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The Googlification of Innovation

Call it Google creep. The minimalist little search engine you loved when the Net was still young—the one with the sly sense of humor backed by a devastatingly fast and effective search engine—is everywhere now. It hasn't been an upstart for a long time. It's entrenched, like GE, IBM, and Microsoft. It's long since become a verb:  "I don't know; why don't you Google it?" And it continues to creep like some aggressive vine into many different areas of business, fed by grand ambitions, an enormous cash flow and, many argue, large doses of innovation.

Something is certainly working. BusinessWeek published an article last month suggesting that the Google magic might be fading as a result of falling stock prices and an apparently flattened number of clicks (in the U.S.) on the paid advertising that appears next to search results (Hof  2008). A couple of weeks later, BusinessWeek's April 29th issue included an article that noted Google's resiliency and how it had "defied skeptics" with "surprisingly strong" first-quarter results ("How," 2008).

In trying to explain Google's unexpected rally, BusinessWeek reported, "Google's continued prosperity is a testament to its ability to keep innovating, both in search and advertising operations and in new lines such as online office-productivity software."

This conclusion only adds to the Google reputation for staying on the cutting edge, constantly pushing up new tendrils into businesses where it didn't use to be presenct. And it adds to the interest of a recent Harvard Business Review article titled "Reverse Engineering Google's Innovation Machine." In it, authors Bala Iyer and Thomas Davenport (2008) lay out some of the basic principles behind Google's propensity for innovation.

One of the most fabled of those principles is Google's commitment to requiring that technical employees spend one-fifth of their time on technical projects outside their main jobs. This might strike managers as an expensive and risky way of using company time, but CEO Eric Schmidt argues that innovation stems from small teams of people who have a new idea that isn't understood by those around them, especially managers and executives ("How, 2008). Management may well try to squelch innovation in the name of productivity, so the 20% rule provides a zone in which engineers feel safe to pursue their own best ideas. "I believe," notes Schmidt, "that innovation escape-valve model is applicable to essentially every business with technology as a component."

This approach has its skeptics, however. One former Google employee claims that "nobody really gets around to those projects for all their other work." The Economist reports, "Good stuff has indeed come out of this [20% rule], including Google News, Gmail, and even those commuter shuttles and their Wi-Fi systems. But it is not clear that the company as a whole is more innovative as a result, as it claims. It still has only one proven revenue source, and most big innovations, such as YouTube, Google Earth, and the productivity applications, have come through acquisitions."

Still, the reputation for innovation remains. Iyer and Davenport (2008) report that Google supports over 100 new products and that this represents "a breakneck speed pace of technology innovation for an organization that is less than a decade old."

So, what are some of the other innovation principles by which Google lives? Measurement seems to be a primary one. After all, great ideas are a dime a dozen, so one needs to track innovations carefully to assess how they're being used. "You can do whatever you want," notes Schmidt, "as long as you track it" ("How," 2008). Presentations of new products must be accompanied by large amounts of data, and new designs are chosen according to how well they stack up in terms of metrics. Marissa Mayer, the company's head of search products and user interface, preaches, "Don't politic, use data" (Gallo, 2006).

Another principle is to trust in the intelligence of the group. Google has a system in which workers can e-mail ideas for new products or improvements to an organization-wide suggestion box. Other employees not only can see many of these ideas but also rate them. In addition, Google uses hundreds of "prediction markets," that is, speculative markets created for the purpose of trying to predict the answer to questions that can be decisively answered only in the future. The idea is to use the collective wisdom of the group to help the organization make better forecasts about what innovations will work best.

The principle of "structured chaos" also seems to generate innovation. On the one hand, there are hundreds of people pursuing their own ideas. "We kind of like the chaos," said Laszlo Bock, who heads the personnel department. "Creativity comes out of people bumping into each other and not knowing where to go" ("Inside," 2007). On the other hand, there's some real structure to many of the processes. For example, meetings that look at new ideas feature at least three different wall displays, including one that shows the presentation itself, another that shows a simultaneous transcription of what's being said in the meeting, and a third that shows a ticking stopwatch (Gallo, 2006). The idea is that creativity is enhanced by setting firm agendas, using time wisely, and being transparent to everyone in the organization.

Google's technology stands in support of these innovation principles. Google leverages its proprietary platform to simultaneously experiment with and measure the impact of new initiatives. Iyer and Davenport write, "Google engineers prototype new applications on the platform; if any of these begin to get users' attention, developers can launch beta versions to see whether the company's vast captive customer base responds enthusiastically."

Not every organization has these kinds of built-in innovation advantages, of course, but if Google continues to thrive, more companies will likely imitate many of Google's innovation strategies and principles. And so the creep of the Google will continue, moving from desktops into our collective imaginations and then into specific management practices. For better or worse, Google will again have innovated where it counts the most: in reinventing the way we see the world.

Documents referenced in this TrendWatcher include the following:
• Gallo, C. (2006, September 27). How to run a meeting like Google. BusinessWeek.
• Hof, R. D. (2008, April 14). Google: What goes up... BusinessWeek.
How Google fuels its idea factory (2008, April 29). BusinessWeek.
• Inside Google's new-product process (2006, June 30). BusinessWeek.
Inside the Googleplex (2007, August 30). The Economist.
• Iyer, B., and T.H.  Davenport (2008, April). Reverse engineering Google's innovation machine. Harvard Business Review.