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Summary

This chapter explained that most new products and services are easy to imitate, particularly by large established companies. Companies can often reverse engineer the new products of their competitors to find out how they work and duplicate their functionality. They can also hire the employees of the innovating company to gather tacit knowledge of how the innovator developed the new product or service. They can often look at patent documents, published papers, or other written sources to gather codified information that allows them to imitate the new products or services introduced by entrepreneurs. Finally, established companies can often imitate the new products and services that entrepreneurs develop simply because they are working on similar projects, and their own research and development provides them with needed information to imitate.

The fact that other companies, particularly large established ones with better manufacturing and marketing capabilities than start-ups, can imitate their new products and services is problematic for you, as a technology entrepreneur, because the profits that you earn from introducing a new product or service are eroded by imitation. Therefore, to be successful, you must make concerted efforts to minimize imitation through two alternative means: secrecy and patenting.


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