LEADING BY IMITATION

LeadingImitation is catching on these days. A new research shows that leading banks, by copying techniques from the manufacturing sector, are simultaneously cutting costs and boosting growth. Executives from car dealerships are attending classes on customer service given by up-market hotel chains. Hospitals are learning lessons in safety and efficiency from airlines and the US Navy. Shipping lines are looking to aircraft-engine makers for better propulsion technology. And several blue-chip companies —including Bayer, BP, IBM and General Electric Company—  have recently teamed up in a consortium called the Global Leadership and Technology Exchange to formally share best practices. Their rationale? Big, foundation technologies such as fuel cells can benefit them all—and research is not getting any cheaper.

Market forces are rapidly converging to make it more practical—and more profitable—to adopt the best new ideas, processes, technologies and systems from outside a company's own boardroom or design department. Outsourcing initiatives, coupled with willingness by management teams to redefine their organizations' core competencies, are augmenting the intake of intellectual capital as companies increasingly learn from their outsourcing partners. The "open innovation" phenomenon—brought to light in 2003 by Henry Chesbrough, an adjunct professor at the Institute of Management, Innovation & Organization at the Haas School of Business at the University of California, Berkeley—has helped popularize open loop systems in which concepts are assigned values and traded across corporate boundaries.
 
Today, however, such innovation through imitation is moving to a higher level of competitive importance. Experts have found that high-performance organizations do much more than examine open innovation theories or occasionally send delegations to visit companies that have made the "best-in-class" lists. They actively lead by imitation—first identifying the business processes that they know will change the game in their markets; then seeking out examples of those processes done right, wherever they are used; and finally adopting selected processes as rapidly as possible.

In effect, those organizations are institutionalizing the concept of distinctive capabilities, one of the three building blocks of high performance, on another strategic plane: They use their recognition of the processes that give them an enduring edge as a tool to gain further systemic advantage through leadership by imitation. While they may keep the specifics of what they imitate close to the corporate vest, their route to leadership—and, ultimately, to high performance—in this way is plain to see.

A decade ago, when Boeing was losing its dogfight with commercial aircraft rival Airbus, Alan Mulally and other senior Boeing executives knew they had to break with the traditional costly and inflexible ways of building aircraft in one fixed factory location. By consulting with automakers such as Toyota Motor Corporation and Ford, Boeing learned better ways to manage the assembly lines that produced its enormous aircraft. As a result of moving aircraft during assembly, Boeing can now adjust its production rate more quickly to accommodate fluctuations in orders. The total time spent assembling one 777 aircraft is expected to drop from 20 days to 16 days, and eventually to as little as 12 days.

Similarly, hospitals are now studying airlines, nuclear power plants, European railroads and even the US Navy in search of techniques for improving patient safety and operating efficiency. At some hospitals, surgery is now preceded by what is called "the pause for the cause." In this approach, drawn from standard practice on aircraft carrier flight decks, the surgeon and the support team review both the patient's history and the procedure they are about to perform. If any team member expresses a major concern, the procedure is delayed until the issue is resolved satisfactorily. Elsewhere, using a backup system check that is standard practice in the nuclear power sector, nurses are providing their analyses of patients' conditions before doctors begin treatment.

In those situations, core operating concerns are the catalyst. In other scenarios, a borrowed idea is seen as a way to establish a quick competitive advantage.

(Adapted from the Outlook Business Journal)