Member Article

Is "Innovation" Dead?

Academics are increasingly trying to teach MBAs “innovation“ – a concept still widely embraced by many entrepreneurs and companies. But there are concerns that “innovative thinking” is fast becoming a thing of the past, replaced by business “cloning” as a legitimate business strategy. Harvard Business Review defined “copy-cat” as one company that clearly demonstrates a successful business model in its home geography, but has yet to expand broadly, so a new entrant replicates that successful strategy in one or more other countries before the original innovator expands on its own.

Rocket Internet, a Berlin-based incubator, makes no apologies for copying other successful business models, and seems to be building a successful business based around this strategy. Started by three German bothers, Marc, Alexander and Oliver Samwer, they’ve made their fortune (estimated to be over $1B) building copycat companies from top web companies from eBay to Airbnb and believe that,

“if you cannot create new ideas, you can legally copy them.“

Rocket Internet recently invested nearly a billion in two German based on-line food services, Hellofresh ($126M), and Delivery Hero Holding Gmbh ($656.8M). Forrester estimates that online food shopping will be a $21 billion industry in the U.S. alone by 2016. Hellofresh will compete directly against “Grubhub”, the current leading online and mobile platform for restaurant pick-up and delivery orders in the US. Based on SEC filings, “Grubhub” processes more than 135,000 combined Daily Average Grubs in 2013 and had approximately $1.3 billion of combined Gross Food Sales.

Rocket Internet has also invested in other replication businesses namely around transportation (UBER), travel (Expedia), home furnishings and on-line fashion beauty sites. Their recent investment portfolio includes:

Is “Innovation“ Dead?

Well not if you consider companies like Tesla, SpaceX, Ubuntu, Elio, Ello and a cast of others, but keeping in mind the strategy of the “copy-cat” effect, will it really only be a matter of time before all of these will be replicated as well? Or is replication, only applicable to internet based companies that serve the on-demand economy - those with money and no-time, and vice versa. Either way, 2015 is shaping up to an interesting year so perhaps we forget about “innovation” and instead, start thinking “Ingenuity.“

This was posted in Bdaily's Members' News section by Rachel Rowling .