When asked recently, Eric Schmidt’s answer to the question was
It’s better to think of Google as a technology company. Google is run by three computer scientists, and Google is an innovator in technology in our space. We’re in the advertising business, 99% of our revenue is advertising-related. But that doesn’t make us a media company. We don’t do our own content. We get you to someone else’s content faster.
The question is central to many web service companies. What is our core competency ? What is a must for our future ? Are we technical, are we media, or are we marketing & sales deal makers ?
Choosing advertising and selling is extremely tempting. Operationally and day-to-day these skills and departments have the biggest impact on the bottom line.
But time again technology disrupts the market. Your core competency must be in whatever disrupts your market most. One constant, in words of innovation guru Seth Godin, is that safe is risky; you innovate or you die.
For web service companies, it is technology that is disrupting the market. You miss the boat in technology, even when your revenue is from advertising, and you are sunk.
from LA Times inteview of Eric Schmidt.
After several attempts at structuring their development process, Google has arrived at the 70-20-10 rule. Eric Schmidt, the Google CEO, alleges the rule was arrived at through some clever maths from Sergey Brin. An unlikely story, since getting an innovation process right is, like cooking, more an art form than a hard Science.
Initially, Google attempted a classical structured engineering process. The structured BCG matrix approach is excellent for incremental innovation. Maintaining a product in a competitive position, by measuring function or feature points of products in the market. Google abandoned this engineering management approach concluding that while productivity was high creativity and innovation were poor. The process is poor at discrete innovation, at launching new products.
Eric Schmid outlines their current process as follows:
1. 70-20-10 Principle: By the most recent analysis, Google is not as high as 70% in the core of search/ads, so now they’re reshifting the focus again to adjust (in other words, we’re doing more search again…).
The 20% represents Google’s bargain with technical people, allowing them to roam free to encourage creativity—where all the most interesting products emerge.
The 10% is for wacky ideas that might not work out but feel worth pursuing.
2. An “exhaustive drama of arguments and reviews” in “ceaseless GPS [Google Product Strategy] reviews—so much that it’s produced a recent internal traffic jam on the servers with so many such teams.”
3. A monthly formal revenue force and reordering around product investment.
“The goal is to systematize anything…The only way to deal with the growth in scale, is a systematic approach to each and everything we do…Google’s making significant storage/computing capacity investments, reusing and combing data from one application to another….”
An interesting glimpse on how you maintain creativity and disruptive innovation once your company and staff mature. The continual GPS (Google Product Strategy) Reviews are akin to Microsoft’s continual paranoia of potential threats to their dominance. This is likely to be a core objective for Larry and Sergey, as the future of the company hinges on a continual flow of creative disruption from its development staff.
Google’s innovation process certainly intrigues many people Google’s secret sauce recipe.
Is Google Hiring Hackers or Software Engineers?
The Colorado Institute of Technology is quietly closing its doors, six years after it was created amid hopes of someday rivaling Caltech and MIT as an educational powerhouse churning out digital-age engineers. Tech facility closing
In my experience regional authorities get the best results in “creating technology clusters” by recruiting market forces into the process. Essentially, private equity investors and venture capitalists will inadvertently create more sustained regional economic growth than a government committee.
Quoting Brad Feld a Colorado venture capitalist, on the closure of the Colorado Institute of Technology.
Education is at the core of creating a great, long term, entrepreneurial environment. While a few people in Colorado, such as Jared Polis, are doing great things, our state government and business leaders should look at the failure of CIT as a major wake up call that we are simply not doing enough, or the right things, or managing them effectively, I wasnt involved in CIT, so its hard to be specifically critical, as Ive spent most of my Colorado-based entrepreneurial – education activity working with CU Boulder Deming Center for Entrepreneurship and the CU Denver Bard Center for Entrepreneurship, but Id hypothesize that if the companies that invested energy and money into CIT had channeled the same energy and money into these two institutions, there would have been a better outcome.
The most successful technology parks I have visited have a resident marketing & sales support department, and the worst performing parks focus on technology support. St John’s Technology Park in Cambridge (UK) has a great commercial support team and a great tenancy record.
[Disclosure: I am a serial entrepreneur, my views may be biased]