Over the last ten years, Google has become a poster child for
successful internet businesses. Much of its success derives
from a business strategy which CEO Eric Schmidt has described as
"ubiquity first, revenues later".
What is the secret behind Google's capacity to innovate
successfully? Commentators frequently mention the freedom
Google gives to its staff to work on projects of their own
choosing, and the fun atmosphere created at the company's
headquarters.
Working for Google
"People in Google have up to 20% of their time to 'play' with
ideas and initiatives which might be of interest to the customers,"
explains Phil Anderson, a client director at Ashridge Business
School.
"There is also a wonderful physical environment -
the
Googleplex - where people are provided with free food, coffee
and 'play areas'."
Google staff say that typically half of all new products and
features result from "personal project" time.
However, this is not the only way Google promotes innovation.
Another key component is Google's technology platform. Tom
Davenport, a professor of information technology and management at
Babson College in Massachusetts, explains that this infrastructure
"allows Google to rapidly develop and roll out services of its own
or its partners' devising," with engineers able to "prototype
applications and launch beta versions to see if the company's vast
captive customer base responds enthusiastically."
The emphasis, he adds, is "not on identifying the perfect
offering, but on creating multiple potentially useful offerings and
letting the market decide. There is no need for Google to do market
surveys to forecast trends: the information is in Google's
database."
Richard Hunter, a group vice-president at Gartner and Gartner
Fellow, points out that Google has also developed proprietary data
management technologies that allow it to derive value and success
from the mountains of data it acquires. "Most companies ask: 'What
information do we need to run the business?' But Google asks, 'How
can we get our hands on every piece of information in the world -
never mind if we do not know what to do with it all right
now?'"
Davenport adds that the infrastructure acts as an "innovation
hub where third-parties can share access and create applications
that incorporate elements of Google functionality. Google gets its
product widely adopted, and its partners can devote their energy to
developing product functionality important to their customers"
while leaving aspects such as map display to Google. Allowing
elements to be mixed and matched easily engenders what Davenport
calls a "just try it" lean innovation environment.
He thinks that "while few organisations can match the magnitude
of Google's infrastructure investments, many could create reusable
software components, bake them into its infrastructure, and make
them accessible to the enterprise - or to members of the extended
enterprise who might be inspired to use them in building and
delivering their own applications."
Learn from Google
He also thinks other companies could make use of some of the
ways Google taps into the intellect and opinions of employees. For
example, Google runs nearly 300 prediction markets - basically,
betting exchanges - with panels of employees who make assessments
of everything from demand for new products to likely future
competitor performance.
Similarly, Google has taken the "suggestion box" a step further,
by encouraging staff to submit ideas and allowing colleagues to
comment on and rate them. Staff can also submit code for projects
being run by other teams - such as a feature enhancement - without
asking permission, and have the code incorporated into the testing
process.
One of the reasons Google is able to put this much trust in its
employees is that it recruits very carefully and continues to
manage them in ways that encourage innovation. "Employees are
scored on 25 performance metrics and Google continually modifies
its hiring approach based on an ongoing analysis of which employees
perform best and most embody the qualities of 'Googleness',"
Davenport explains.
Google also allows for failure. "Rewarding ideas that do not
progress is important to encourage people to keep innovating,"
Anderson argues. With an approach based on releasing many products
and hoping some will become blockbusters, many fail, but
Google
CEO Eric Schmidt encourages persistence, describing his outlook
as, "Please fail very quickly - so that you can try again."
Google's approach may be hard for others to copy because few
companies have a revenue stream as profitable as Google's
search-based advertising to support potentially unprofitable
development. However, they could successfully apply many of the key
planks in Google's strategy - the right infrastructure, an
analytical approach to every aspect of their operations, and a
focus on valuing staff - to boost their performance.