Business Innovation Through Imitation

Benchmark good business practices.

In big-business doublespeak, copying the ideas of other businesses is done through "benchmarking," something that all major corporations routinely practice. For example, the owners of virtually every large entertainment and sports complex in America have for decades sent managers to Disney World to look for people-handling practices they can beg or borrow. Because most of Disney's business practices are right out in the open, learning from and even copying them is not only smart and cheap but, as long as competitors don't try to borrow the Mouse, Duck, or other copyrighted characters or patented inventions, is perfectly legal. It should come as no surprise that Disney itself has borrowed innovative ideas from many other entertainment venues.

Copying is a particularly great way to innovate in the world of small business, especially when times are tough and you need to change or die. America is a big place, and in many fields there are so many small operations that it can take years for best practices to permeate a whole business segment. For example, if you run a struggling children's clothing store in Omaha, you may be able to check out a dozen similar operations in California and come away with several innovative business ideas no one in Nebraska has yet stumbled onto. Similarly, if you own several bagel shops in Seattle, you would be nuts not to check out the New York bagel scene when visiting the East Coast.

EXAMPLE: Trina owns a small teashop on the outskirts of Austin, Texas. The recession has tightened the pocketbooks of her largely retirement-aged clientele, and her once-popular gathering place is barely hanging on. While visiting a cousin who has a toddler in Oakland, California, she is taken to Tot'nTalk, a combination daycare-coffee shop where harried mothers have a place to meet friends and socialize while their offspring happily play in a play area overseen by a friendly teenage babysitter. The lightbulb goes on over Trina's head as she sees a way to convert her dying teashop into a popular gathering place for the many growing families in her area.

Borrowing the best practices of others should be a part of every business's ongoing innovation plan. Because it's free and easy, you may already do it on an informal basis. But to improve your chances of success, start a systematic study of excellent businesses in your field, particularly those that are not in your immediate area. Staying clear of local competitors will avoid unnecessarily angering them and at the same time force you to explore beyond the familiar, increasing your chances of discovering a breakthrough business model.

To find businesses good enough to serve as role models, talk to suppliers and other knowledgeable people who work in a different geographical area. For example, if you run a small ad agency in Bangor, Maine, that is struggling to survive because many of your customers are cutting their ad budgets, you might call several business acquaintances who use similar agencies in the mid-Atlantic states. Ask them for the names of three excellent local ad shops in their area. If they can't help, maybe they know someone who can. Once you get a preliminary list, do some more checking (looking at websites can tell you a lot) to shorten it to a few successful businesses that are most like yours.

At this point, you'll need to decide whether it makes more sense to call the other business, explain what you are doing, and suggest sharing best practice information, or to anonymously study their operations. Depending on a number of factors, including whether you can arrange an introduction and how transparent the business is, either approach can work. Obviously, it's a lot easier to learn a lot about a deli by walking in the front door a few times than it is to figure out what makes an ad agency tick by schmoozing with the receptionist.

Establish a separate file for every business you study, dedicating a section for each key business area you want to study. Depending on the business, this might include signage, marketing, staffing, website design, key products, and delivery methods. For example, if a business you study apparently gets lots of calls because of a super-clever yellow pages ad, you want to capture that information in your notebook so that you can design an equally compelling ad.

EXAMPLE: After working several years as an electrician, Maureen, who is excited by the aesthetic and energy-saving possibilities of new lighting systems, opens Maureen's Full-Service Lighting with an electrician's business built in. Her idea is to give do-it-yourself remodelers a one-stop way to buy new lighting systems and get them installed. Although in her city there are plenty of lighting retailers and electricians, no other business has efficiently merged the two. In large part, this is because lighting stores are afraid to offend electricians, who are themselves wholesale customers as well as a source of customer referrals.

Maureen is convinced that given time, her customers will be so enthusiastic about her operation that they will refer others. She concedes that she may alienate some independent electricians, but believes most of them already buy cheaper generic products at big box stores. Maureen reasons she will gain far more than she loses by funneling lighting purchasers directly into her own installation business. And she hopes that once she gives these customers quality service, they will call her when they have future electrical needs.

But just a few months after Maureen opens, local businesses announce major layoffs, and sales are far slower than her business plan predicted. She begins to worry that, despite her innovative approach, she won't have the financial wherewithal to survive until her new concept has a chance to prove itself. To help her decide what to do, Maureen recruits an advisory committee chaired by her Uncle Jimmy, an investor who retired early with a big nest egg. Although Jimmy and the others are impressed with Maureen's business plan, their concern is that it's not innovative enough in these bad economic times. Jimmy wants Maureen to take the time to study some highly successful lighting shops to get ideas. Jimmy gets on the phone, calling lamp manufacturers and wholesalers who do business across the country.

He learns that the hottest lighting retailers all have one thing in common: they have fully embraced "green" lighting. Jimmy buys Maureen a plane ticket, and in a week they visit five lighting stores in four states, all of which concentrate on energy-efficient fixtures. Convincing Maureen's advisory committee, Jimmy proposes that Maureen start featuring green products that will save big on the cost of electricity. Maureen enthusiastically agrees and immediately sets about remaking her shop to emphasize energy-saving products plus educational materials on using them. When all this is in place, she installs a bright green awning with her new name, "Maureen's Energy-Saving Lighting" and in smaller print, "Electrician on Duty." Because Jimmy believes Maureen now has a concept that will thrive during hard times as well as good, he lends enough money to bring her dream to reality.

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