Management Google Case Study
Introduction
New competitive strategies and business models are essential for the consolidation of a company’s leadership position in the internet market. In the real world, a company that can offer various services to consumers and complimentary companies has a strong strategic position. Google focuses on maintaining a leadership position by offering distinct services. The two services are advertisement on the web and search engine (Edelman & Eisenmann, 2011). These services make up Google’s core competence and are the business base of Google (Eduardo, Mariane & Sugano, 2009). The company began in 1998, and has since grown to have an average of 7 million searches per day by 1999 (Eduardo, Mariane & Sugano, 2009). The company is the world’s first brand name above Coca-Cola, Samsung, Apple, Nokia, and IKEA.
Innovative strategy and Business Model
The factor behind this success is its innovative strategy, which assists Google to manage the chaos and growth of information on the internet. This strategy allows Google to transform its technological tools into a profitable business. Google’s innovative approach causes it to turn its core competencies using innovation to generate revenue and structure business as a mixture of innovation and technology (Eduardo, Mariane & Sugano, 2009). The idiom, “technology matters” fuels the company’s innovative strategy. Under this motto, Google invests heavily on infrastructure that supports the fast return on search queries. Google focuses on low-cost, custom, Linux-based architecture for its server to increase the speed of search queries (Edelman & Eisenmann, 2011). The company is not afraid of investing in high-risk and high-reward projects.
To manage this innovative strategy Google uses distinct corporate values and governance structure. According to Shafer, Smith & Linder (2005) there is a construct between context of the information society, knowledge economy, and age of revolution, which are tools that assist strategists and managers to communicate a company’s competence to create sustainable revenue. The technological paradigm of information technology rules the economy and requires the use of new business configurations. Google quickly learnt the dynamics of an economy under the influence of technological innovation. It is on this foundation that Google builds its innovative management strategy.
In this strategy, Google encourages engineers to use 20% of their working hours on projects from their own initiative. This strategy allows the company to maintain its innovation and the creation of new and improved services. The innovative strategy also involves rapid execution where the workforce is in teams of three to five employees (Edelman & Eisenmann, 2011). Smaller teams are easier for management of projects and increases productivity. This strategy has led to a flexible organization where teams can pursue many projects. With many projects running, Google faced challenges with prioritization. To overcome this, Google set up the 70/20/10 rule, which allocates and distributes engineers and technical staff efforts (Edelman & Eisenmann, 2011). In this rule, 70% of an engineer’s time is on core business involving paid listings and web searches. Another 20% is on projects that are an extension of core business, and 10% is for new businesses. The 10% innovation has increased Google’s business through extensions like content hosting, productivity and communication applications (Edelman & Eisenmann, 2011). Remarkable extensions that are increasing Google’s business are innovations like video and book hosting. This is with the 2006 acquisition of YouTube, making Google a leader in content host. Communications applications include Gmail gives Google a competitive edge over e-mail providers like Hotmail and Yahoo.
Recommendations for Future Strategies: Critical Success Factors of Innovation
Innovative change is a necessity for today’s business. Innovation occurs through visionary and creativity of a company’s human resource. Therefore, Google needs to use innovative change in its management and HR strategy as a necessary approach to survive and succeed. Critical success factors of innovation Google requires to look out for are economic change, research and development, and talent management. According to Sungkhawan (2011), globalization and changes in the economic environment force organizations to reduce their research and development budgets causing workforces less creative. To overcome this challenge, Google can use skilled employees in the innovation process to create a competitive advantage (Sungkhawan, 2011). This is attainable through motivation and talent management as seen with the case of Apple Corporation. In the technological and innovative environment, motivation and talent management of skilled employees is the main source of innovation and competitive advantage for companies (Sungkhawan, 2011). This provides the company with a sustainable and efficient source of skilled and knowledgeable employee base.
Forward Thinking Strategy
To gain sustainable success in today’s market, Google requires radical and incremental innovations that create new and regular products, which connect with consumers. A critical factor of this innovation is the need for risk, time, creativity, and experimentation (Sungkhawan, 2011). Elements of innovation Google need are efficiency, cost effectiveness, ability to forecast consumer wants, desires, and needs. Innovation also requires research and design that anticipate services and products cost effectively and timely. There is evidence that the most innovative firms are those that sustain their competitiveness by anticipating consumer needs and wants and by creating services and products in a cost effective and timely manner (Sungkhawan, 2011). To gain this, Google requires a continuous, innovative, and forward thinking trait to survive in this market.
Disruptive Technologies
This innovative strategy can make use of disruptive technologies to gain a competitive advantage. New technologies introduced in the market destabilize market equilibrium, making firms define their role in the market structure. According to Dan and Michael (2007), a firm can use disruptive technologies to create strategic positioning though the introduction of significant technology as it offers new service interactions. This is also by the leveraging technology through links with customer values, and leveraging through customer values (Dan & Michael, 2007). Google’s disruptive technologies will achieve this if only it creates products that change the mainstream consumer use. The technologies are radical and innovative, is the difference between innovation and existing technologies is significant. Therefore, to gain a competitive edge over competitors like Apple, Google requires an understanding of the impact new technology will have on the existing market structure. This means the creation and introduction of technologies that will change the communication and hosting application market. Google’s disruptive technologies are those products and services that change consumer use in core competence for search engines, Gmail, video and books hosting, and cloud-based applications.
First Mover Advantage
Along with disruptive technologies, Google can create a competitive advantage by being a first mover and taking advantage of first mover advantage. To be a first mover, Google requires to create products and services, which upon entry in a new market, creates and captures value. Google can create value by providing services and products, which consumers will pay higher than the cost of production (Bhattacharyya & Rahman, 2003). To main advantages of a first mover, Google needs to retain value through the creation of a competitive advantage.
Resource Allocation for R&D
The innovative strategy calls for equitable allocation of resources for research and development. Resource allocation is essential since innovation is the basis for Google’s business strategy. This requires the balancing of costs, risks, and benefits to meet innovative objectives. According to Carlos and Lawrence (2007), managers of innovative firms face challenges in the allocation of resources to multiple projects. This scenario is in Google where multiple projects run concurrently. To overcome this, Google can allocate resources to projects running within collective units. This is to offer Google’s management optimal decision-making capabilities and achieve efficient use of available resources. The other challenge in Google’s research and development department are the many project managers from the multiple project teams. This creates problem in decision making, as conflicts and competition for resources occur. To allocate resources in this work environment, Google needs to prioritize projects and activities. Allocation of resources is to high priority projects, which makes it easier for managers to make decisions (Carlos and Lawrence, 2007). Prioritization of projects is through appraisal of options or through construction portfolios. Appraisal of options involves the ordering of different options in a given area, while construction of portfolios is the appraisal of options in many areas (Carlos and Lawrence, 2007). This implies that Google orders projects in areas like communication applications, hosting, productivity applications, or new systems though the appraisal of options strategy. This is an orderly method for Google since it deals with projects in one area, unlike the construction of portfolios that covers projects across many areas.
References
Bhattacharyya, S.K. & Rahman, Z. (2003). Sources of First Mover Advantages in Emerging Markets-an Indian Perspective. European Business Review, Emerald Insight, 15(6), 361-369.
Carlos, A.B. and Lawrence, D.P. (2007). Transparent Prioritization, budgeting and Resource Allocation with Multi-Criteria Decision Analysis and Decision Conferencing. Ann Oper Res, 154, 51-68.
Dan, P. &Michael, S.M. (2007). Differentiation via Technology: Strategic Positioning of Services following the Introduction of Disruptive Technology. Journal of Retailing, ELSEVIER, 83(4), 375-391.
Edelman, B.& Eisenmann, T.R. (2011). Google Inc. Harvard Business School, 9-910-036. 1-21.
Eduardo, J.V.G., Mariane, F. & Sugano, J.Y. (2009) Business Model and core Competence Refinement: google Case Study. RAI, 6(3), 46-62.
Sungkhawan, J. (2011). Leading Innovation and Change Management-Characteristics of Innovative Companies. Journal of Applied Management and Entrepreneurship, 16(2), 126-128.
