Clayton Christensen's "The Innovator's Dilemma" was motivated by DEC getting killed. He claims that DEC was a victim of a disruption: a new technology that offered something that didn't seem to be a threat, become successful in other markets and eventually improved enough that it was threat - then it was too late. There, the old technology was minicomputers; the new technology was workstations.
The new technology isn't perceived as a threat because it is not as good and will never be as good in the old market. It manages to survive in a different new market (because it really can't compete in the old pond). As it improves, it never catches up with the old technology - but it becomes good enough. That is, the old technology has also improved, and is definitely better - but the old market doesn't care for that extra improvement. You can see there are a few things that have to happen for disruption to occur.
One of the reasons for Google's 20% was to try to prevent this kind of thing, but it never worked out. Some business types redefine terms, so that "invention" is a new technology (make something), and "innovation" is a new business (people want). Google's made a lot of stuff, but most isn't wanted and didn't create a business. They aren't innovations. Closing down businesses that aren't making enough to move the needle is the classic mistake of disrupted businesses: Christensen suggests setting up separate, autonomous business units (even separate businesses; startups), with limited resources, that will get excited by small wins - because new disruptions start small. (YC is pretty much doing it right...)
However, right now, Google is fighting for its life. At the beginning, facebook didn't seem threatening - or at least not that threatening. Then again, I'm not sure that Google ever could win this fight; social is such a different kind of business. Perhaps the best that google could hope for is to settle back into owning search forever.
My only disappointment is that google didn't manage to transform its internal inventions into innovations. I'm not saying it's easy or that I could do better, it's just that unlike winning social, it seems possible... and who knows what new disruptions might have come from that?
As it is, Google seems closer to Xerox: one fantastic invention/business, invents the future, makes no money from it.
Its an interesting comment but lets put a few things in perspective:
1) "However, right now, Google is fighting for its life."
Any company that is dumping 2 - 3 BILLION dollars into the bank each quarter is not 'fighting for its life.' Google is doing just fine at the moment.
2) "My only disappointment is that google didn't manage to transform its internal inventions into innovations. "
This is a huge thing, and its important to know that it isn't that Google didn't make money, its that Google didn't make enough money.
When I was their 2006- 2010 I saw projects that were nominally making a profit of several million dollars a year get cancelled. That is they were covering the cost of the group working on them and they earned their bit of the advertising pie enough revenue to make money. But it was 'nominal' since at the time Google didn't charge internally anything for using the physical infrastructure which clearly did have a cost associated with it.
So when they started figuring out their costs (which they needed to do if they were going to charge for AppEngine) they got a kind of rude surprise (a nuanced description of that surprise is covered by NDA but suffice it to say they learned new stuff about themselves).
At the time I suggested that rather than penalize folks who were running their product on infrastructure that was ill suited to them, they allow those folks to change the infrastructure, and I might as well have been telling the Church that the Earth revolved around the Sun. That is where Clayton would have said, "Guys, you aren't looking at this like an entrepreneur..."
Which is funny, because Google product developers are intensively trained to believe compute resources (BigTable, etc) are free (in stark contrast to Amazonians who are constantly shopping for TCO effective virtual machines) right up to the moment they get shut down for inefficiency.
1) DEC also had bumper years just before they failed. That's a common pattern, according to Christensen (and his empirical data), caused by the incumbents' retreat upmarket (away from the new threat) - where the margins are higher.
For Google, this is optimizing its advertising reach and effectiveness. I haven't checked trends, but I'm sure that over time higher margin goods have began advertising online, and the competition for ad ranking has increased, bidding up google's price (they worked that system out well).
Overturning everything, in order to match a competitor, is a sign of something. As facebook figures out how to use its data to sell to people, it can target advertising more effectively than google's approach can.
I think facebook is a threat because you can advertise better the more you know about your audience - google's been gathering personal data, but they aren't in the same league as facebook (and I get the impression they haven't exploited it as effectively as they could). i.e. it's not really a contest between two companies so much as between the approaches they champion. Of course, Google is trying to become a champion of social; so the second issue is whether google can beat facebook at its own game.
Christensen found that incumbents practically never win this. It's because they are not incumbents in this new approach - here, facebook has had years of experience in social, of the technology, of the needs of people, how to address them, what works, what doesn't, and an organizational structure with values shaped over time around improving those issues, and synchronized to the rhythms of that business - and of course, astonishing marketshare and mindshare. Google beating them is like some other company beating Google at search. It's really hard to do, because there are so many advantages that an incumbent can build up over time.
It's different for "sustaining" technologies (which support the same way of doing business, same market, same values) - incumbents almost always win those. For example, if a new way of doing search came along, totally different from PageRank, google would likely still win that: they have habits of customers and advertisers; they have engineers that are great at doing it; and their whole organization is naturally galvanised around any such technology. Everyone involved would be excited about this new technology, because that's what they were hired for. They would probably also try to buy the competitor, paying whatever it took (which wouldn't be that high, since they'd be on the lookout and would catch them early).
2) Thanks for your insight on costing those innovations. Unwillingness to adapt is bad sign (i.e. change infrastructure). It makes sense: google's infrastructure is great. Excellent technically, and a world-beater when applied to Google's way of making money. It might not be valuable for other approaches, other ways to make money in other markets, based on other values.
Here are my thoughts as an engineer at Google. These are my own thoughts, not Google's :)
I don't think Google is fighting for its life; people are not defecting away from search to use Facebook's search or Bing or whatever. Right now, Google+ is something like, "let's see what happens if we build a social component and integrate it with our products". It doesn't seem like much right now and it's certainly not killing Facebook, but that's not the goal; the goal is to have something in case being able to post pictures and "interact with brands" turns out to be important in the future. (Do people like ads? I say no; I avoid them at any cost. But many people like ads and like companies and like products. So we'll see how that goes! Look at the brand Apple has built. That's advertising, my friends.)
It's easier to understand if we look at past events. So let's take Picasa, for example. It was never as popular as Flickr or even SmugMug. Why bother maintaining it when it's clear that Google "lost" to Flickr? The answer is because it could later become relevant. Now that people are running around taking pictures with Google phones, sharing them with GMail and Google+, it's logical to have a Google-owned picture repository. That way, we get total control over the user experience and can make a really integrated product. Take a picture on your phone, instantly share it with your friends from your computer. Pretty neat!
Google Play is similar. People loved iTunes' integrated payment system, music store, book store, movie store, app store, and phones. Google had all the infrastructure for these things (Checkout, Music, Books, YouTube / Video, Android Market, and Android), but not integrated, so people didn't tend to buy Android phones to get apps and content. But, time allowed Google to unify these discrete components into Google Play, and now users have access to something very much like iTunes. It was a very slow incremental thing, which people aren't as excited by as "one more thing" style announcements, but now we have something that's pretty cool and will make Google products more attractive than they were before. It was worth keeping stuff like Checkout and Books alive, even if they were not exactly putting PayPal and Amazon out of business.
So today, Google+ is maybe not the best thing ever. But some day, it might be a useful piece of software to have, and so we have it. Right now, I think it's really great as an internal bulletin board that I can fine-tune to exactly my interests. It may not be as cool as Facebook, but it's still a useful piece of software that was worth writing. (I've never seen an internal bulletin board system that lets me subscribe to certain topics and people, after all.) Rather than ensure that everything we push is an epic success on day one, we're putting it out there for people to try. Some people don't like Google+, some do. I use it as a better Twitter; the interface is nicer, I can write more, and so I use it more than I used any "social" products before Google+. So there's one data point, though I realize I am not the average user. (Facebook never excited me and I didn't have an account. Google+ was interesting enough to entice me into trying social networking.)
Yes, management sounds a lot more excited about Google+ than I do, and that's fine, Google is not my company and I am more practical :) Worst case: G+ is a nice internal tool for Apps customers. Middle case: something that's good to have if we want to play with social ideas. Best case: a new way to use computers that people love. All are good.
(Remember Google Checkout? It was a nice foundation for Google Wallet. So it's worth trying things and having products that may not be the industry leader, because you can always improve them!)
Personally, I'm working on a new product at Google that will make computers do something that they've never done before, something that many people have wanted for a long time. I have no idea how it will ever make money, but we're doing it anyway because people will like it. And no, this is not some rogue 20% project. :)
So to summarize; I'm not upset with Google for creating products that are not overnight successes. Yes, social is where your friends are, and everyone is on Facebook today. Clearly Google+ isn't enough to get people to abandon their friends for a while. But it's worth continuing to develop, because it will only get better with time. I don't think that means the end of Google :)
But it is Google itself that is creating the impression that Google+ is critical to its future, just look how much you're pushing it everywhere.
By the way, I use G+ and like it more than facebook, but I also think that there is only one serious way for Google to differentiate it enough from Facebook to make it a compelling alternative in the long run: Make G+ the open alternative to Facebook; ie, make it THE platform on which other websites, services etc. want to build their social features, without being afraid that by doing so they'll contribute to the construction of a walled garden that, in the end, could destroy the (free) internet as we know it.
Google is already the biggest winner with the free internet, so, defending that model would be in its best interest. Trying to beat Facebook at its own game, on the other hand, doesn't make so much sense to me. By winning over third parties, on the contrary, they could make it so diffuse and useful that even "common users" will see a real reason to use it.
Haha! I told Vic Gundotra to do exactly what you say (and I am surely not the only one), he said "maybe later".
Google used to be about the open web, but with Chrome. Experiments and now the way they built G+ (need a Google account to view shared photo link?!), it is clear they have fallen in line with the walled garden "a little evil is OK" contingent.
I agree for the most part that Google is not "fighting for it's life", though I think it has faltered a bit.
> people are not defecting away from search to use Facebook's search or Bing or whatever.
You are perhaps missing the point a little.
It doesn't matter what people are doing, it's what advertisers are doing. The fact that everyone still uses Google search won't be worth much if advertisers are only interested in putting ads on Facebook.... Google would be running an expensive, but popular, charity.
I don't think the day like that will come, but it is clear that Google's revenue can be threatened from things like Facebook which don't directly compete with their products.
I think iPhone vs. Android is a good analogy. Google is never going to kill Apple and Apple is never going to kill Google. Google provides a phone platform for two groups: people who want the cheapest smartphone, and people who want the most freedom to customize their phone. Apple provides a phone platform for people willing to spend a good amount of money on a phone that works perfectly without tweaking. Android will never satisfy John Gruber. Apple will never satisfy Jon Rockway. So there are two platforms and they happily coexist.
I disagree, and in my opinion this is the exact logical flaw that has lead google down it's current path.
Facebook might become more profitable at some point, yes, but google's revenue was not threatened if they kept their spot as search engine and innovator.
Every time I hear concern that advertisers will suddenly throw all their money at Facebook instead of Google, I am reminded of my experiments at Facebook advertising and the 0.00[...]001% click-through rate I achieved after a few dozen attempts.
This notion is laughable. The notion that Facebook will look into the minds of my friends and determine the answers I am searching for is also laughable.
The fact is that the only ads I have ever (deliberately) clicked on IN MY LIFE are ads on Google, because they were the only ads that were 1) relevant and 2) timely. Facebook is nowhere near getting #1 and hasn't a chance in hell of getting #2.
Facebook ads are far more relevant to me than google ads. But then I'm quite free with my posts and likes on facebook. IE, I'm using it as they envision.
I've clicked many, many more ads on FB than I ever have on Google.
Actually, speaking as an android user who LOVES that I can auto upload my pics to the GOOG, I absolutely hate that Google has any social platform at all.
Because G+ exists it makes Facebook a competitor. Can I easily share my auto uploaded pics with my Facebook friends? Not at all.
Can I change where I upload my pics to? (Ie : not picasa) not at all.
Picasa is about lock in. Not about user experience.
You can upload all your pics from your phone to facebook with a couple of clicks from the Android Gallery app. A lock in would be if you were not allowed to, or at least if they went out of their way to make that harder for you. But instead they go out of their way to put the share button and inter-app communication (intents) to allow you to easily share your pics with third parties.
I understand your frustration, and I too would like some kind of API to let us better control auto-upload. But "lock in" seems a bit of a stretch. You're asking to go out of their way, again, to better support competitors. When there's already a lot of support for them in place.
Auto-upload is a feature provided by the G+ app. There is absolutely no reason why Facebook can't include that functionality in their app. (It would be nice if this was as nicely integrated as contacts in the dialer, but it's not yet. It's due to developer time constraints or the fact that nobody has thought about it yet, not due to lock-in. Remember, Google is the company that lets carriers ship Android phones with Bing as the default search engine!)
Being able to leave once an for all is different from open interoperability with other systems. Both are a form of lock in protection, and Picasa only supports the former.
"Lock in" is a particularly loaded term, and I have to disagree with its use here in that they've given you a way to export everything should you want to. Not doing the work to integrate with other system is not "lock in".
I think Google and Apple already see the facebook threat, and are trying to limit helping it grow any further. Even without G+, you may not have had this sort of FB integration to Google. The only reason Microsoft is sidling up to FB is in an effort to get some traction in mobile and the web space.
I suppose 'lock in' was the wrong choice of words to use.
I understand that the data is only there because I chose to auto-upload it, and I also understand that I can easily re-upload the photo to facebook, but my point was that Google themselves are actively preventing me from doing something like that through the Picasa interface.
I think you understood the meaning behind my point, but I'd argue that they shouldn't even be in that space in the first place.
The very first thing that any photo-storage/sharing site should be looking at, after the service itself is working, is social sharing and interaction. Google are restricting the interaction on their platform (understandably, I might add) because they have built a competitor to Facebook.
That's passively preventing. (YouTube lets you share to Facebook and Twitter, so the lack of this ability from G+ is a lack of a feature, not one of Google's design goals. Code takes a long time to write and everyone wants a different feature. Eventually we will have them all, but right now, not enough code has been written :)
Prioritizing G+ over an open API (and a "Chinese wall" between the apps and the platform) is still preferential treatment, and is the sort of thing that got Microsoft consent-decreed.
I am not saying Facebook is better, but you can't say Google is better, either.
Personally, I'm working on a new product at Google that will make computers do something that they've never done before, something that many people have wanted for a long time.
There are 2 things I've wanted for a long time:
A search engine for stuff in my house, so that I never have to sift through drawers for hours ever again.
A cheap robot for cleaning dishes, washing clothes, cleaning the house. The current solutions are expensive and don't work very well.
have you read doctorow's "makers"? he presents a reasonably plausible way in which a "search for stuff in your house" system could evolve (based on dirt cheap and deeply unobtrusive rfid tags you simply attach to everything)
Attaching rfid tags (or anything) to everything sounds like a very inefficient and impractical solution. I think I have a better idea involving other types of sensors. I just need another life to work on it.
A cheap robot for cleaning dishes, washing clothes
I think we have these, right: dishwashers and washing machines. The problem is emptying the dishwasher and folding clothes. (I live in New York so I drop off laundry before work and pick it up after work, cleaned and folded, for about $9 a week. Yay.)
> Rather than ensure that everything we push is an epic success on day one, we're putting it out there for people to try. Some people don't like Google+, some do.
Oh, I got bitten by this before by Google. I was a heavy Google Notebooks user which used it until the last days. They stopped supporting it some time ago and now will be shut "anytime soon".
The problem I see with a lot of the 20% projects (labs, or microsoft Garage) is that all of them are wasted business opportunities stalled by the corporate aspects of the companies. When a new technology is created on the side (such as say, Wave), there should be a way to create semi-independent "startups" which tries to make bring the technology to the market on its own (making it mature,etc). Later, if it is good, Google (or Microsoft) could then buy it and integrate it to their stack.
There are definitely cool things that end up shut down. All I can say is that it's an age-old problem: "'Tis better to have loved and lost / Than never to have loved at all."
Google needs to pick Picasa of the gutter where it dropped and make it a good photo app before shoving it down everyone's throat as a social app. And online editing from that startup they bought is not the answer.
Similar for Market/Play. I will never buy a POP culture book or video from Play, so stop flooding me with ads for them when I want to look for apps.
The new technology isn't perceived as a threat because it is not as good and will never be as good in the old market. It manages to survive in a different new market (because it really can't compete in the old pond). As it improves, it never catches up with the old technology - but it becomes good enough. That is, the old technology has also improved, and is definitely better - but the old market doesn't care for that extra improvement. You can see there are a few things that have to happen for disruption to occur.
One of the reasons for Google's 20% was to try to prevent this kind of thing, but it never worked out. Some business types redefine terms, so that "invention" is a new technology (make something), and "innovation" is a new business (people want). Google's made a lot of stuff, but most isn't wanted and didn't create a business. They aren't innovations. Closing down businesses that aren't making enough to move the needle is the classic mistake of disrupted businesses: Christensen suggests setting up separate, autonomous business units (even separate businesses; startups), with limited resources, that will get excited by small wins - because new disruptions start small. (YC is pretty much doing it right...)
However, right now, Google is fighting for its life. At the beginning, facebook didn't seem threatening - or at least not that threatening. Then again, I'm not sure that Google ever could win this fight; social is such a different kind of business. Perhaps the best that google could hope for is to settle back into owning search forever.
My only disappointment is that google didn't manage to transform its internal inventions into innovations. I'm not saying it's easy or that I could do better, it's just that unlike winning social, it seems possible... and who knows what new disruptions might have come from that?
As it is, Google seems closer to Xerox: one fantastic invention/business, invents the future, makes no money from it.