Google’s innovation recipe
“Talk to more than a dozen Googlers at various levels and departments, and one powerful theme emerges: whether they’re designing search for the blind or preparing meals for their colleagues, these people feel that their work can change the world (…) The marvel of Google is its ability, after 10 years, to continue to instill a sense of creative fearlessness and ambition, even as it has grown to more than 16,000 employees.”
Read Chuck Salter’s article, “The Faces and voices of the world’s most innovative company“, on Fast Company.
“Google excels at IT and business architecture, experimentation and improvisation, analytical decision making, participative product development, and other relatively unusual forms of innovation. It balances an admittedly chaotic ideation process with a set of rigorous, data-driven methods for evaluating ideas. The company culture attracts the brightest technical talent, and despite its rapid employee growth Google still gets 100 applicants for every open position.”
Read Ball Iyer and Thomas H. Davenport’s paper, “Reverse engineering Google’s innovation machine“, on Harvard Business Review.
“Google is finally discovering gravity. First, the company missed Wall Street revenue forecasts in the fourth quarter for the first time. Then a pair of reports from market researcher comScore (…) said U.S. growth in the number of clicks on the paid ads appearing next to Google’s search results essentially flatlined for two months running compared with a year ago. Six months ago, paid clicks were growing up to 40% annually.”
Read Robert D. Hof’s article, “Google: what goes up…”, on BusinessWeek.
A year ago I posted “Innovation at Google“, which features Marissa Mayer’s talk about the basics behind Google’s innovativeness. The company’s stock traded at $747 a share back in November, falling to $466 at the begriming of this month. Interestingly enough, this year Google did not make the top 10 of Fortune’s “most admired companies for innovation“, but was featured as the number one by Fast Company’s hand picked “most innovative companies“. Here are some insights on Google’s innovation recipe, which is being put to the test as the company faces growing competition.
- Best and highly motivated talent. Google continues to get the best young talent in the industry. One of the company’s policies enables engineers to allocate 20% of their workload to projects of their choosing. Employee’s own discretionary projects have delivered 50 new products and features. However, just recently, market analysts highlighted the fact that key some senior people left Google for Facebook and that Douglas Merrill, Google’s CIO who was featured on the cover page of Fast Company’s March issue, will become EMI’s Music president of digital next month. I suggest listening to D. Merrill’s comments on how Google avoids corporate policies which would otherwise prevent in-house talent from coming up with innovative concepts. “Let a thousand flowers blossom”, “fail very quickly so that you can try again”, “innovation is super fragile and it’s very easy to kill” are characteristic statements portraying Google’s corporate culture.
- Make and buy. In-house engineering talent is behind many of Google’s successes (e.g. Gmail). Nonetheless, the company has become a serial acquirer. Here are some examples (there are more than 50 on Wikipedia’s list): User Generated Video – YouTube; Web ads – Doubleclick; Analytics – Urchin; Wikis – Jotspot; Photo management – Picassa; Mobile platform – Android; Blogging – Blogger; Microblogging – Jaiku; 3D design – Sketch; Google Earth – Keyhole; Voice mail management – Grandcentral; RSS feeds – Feedburner; Social networking – Dodgeball.
- Design principles vs. processes. Google manages to avoid non essential processes to accelerate product development by making usefulness, usability and ubiquity become key design principles. Note that rapid prototyping and usability testing involving actual users is coupled with the launch of beta versions which rely on users’ feedback to enable a continuous improvement process.
- Center of gravity. Architectural control matters to Google. A scalable and proprietary platform is the center of gravity of an ecosystem attracting third parties delivering mash-ups (e.g. Platial enables user generated content and Google maps) and mobile applications in the near future (e.g. Google’s Android). Google’s own assets are also expected to contribute to the company’s overall infrastructure and new product development (e.g. Google Finance was assembled by mixing existing components).
“Google hopes to use its platform, with applications relevant to add buying, to help advertisers allocate their marketing dollars effectively.” B. Iyer and T.H. Davenport.
- Market creation. Google does not appear to be concerned about competing head to head with incumbents (e.g. Microsoft) and influencing market conditions (e.g. getting regulators to mandate open access in the wireless space, in the recent 700MHz bid process they managed to take down the so-called network operator’s walled gardens). If interested in the subject, see my post on Google’s Wi-Fi 2.0
- Prediction markets. Google appears to make the most of some 300 prediction markets. Basically, this helps gather input from panels of employees on subjects which involve forecasting activities. I’m posting the following links for those of you interested in this topic: InnovateUS, Virtual Ventures, PPX.
“The markets were designed to forecast product launch dates, new office openings, and many other things of strategic importance to Google”. Bo Cowgill’s Putting crowd wisdom to work.
- Competing on analytics. Quantitative and statistical analysis have become a source of competitive advantage. Google takes full advantage of this by driving innovation and improving product performance. As Thomas D. Davenport and Jeanne G. Harris share in “Competing on analytics, the new science of winning” data mining and predictive analytics are critical business tools. The HBR paper on Google, which I quoted above states: “a key ingredient of innovation is the extensive, aggressive use of data and testing to support ideas”. Some other quotes worth noticing:
“At the university, you’d work on one problem for months at a time. Here, I have a dozen problems I’m working on -auctions; forecasting; ad hoc statistical, econometric analysis such as how the mortgage crisis affects Google -and I get two weeks to work on them”. Hal Varian, Chief Economist.
“Its ad business, ruled by secret, complex mathematical formulas, vexes analysts, who label the company a black box”. Robert D. Hof.
Since many of you have expressed interest in my posts about innovation recipes, here is the link to HP’s and those of 2o+ other companies which you will find listed at the bottom of that page. As usual, I will welcome your comments and emails.
Picture credits: DNA Google Logo At Google Kirkland
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