. In fact, this author says that to stay competitive and not fall behind, firms must imitate. In this article, he describes why imitation is as valuable as innovation, and argues that imitation can and should be strategically conceived and systematically executed. Consideration is given to the three main types of imitators, the correspondence problem (converting an imitation target into a copy that preserves the favourable outcome of the original), the value proposition of imitation, and overcoming imitation defenses.

Imitators are often so successful that they push innovators out of business. Innovation has a well-established argument based on higher sales and growth, lower costs, and the transformation of a firm’s capabilities, yet imitators enjoy many of the same benefits. In fact, an imitator’s overall costs are estimated at 60 to 75 per cent lower. Generic drug makers, for example, not only leverage the investments of original developers but also save billions of dollars and decades of effort. With the benefit of hindsight, imitators capitalize on the shortcomings of early offerings. They choose what to adopt, singling out profitable opportunities, and are less likely to be complacent than innovators. However, even in an age of imitation ushered in by factors like globalization and outsourcing, business scholars have failed to recognize imitation as a complex endeavour that requires rare and valuable capabilities. <br><br>Crucially, imitation and innovation are not opposites. Though the capabilities to imitate share much with the capacity to innovate, innovators do not adopt them because of the stigma of imitation. This has prevented many firms from becoming “imovators,” able to fuse innovation and imitation. Good innovators and imitators both adapt imported elements or systems, combine different knowledge bases, and identify and leverage “spillovers.” Innovators are better at producing effective barriers to imitation, as much as imitators are experts at finding ways to overcome those barriers. In combining these two skill sets, firms can reap the benefits of innovation.

Imitation is vastly underappreciated, says Oded Shenkar, a professor at Ohio State University's Fisher College of Business. Nearly 98% of the value of innovations is captured by copycats. Look at McDonald's, Visa, and Wal-Mart, which all far outran the path breakers they followed. Successful imitation, however, requires as much discipline as innovation does. To improve their odds, imitators need to understand "true" imitation, develop the capabilities that enable its effective use, and learn to deploy the right strategies.