Part 3 of our series on Google focuses on the path of Google to 2008….its strategies, successes and failures.
Googles strategy appears to be to build from the bottom up. By providing the market with commercial grade tools, without charge, it is empowering more and more of the market to engage further in the online experience.
Every action Google is taking – building big data centers, buying optical fiber, promoting free Wi-Fi access, fighting copyright restrictions, supporting open source software, and giving away Web services and data, is aimed at reducing the cost and expanding the scope of Internet use. All to make information free to all.
With the cost of distributing a digital product virtually zero, Google aims to give away informational products. Even its beta releases generate advertising revenue and producing valuable data on customer behavior. For Google, in general, failure is cheap. A huge advantage against competitors.
It suggests that building digital products for sale may become obsolete, the model morphing to one that supports advertising around free digital goods. Will this be the big mistake Google makes that is too radical for the market to follow?
On a more tactical level, there are some useful lessons to be learned from Google in how to manage business innovation.
Googles big three innovations:
- Organization of information – free search results approaching page ranking from a back-links, rather than keyword popularity.
- Imitation – of GoTo in the development of an auction system to sell adds linked to search results, refining it to evaluate its search ads according to the size of advertisers’ bids, and the likelihood that people would actually click on the ad. This made Google’s ads more relevant, increased click-through rates substantially
- Engineering of its parallel-processing computer systems – housed in scores of data centers around the world and incorporating hundreds of thousands of computers, the system is able to crunch numbers and process searches and other transactions at unprecedented speeds.
The Google environment fosters innovation and keeps its workers happy. It provides budget and considerable freedom, allowing its engineers to devote 20 percent of their time to pet projects, with little corporate oversight. It monitors its employees work carefully, and has set a goal to use “metrics of performance” to “systematize” every aspect of its operations.
The strange this is though, that in spite of the dozens of new services, few have been able to capture dominant shares of their markets. Gmail, lags well behind the industry leaders, Google Answers and Google Video have been scaled back or abandoned.
Many of the most innovative and successful of Google’s new ser¬vices are, ones it has acquired rather than created. YouTube, Blogger, Google Earth, Google Docs, JotSpot, Feedburner, and the Internet phone service GrandCentral. One has to wonder whether Google merely launches products to test the market, then upon recognition of potential success, it seeks out a more developed version of the product, rather than fully commercialise its beta versions.
With the number of products under development reduced by 20 percent Google appears to be merging gracefully into maturity. The key lesson along the way is that regardless of the number of failures to the number of successes, the road to success is consistent innovation.