Why Google May Not Be a Good Model for Innovation

Nick Carr has an excellent article in Strategy+Business about Google. The article examines whether or not Google should really be a model that others should follow. Carr makes a couple of key points that explain why you should be concerned about copying Google's tactics.

Whenever a company becomes wildly successful in a brief span of time, it naturally becomes an object of fascination for corporate executives and even the general public. More than that, it comes to be presented as a new model for business success. Reporters and scholars scour its history and its practices, looking to distill general lessons for other firms to copy. Google is no exception. Over the last two years, the workings of the company's "idea factory," as Business Week describes it, have been dissected in cover stories in all the major business magazines, and business school professors have published studies documenting how the company organizes and manages its product development efforts. In his new book, The Future of Management, London Business School professor Gary Hamel calls Google "a modern management pioneer" that "has much to teach us about how to build companies that are truly fit for the 21st century."

That's heady stuff, and it's hard not to get caught up in the hype. But business executives have at least two reasons to think twice before leaping aboard the Google bandwagon. First, for all its success, Google is still a young company, and it has yet to be tested by adversity. We don't even know whether its approach to management, and in particular its approach to innovation, is a cause of its success or a product of its success – a crucial distinction. Second, we don't know how well Google's example applies to other businesses. Google is certainly a different sort of company, but is it so different as to be anomalous? Is the company an exemplar or a freak?

The ravings about Google echo what people have said about other companies in different eras. All those companies have stalled at some point. I think the same thing will happen to Google because their success is less a result of innovation and more a result of favorable economics and taking a market leadership position at the right time in history.

Carr makes a key point, after discussing the major innovations that have led to Google as it is today.

These innovations represent a remarkable accomplishment. But it's important to remember that they largely predate the formal innovation process that Google developed as it expanded and that is now the source of much of the praise lavished on the company.

In other words, Google's unique culture of innovation that is so highly praised was not yet in place when their primary innovations were made. And since it has been in place, the results have been mediocre.

Is Google's innovation model overhyped? Go read the whole thing and make your own decision.

  • Is Google really successful? Their search engine is, but they have not proven themselves financially. When their income equals their stock value, they will have proven themselves.

    Show Me the Money.

  • If this is true…

    “…their success is less a result of innovation and more a result of favorable economics and taking a market leadership position at the right time in history.”

    How do you explain Google’s rise over Amazon, Yahoo, MSN and hundreds of other search engines?

    How do you explain Google’s revenue and profit making ability relative to like companies?

  • Rob

    Great question, and here’s my take on it. Two things happened that made Google the leader.

    1. Google was the best search engine right at the turn of the century, when massive numbers of people began using web search. So even though they no longer provide the best results, they have trained most common users just to use Google.

    2. People forget this, but Google powered Yahoo’s search functionality from mid 2000 – early 2004. That gave them a tremendous boost and a connection to the most popular site on the web.

    But all that aside, the reason for their outperformance is that search has fundamentally different (and better) economics than the core businesses of the other companies you mentioned, and Google focused only on search.

    The main point of Carr’s article is that copying Google doesn’t mean you will get similar results, because it wasn’t really the existing Google innovation structure that created the search+advertising model that drives Google today. And that is still where 98% of their money comes from.

    Brin and Page didn’t make Google what it is today because they spent 20% of their time on other projects. They only focused on search, and it was that relentless dedication that helped them get it right. They didn’t invent contextual advertising, they copied it from someone else. But then they decided to build their vision of an innovation utopia, and it has yet to bear fruit (financially speaking). Luckily for Google, their core business was strong enough to support that vision. Down the road, when times get tough some day, I doubt the culture stays as it is. We’ve already seen changes, and a few hints that even the founders question how well it is working.

  • They didn’t invent contextual advertising but still they are the current advertising leaders.

    And further , acquiring successful services like blogger , orkut and youtube is also a part of their business model which is doing wonders for them.

  • I’ll look forward to reading the full article of Carr’s but while we can question the model’s relevance to Google’s success as Hemel explains in his book it’s actually very similar (and probably not as good) as W.L. Gore’s which has been working very well for decades.

  • Bob

    Oh brother. Same thing happened with Apple..studied, praise lavished, yada, yada.

    Google sells electronic billboards.


  • Sergiy Grynko

    Definitely not a good model to study.

    They got a nice break early on, which led them to a Microsoft-like monopoly over online search. Now, instead of improving the search, they’re diversifying like crazy, while the core business suffers.

    I did a Google search on an unfamiliar topic the other day, and boy were the results bad. The entire first page was essentially snake oil vendors who figured out how to positioin their sites for the particular keywords I used.

    So, all in all, praising a later approach that didn’t even generate the original success is silly.