kip/bot/blog

There’s probably not an agency or tech-UX company that hasn’t talked several times about adopting Google’s 80/20 rule. In the search for ways to become innovative, this is the one technique everyone seems to know and understand, at least at some level.

But, it seems like most attempts to pursue this idea suffer an early death in the face of billable reality: we need our agency folks to be billable, or we have too much work to do to hit our next set of goals. As a result, the implementation gets watered down (do what you want, but make it billable to the client), shrunk (90/10, 95/5, monthly brainstorm), or transformed into good old-fashioned pluckiness (after you work 50 hours, you can spend 10 more hours in the office on whatever you want). The simple fact is, devoting 20% of your workforce’s time is very hard to do unless you’re fabulously profitable, are tasked as an innovation engine (in which case the ratio would be reversed), or have incredibly patient money.

This month’s HBR has an article about what companies can learn from Google about how to innovate. I’ve been reading HBR on and off for about 20 years, and I seem to remember articles in this format — Summary of fabulous results, A look inside, Summary of what they do, What it means to you, Sidebars with tips and reminders of how to make it work — for Miscrosoft, 3M, Sony, P&G, Toyota and a dozen others. This one, though, pains me. While Google is fascinating and absurdly successful, I have a hard time buying into the premises of the article: that Google has a track record of creating successful products, that their R&D engine can be reverse engineered.

Start with the first paragraph, which has the line: “Not since Microsoft has a company had so much success so quickly.” Feels right, at first, but what do we mean by “so much success”? This is hard to parse, but Microsoft’s innovation success involves a wide range of products in the pre-internet days: operating systems, Office, programming languages. These are products that went on shelves and which people bought and used in large numbers. Whether you believe that MSFT innovated these products or coopted ideas and stitched them together doesn’t matter: it was a lot of complex software to code, debug, ship, and support — and the masses bought and used them.

I don’t see the parallel with Google. Outside of search, which apps have had meaningful market penetration? Gmail is a small, small fraction of Hotmail and Yahoo mail users, Google docs is a smaller fraction of Office users, Google Reader isn’t even a fraction of an established market. In terms of innovating new products that succeed in the marketplace, Google is still 80% (or more) search. Don’t get me wrong, I dig their stuff. But to lump Google’s proven success in search and unproven success in their interesting projects to MSFT’s proven successes in OSes, productivity software, and development languages is misleading. (And I think it’s worth harping on the programming languages. Visual Basic has millions of user/developers who build cool things for themselves and others and that’s a community not as web-notable as the mashup types, but arguably of equal or greater economic significance.)

Anyway, I have a hard time believing that Google, at this stage, has much to teach other ordinary companies. Google’s revenues, margins, and dominance in search are so massive that they have a cushion no other companies have. When the HBR article cites “Practice Strategic Patience”, the authors make a fair point that Google has a clear mission that ties its acquisitions of YouTube, Picassa, Urchin, Keyhole, and others into a coherent strategy. But the paragraph that follows is the kicker:

With such a farsighted mission, the short-term profitability of a new offering doesn’t seem to matter as much to Google as it might to other businesses. The company’s managers are strategically patient. CEO Eric Schmidt estimated that it will take 300 years to achieve the mission of organizing the world’s information. His 1200 quarter forecast might invite smirking; still it illustrates Google’s long-term approach to building value and capability. Google, unlike many companies, can afford its broad broad mission and collection of innovations simply because search-based advertising is a fantastically profitable product that provides cover for many unprofitable ones. The company certainly care about accumulating customers, but its executives believe that over time the model and the money will take care of themselves. at a 2007 Bear Stearns conference, Schmidt put it this way, “Ubiquity first, revenues later . . . If you can build a sustainable eyeball business, you can always find clever ways to monetize them.”

This acknowledges, in classier language, what I wrote up top, but there’s a rush past some key dynamics that make me wonder if there’s anything we can learn from Google. If it weren’t post-IPO Google, referring to a 300 year goal, and saying don’t worry about revenue let’s get people would be seen as a revisiting of dot-com silliness. Another hard-to-relate-to dynamic is the short-term profitability one. Not only do most companies lack the revenues and profits to acquire a YouTube without monetizing it, but most also lack the capital to acquire companies without incurring debt. Most companies would have to borrow and pay interest . . . so what are we to learn in that reverse engineering?

The article has a table of factors to help companies figure out how to emulate Google. The intro reads “If your company aims to improve innovation capacity, consider emulating these key attributes that have contributed to Google’s success.” The list of factors is interesting, but are they useful or new?

1. Strategic Patience — haven’t we always known this? The challenge is balancing the quarterly needs against the multi-yearly demands.  The Google is answer is to make so much money that your quarterly needs are covered and then some.
2. Infrastructure built to support innovation — Yup, but how many companies are actually doing infrastructure or analogous work?
3. Ecosystem that enables architectural control — yup, if you’re big
4. Innovation built into job descriptions — begs the question doesn’t it?(* see English language pet peeve below)
5. Cultivated taste for failure and chaos — true, this is the one point that I think we should dwell on. Learning how to be smart, wise, informed enough to manage a culture that experiments and fails, and which lets go to innovate is something that is still tied to Google profits, but which Google does seems to take seriously and approach intelligently.
6. Use data to vet inspiration — yup, but aren’t we all number-crunching these days? More important, though, Google is testing to see which works better, not what constitutes a viable product. GMail is optimized within its idiom and its small audience, but are they using to data to grow the audience substantially?

Don’t get me wrong, Google products are cool and some of them excellent, but it’s a mistake to say they’re profitably innovative. They’ve created an idea factory, built on very smart people, and have an interesting formula for advancing the current core business, the long-term core goal, and cool stuff. But I’m not sure this is a model we mere mortals with less than billions in market cap should be looking at.

(*) Begging the question is a horribly misused phrase in today’s language . . . to the point that the misuse is probably the use, but I’m terrible at letting those things go. The original, and to my mind more interesting, meaning of “begging the question” was not a fact that raises a question so powerfully as to beg it. Instead, “begging the question” was the proof of a proposition by invoking the proposition itself as a premise. In the instance above, question is begged in the sense that we want to know how to make innovation part of our culture. The answer? Make it part of people’s jobs. Doesn’t take you very far.