Samsung: Copycats

Let's just say it: Samsung is a copycat.

This may be disputed, subject to appeal, void where prohibited, and so on--but after last August's $1 billion judgment by a California jury, we can say without fearing a libel suit that in developing its Galaxy smartphones, Samsung stole design elements from Apple's iPhone. Sure, the "stolen goods" were for comically insignificant elements that perhaps didn't deserve patent protection to begin with: One was for icons with rounded corners while another was for the iPhone's rectangular shape. If Samsung had gone with an ovular phone and sharp-cornered icons, perhaps all this litigation could have been avoided.

But in a 2010 memo, Samsung mobile chief JK Shin did encourage his designers with the phrase, "Let's make something like the iPhone." So feel free, if you must, to shake your head, sigh, and chalk up the Korean conglomerate's sudden, remarkable success to the business equivalent of cheating on a grade-school spelling test. Bad, Samsung!

Now that that's out of your system, here's why Samsung should be lauded rather than loathed. When you boil it down, the electronics giant built upon an existing innovation, the iPhone, to produce a more-advanced, better-selling product. In the process, it transformed itself from a bit player with just 3% of the smartphone market into the market leader.

Samsung engages in a lightly discussed, underappreciated varietal of creativity known as "focused innovation." Oded Shenkar, a professor at Ohio State University and the author of Copycats, defines it thus: "Basically, you try to innovate where you have an advantage and imitate everywhere else." So Samsung built a user interface similar to that of the iPhone but gained its real edge by improving one of Samsung's core strengths: producing big, beautiful screens. In fact, beginning with the company's entry into the semiconductor business, Samsung has cultivated an ability to quickly study, imitate, and, where appropriate, improve upon competitors' products. In an age when information flows freely and contract manufacturers can pump out millions of new devices in a matter of weeks, that skill may be the most underrated in business.

Samsung's strategy--Shenkar dubs it an "innovative imitator"--may lack a certain artistry, but it's also a path set by Steve Jobs himself, who in a 1996 interview said, "Picasso had a saying, 'Good artists copy, great artists steal.' And we have always been shameless about stealing great ideas." For the iPod, Jobs and Apple borrowed liberally from long-forgotten pioneers such as Diamond Multimedia and Creative Labs; in designing the iPhone, from Palm and HP; in designing the iPad, from Microsoft.

Shin encouraged his team to imitate; Apple says it "slavishly" copied. But straining for originality in the post-iPhone era has been a loser strategy. RIM and Nokia's mediocre, unloved--but different!--products have led to dwindling market share, profits, and influence. Samsung, meanwhile, has produced a series of increasingly desirable gadgets, culminating with the beautiful Galaxy SIII, which last November surpassed the iPhone 4S as the world's best-selling smartphone. Since Shin circulated his memo, operating profits at Samsung's mobile division have increased fivefold, growing to $5.2 billion in the third quarter of 2012. During that same period, Samsung shipped 56.3 million smartphones (according to research firm IDC), compared to 26.9 million iPhones.

Samsung's phones aren't popular because of some underhanded trick, but because they're good--and, yes, innovative. Silicon Valley's cool kids may scoff, but its devices have frequently boasted better battery life, bigger screens, and faster data transfer speeds than the iPhone--all for less money. When Apple unveiled the iPhone 5 last fall, it touted LTE download speeds (a Samsung feature since 2009) and a larger screen (Samsung's is bigger). Meanwhile, Samsung's latest Galaxy phones track your eyes and won't dim the screen while you're looking, and a new version released late last year can support two subscribers on the same device, clever features that already seem destined to be copied by its rivals. Samsung's commercials mock Apple fanboys and proclaim, "The next big thing is already here." They're right.

FastCompany