Google
Case Study:
Abstract
Google, Inc. made innovation an everyday process rather than using it as a strategy during times
of crisis. While some companies worked on perfecting their product before its initial release,
Google followed a unique launch and iterate process to innovation. Right from the time the
company was founded, Google relied on its employees to augment its culture of innovation. Its
policies like the 70/20/10 innovation model and Innovation Time Off gave a lot of freedom to
Googles employees to work on their preferred projects.
Google also made it easy for its employees to express themselves through several channels
including TGIF, Googlegeist, and Google Moderator. To foster radical innovation, the company
set up the Google X division, where the employees were pushed to come up with moon shots
projects that created products and services that were 10 times better than the competition. Cofounders of Google, Larry Page and Sergey Brin, Executive Chairman, Eric Schmidt, and other
members of the top management team took a personal interest in these projects.
Issues
The case is structured to achieve the following teaching objectives:
Understand the concept of corporate entrepreneurship as also which model of corporate
entrepreneurship is followed by Google.
Understand how Google managed innovation to emerge as a leading technology company in the
world.
Study the various initiatives followed by Google that enables it to keeps the innovation spirit
alive in a company with an employee strength of more than 44,000.
Appreciate the importance of innovation in fostering growth and achieving superior results.
Discuss the challenges that Google will face on the innovation front in the future.
Explore ways in which Google can take its agenda of radical innovation forward and stay ahead
of the competition.
Keywords
Corporate Entrepreneurship; Models of Corporate Entrepreneurship; Sustaining Corporate
Entrepreneurship; Innovation strategy; Innovation management; Organizational culture;
Innovation culture; Launch and iterate process; Innovation as a Strategy; Resource-based View
of the Firm; Strategic Capabilities; Enabling and Managing Change; 70/20/10 innovation
model; Innovation Time Off; Google; Google X
Introduction
By August 2013, Google, Inc., known more for its dominance in the area of internet search till
then, began to overtake its major rivals in innovation. The firm started working on a lot of other
projects and increased its spending on research and development, thus gaining an edge over its
competitors (See Exhibit I for revenue, profits and R&D expenses). Some analysts predicted that
Google had started outpacing Apple, Inc. (Apple) in design, an area traditionally dominated by
Apple. Google achieved this feat by making innovation an everyday process rather than as a
necessity during times of crisis.
It followed a unique launch and iterate process to innovation where the new products developed
were initially made available to the public as beta versions. Google improved these new products
after getting feedback from the early users. It also practiced the system of using lead users to find
new and innovative applications for its products. In addition to this, its CEO and co-founder,
Larry Page (Page), continuously pushed the employees to go in for moon shots, i.e., create
products and services that were 10 times better than the competition.
According to Page, How exciting is it to come to work if the best you can do is trounce some
other company that does roughly the same thing? Thats why most companies decay slowly over
time. They tend to do approximately what they did before, with a few minor changes. Its natural
for people to want to work on things that they know arent going to fail. But incremental
improvement is guaranteed to be obsolete over time. Especially in technology, where you know
theres going to be non-incremental change.
Googles roots lay in a research project on search engines taken up by two PhD students at
Stanford University, Larry Page (Page) and Sergey Brin (Brin) in 1996. Google pioneered a new
technology called PageRank, which determined the importance of the website by the number of
other pages linked to it and their importance that linked back to the original site. This new
technology was a shift from the earlier method followed by other search engines which ranked
the results by the number of times the search terms appeared on the page.
The search engine was initially called BackRub as it determined a websites relevance by
checking its back links. The name was finally changed to Google, based on the word Googol
the number one followed by a hundred zeroes.
Googles primary domain www.google.com was registered in September 1997 and the
company was incorporated in September 1998 in a friends garage in California, USA. In 1999,
Google moved its headquarters to Palo Alto, California, home to several other technology
companies. Googles mission was to organize the worlds information and make it universally
accessible and useful. In addition to its mission, the company wrote 10 things in Googles
initial years and the founders made it a point to revisit these from time to time to see if they still
held true
Leveraging Employees In Fostering Innovation
In the year 2005, Googles former CEO, Eric Schmidt. introduced a business resource
management model called the 70/20/10 innovation model for the employees. Under this model,
Googles employees dedicated 70 percent of their working to core business tasks, 20 percent to
projects related to the core business, and 10 percent to projects which were totally unrelated to
their core business. This model led to better utilization of the skills of its employees and helped
the company come up with new products and technologies.
The option to work 10 percent of their time on projects not related to their core business gave the
employees a lot of freedom to work on any task they liked and come up with new and innovative
ideas. The success of the 70/20/10 model led to the total organization of Google under this
philosophy underlying the total organization of Google for a long time.
Google X And The 'Moon Shot Mentality'
Even when Google came up with new products in response to competition, it strove to offer
benefits that had been unimaginable till then. For instance, when the company launched Gmail, it
offered users 100 times as much storage as they could get anywhere else. In August 2011,
Google acquired Motorola Mobility LLC for US$ 12.5 billion in order to make its own hardware
for smartphones, tablets, and other devices. Google had been eyeing Motorola for a while for its
vast patent portfolio and manufacturing expertise. Some technology companies like Apple made
their own software and hardware which gave them full control over the devices made by
them.......
Keeping The Spirit Of Innovation Alive
Google constantly strove to ensure that its growing size did not come in the way of its innovation
driven culture. Google kept its commitment for innovation and risk at a constant level by
following several policies like having a corporate mission that could guide them, constantly
looking for new ideas everywhere, working for continuous innovation rather than instant
perfection, proper usage of data, etc. (Refer to Exhibit VIII for the Googles Eight Pillars of
Innovation). Google tried its best to maintain the nimbleness of a startup.....
Looking Ahead
As of August 2013, Google was chugging ahead with its future innovation plans. The top
management team including Page, Brin, and Schmidt had always believed that a lot more
innovation was possible than had been achieved. Commenting on future possibilities at Google,
Page said, Today, were still just scratching the surface. Google is working on so many
innovations. I get goose bumps about it. Google was even looking to enter new product
categories by launching new types of gadgets. In August 2013, Google confirmed that it had
acquired Android smartwatch maker WIMM Labs. The acquisition led to speculation among
industry observers on Google entering another lucrative wearable gadgets category..
Source: IBS center for Management Research
