Google has become a giant company with many innovative ideas that are regularly introduced to the public. However, not all ideas are successfully realized and the company is sometimes criticized for being ineffective. For example, Project Loon is one of the recent controversial projects that received a lot of criticism especially from the investors that do not realize fully the goals of Google’s revolutionary innovation. So the innovation strategies at Google should be assessed more deeply in order to understand why Google sometimes presents the ideas that are very difficult to realize in the real life.
Google used to be a company that specialized in the area of internet, but in the past few years there were many innovative breakthroughs that have had a unique value for the users. Productivity tools, enterprise products, Android operating system, advertising services are just a few areas in which the company has been working. Rao (2014) writes that Google was able to start a lot of new projects after “making innovation an everyday process” (Rao, 2014, p.2). The new products are at first launched as beta-versions and after the feedback analysis they are redesigned and launched again (Rao, 2014, p.2). Several channels were created within Google so that the employees could discuss their ideas: Google cafes, direct emails to the senior management, Google Moderator, Google+ conversations, TGIF meetings with the senior management, FixIt events, Googlegeist surveys and internal innovation reviews (Rao, 2014, p.14). The main goal behind these initiatives was to boost the employees’ creativity and generate the new ideas that could be implemented in the future.
At the formal level Google was very active in terms of R&D. R&D expenses tripled in 2008-2012 (Rao, 2014, p.13). A separate division called Google X was created in 2010 and its goal is to generate the innovative “moonshot” ideas (Rao, 2015, p.8). However, a lot of “moonshot” projects are being criticized by the analysts and investors, because they are not of the high public interest at this time.
When analyzing literature about innovative business models and strategies one may come to the conclusion the Google has been working in the right direction and therefore there should be more understanding and sympathy with Google, because the company tries to be innovative and entrepreneurial despite the giant size and a vast number of competitors with Apple and Microsoft among them. A successful business model should include four elements: customer value proposition, profit formula, key resources and key processes (Johnson, Christensen and Kagermann, 2010, p.110). Therefore when Google introduces a new product, there should be general understanding who the target customers will be and what kind of problems will be solved by means of the new product. Google Fiber, which is one of the latest innovations, will help to make internet much faster and Project Loon will make internet more accessible. Therefore both innovations have excellent customer value proposition. Nevertheless, in order to realize these ideas there should be a well-planned revenue and cost structure. Moreover, the company needs to have proper technology, equipment and personnel and processes that will allow the new products to be launched and be sold successfully (Johnson, Christensen and Kagermann, 2010, p.110). At the moment, Google Fiber is a much easier project to implement than Project Loon and the company has already started a pilot phase in one of the US states. Such a slow product launch may be attributed to the need to reassess the business model several times before the final launch. Usually the companies revise their business models at least 4 times before they reach profitability. So the companies should be able to adjust their products and be patient (Johnson, Christensen and Kagermann, 2010, p.110).
Moreover, innovative companies, including Google, know that there are different kinds of consumers in terms of adoption of a new product. Gorchels (n.d.) defines 5 types of customers: innovators, early adopters, early majority, late majority and laggards. In order to launch the product successfully, there should be support of the innovators and early adopters who will be the first customers to judge whether a new product has a unique value or not. If the early adopters prove the product, the early majority that in theory represents 34% of all consumers will start buying the new product. The rate of adoption depends on a very large number of factors. Some of the most important factors include: perceived benefits over the other products, pricing and costs, compatibility with the current standards, etc. (Gorchels, n.d.). The products such as Project Loon and Google Fiber have a high value, but Google needs a lot of time and effort in order to persuade the consumers and investors that these new products are unique and have a very positive impact on all stakeholders.
Because the new innovations developed by Google are very complex, their life cycle will be significantly prolonged. In general, the product life cycle consists of four stages introduction, growth, maturity and decline. The first stage – the introduction stage – is the most vital one, because the market of the new product needs to be created. Again the consumers need to show that they will accept the new product (Gorchels, n.d.). Therefore, Google will need to continue to work on the product branding and promotion aimed at innovative consumers and investors in order to raise awareness about their new products. The received feedback will help to take a decision whether it is worth the effort to launch such state of the art products as Project Loon and Google Fiber.
One more challenge that Google has to resolve everyday is keeping the entrepreneurial spirit in the company. As it was written above the company introduced several communication channels that allow the employees at all levels talk about the innovations or other job-related issues. The company employs 26,000 people, but it strives to “maintain the nimbleness of a startup” (Rao, 2014, p.9). Undoubtedly, the strategies pursued by the start-ups will be insufficient for Google that operates as a public company and therefore has many obligations. So there should be entrepreneurial activity within the company that will correspond to the corporate mission and the goals that were set by the senior management. In order to boost active participation of the employees in the innovative activity of the company, two business resource management models were introduced – 70/20/10 and Innovation Time Off – that gave the employees some free time to focus on their preferred tasks and innovative new ideas (Rao, 2014, p.9). Such models were quite successful, because the employees contributed to the development of the new products that became very popular later. One more goal at Google is to improve communication between the employees and the top managers. Better communication leads to solving some of major problems related to the products or work practices. TGIF, Googlegeist and Google Moderator have helped the company to leverage on the ideas of the employees and improve the working conditions that are necessary for the successful accomplishment of the business goals (Rao, 2014, p.7).
There are many elements that make an innovative company with great entrepreneurial spirit. One of the most important elements is the corporate culture that includes “the patterns of behaving, feeling, thinking and believing” (Jaruzelski, Loehr, Holman, 2011). It is also important to align the innovation strategy with the overall corporate strategy (Jaruzelski, Loehr, Holman, 2011). So for Google it is not enough to boost the employees’ innovation activity. The employees should be encouraged to suggest the ideas that would correspond to the Google’s business strategy. According to the study carried out by Booz & Company in 2011, superior product performance, superior product quality and products customized to local markets and geographies are the most important goals for the majority of the innovative companies. On the contrary, the number of breakthrough products and success rate of new-product introductions are of the lowest importance (Jaruzelski, Loehr, Holman, 2011). Perhaps Google also has similar innovation goals and despite a large number of the launched products and services, the company’s employees are focused mainly on the improvement of the top-products: Google Search, Gmail, Android, Google Adsense, Google Adwords, Google Chrome, etc. (Rao, 2014, p.12).
Because of the large number of products that at different stages of their life cycle Google acts simultaneously as a need seeker, a market reader and a technology driver. The need seekers try to understand the end-user needs in order to update or launch new products. The market readers monitor customers and competitors and make incremental innovation to the existing products. The technology drivers are focused on the leading-edge technology (Jaruzelski, Loehr, Holman, 2011). In terms of Google, one may see that its employees work in all three directions and what Google should do is to be able to allocate its resources effectively and allow the employees to generate the new ideas in order to stay competitive and flexible.
Finally, innovation and entrepreneurship lead to the creative destruction. There are closed and open innovation models that can be applied (Chesbrough, n.d.). Even though nowadays the companies tend to apply the open innovation model more frequently, Google uses both, because it has sufficient resources for funding own R&D and licensing or buying the technologies that the other companies invented. For example, in 2011 Google acquired Motorola in order to produce own hardware for the devices and receive the edge over the competitors (Rao, 2014, p.7). Thus the company is able to achieve the business goals if the internal R&D capacities are insufficient.
In conclusion, Google has launched a large number of products and services that fulfill the customers’ needs. Some new innovations seem to be too ambitious and perhaps Google is ahead of time. At the same time, Google shows that the company is very competitive and it has plenty of ideas that in the short-term and long-term will shape the way the people live. The large number of innovations may be the outcome of the corporate culture that allows the employees to be creative and share their ideas with the other employees at all levels of management. What is more, Google monitors the market really well and knows what the consumers expect and what new products the competitors will offer. Therefore one may presume that Google will dominate in the IT industry in the future offering the new products or buying the companies as it happened to YouTube, Motorola and Nest.
References
Rao, A. (2014). Corporate Entrepreneurship and Innovation at Google, Inc. IBS Center for
Management Research. Print
Johnson, M., Christensen, C., Kagermann, H. (2010). Reinventing Your Business Model.
HBR’s 10 Must Reads On Strategy. Boston, MA: Harvard Business Review.
Gorchels, L.(n.d.). The Product Manager’s Handbook. Web. Retrieved from
http://www.quickmba.com/marketing/product/lifecycle/
Jaruzelski, B., Loehr, J., Holman, R. (25 October 2011). The Global Innovation 1000: Why
Culture Is Key. Strategy+Business. Retrieved from http://www.strategy-
business.com/article/11404
Chesbrough, H. (n.d.). Open Innovation: The New Imperative for Creating and Profiting
innovation/
