Google, as an internet-based company founded in 1996, which has done a tremendous progress in the past 13 years, is particularly successful and innovative. In 2007, Google surpassed Microsoft as the most visited site on the Web (Kopytoff V, 2007). The company’s influence on the Web is undeniable. Many would ask: How did Google manage to grow up from a nobody to a giant of internet-based companies in such a short time? The answer has much to do with one of the most important elements of Google’s organizational culture – Innovation.
This paper will begin by discussing the innovation ecosystem built by Google, it will then show how Google works under this innovation ecosystem and why Google deploy this type of management, finally, it will consider what it brings to this company. Google is a company that floods with innovation, and the source of those innovations is the innovation ecosystem. This innovation ecosystem is a type of management that involves organizational innovation and open innovation. “Organizational innovation can be considered as the processes of developing new products or services, technologies, systems, usiness models and ideas” (Samson & Daft 2009, pp. 223). Open innovation means “extending the search for and commercialization of new ideas beyond the boundaries of the organisation”(Samson & Daft 2009, pp. 414).
This ecosystem consists of four major parts of people: content providers, consumers, innovators, and advertisers. All elements within the framework affect each other. The most important part of this ecosystem is consumers. Google has an enormous amount of users, there are 47. % of total internet population uses Google as their main search engine, which is about “132 million unique visitors per day (as of 11/2007)” (Lyer & Davenport 2008, pp. 62) and over 304 million searches per day(US core search report 2009). These users search information and reveal interests, which the company could consume targeted advertising on targeted group of users. On the other hand, these users could contribute ideas for improvements of Google?s services and products, and become potential commercial users of the new products.
For instance, Lyer and Davenport(2008) states that when Google wants to launch a new product, the company could test and market the product to its large amount user community, and get feedback from it. In this way, those users become an essential part of the development team as new products take shape and grow, furthermore, they would transit from testing to using the new product and become the consumers of Google terms. Hence, it is a very creative way of testing and promoting new product and services without costing much on market surveys and statistical analyses.
The content provider are media companies and individuals. They create information, stimulate consumers? interest, and provide delivery mechanism for targeted ads. Using the Google platform, over 1 million companies and individuals would become the advertisers, on the one hand, they could get the ad to relevant customers whose interests are revealed through their search terms (Lyer & Davenport 2008); On the other hand, those advertisers could help Google?s innovators to promote their new ideas.
Innovators is a core part of this system. It includes mashup creators, independent software developers, Google?s engineers, and open source community(Lyer & Davenport 2008). Using the Google?s operating platform, those innovators gather together to create a diverse development network, developing new products and services that can continuously capture consumers? heart. By doing so, those innovators will generate large amount of revenue for both Google and themselves.
Specifically, for engineers in this company, Google has a unique way to exploit innovation from them—“budget innovation into job description”(Lyer & Davenport 2008, pp. 64). Unlike Apple which somehow tends to be a bureaucratic company, “new ideas at Google are often generated by employees, from the bottom up” (Lyer & Davenport 2008, pp. 64). “Technical employees are required to spend 80% of their time on the core search and advertising businesses, and 20% on technical projects of their own choosing” (Lyer & Davenport 2008, pp. 64).
This allows Google to create a large volume of new ideas and innovations, any engineer in Google could freely work across teams to create a new product or feature without transferring to the specific department. An evidence shows that “more than 50 new products resulted from Google engineers? 20% time investments- accounting for half of all new products and features(including Gmail, AdSense, and Google News)developed during that period” (Lyer & Davenport 2008 pp. 64). The reason Google invested substantively to create such an innovation ecosystem is due to the highly competitive market and Google?s ambitious mission.
As a young internet-based company, Google?s leaders realized that without enough innovation, it is extremely hard to compete with companies such as Microsoft and IBM, after Google?s Online search engine became its solid and profitable infrastructure, Google is not satisfied of what this backbone has brought to itself anymore. Thus, leaders of Google pay much attention to their ultimate mission, organizing the world’s information and making it universally accessible and useful.
It is a such imperial goal that could take Google over hundred years of time to achieve it, but the leaders of Google are strategically patient, as CEO Eric Schmidt said at 2007 Bear Stearns conference: “Ubiquity first, revenue later…if you can build a sustainable eyeball business, you can always find clever ways to monetize them. ” (Lyer ; Davenport 2008, pp. 60). So, in other words, Google?s mission is to monetize consumers? intentions as revealed by their searches and other online behavior (Lyer ; Davenport 2008).
As time goes by, the living pace is getting faster and faster, the change of consumers? tastes is so rapid sometimes it is even unpredictable. To capture consumers? mind and to follow even to lead the market trend requires enormous innovations, hence, Google builds the innovation ecosystem. The Google?s innovation ecosystem is highly beneficial and promising. The interactions within this ecosystem provide continuous feedbacks for improving or adding features to Google?s products. It allows Google response quickly and innovatively to the change of external market.
This is a win-win situation for all parts in the system. For the third-party developers, they can use the operating platform of Google to share access and create new applications that incorporate elements of Google functionality and develop products that are important to their customers. Meanwhile, Google could get its new services and products widely adopted by consumers. For customers, they are benefit from faster access to the products they needed which is “an accelerated product-development life cycle”(Lyer ; Davenport 2008 pp. 1) while Google is getting more and more customers and bringing incremental interactions to its operating platform. Through this type of innovation management, statistics show that Google is growing at an astonishing speed, total revenue has increased from 16593. 9 millions of USD in 2007 to 29321. 00 millions of USD in 2010, and gross profit has increased from 9944. 90 millions of USD to 18904. 00 millions of USD in 2010( Google Finance 2010), almost two times growth. And Google has surpassed Coca Cola became the second most valuable brand in the world(Zee 2010).
In conclusion, innovation is the most needed for an internet-based organization in today?s fast-changing business environment. In order to stand still and keep wining step by step, Google built the innovation ecosystem. Clearly, as a pioneer with ambitious goals, which regards innovation as the most core element in its organizational culture, Google has done successfully by building such a benefits-for-all innovation ecosystem, providing a highly efficient information-sharing platform for all parts including consumers, advertisers, content providers and innovators within this system. By this means of innovation management, Google has the dynamic capabilities to innovate efficiently to the market change and provide new products and service quickly and continuously.
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