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Posts Tagged ‘google’

Why You Shouldn’t Innovate Too Much

May 14, 2010 Leave a comment

No innovation, please.

Many businesses adopt the canard that process or product innovation is key to stealing a march on the competition. They therefore aspire to deliver stuff to customers in new and innovative ways. Fortunately for themselves, they usually don’t succeed.

That’s because people are a rather conservative breed of animal. They like things to be familiar and predictable, and often find change confusing and disconcerting. More subtly, the ‘normal’ way of doing things can be deemed to have resulted from millions of consumers voting for a particular business model until it became mainstream. Ignore the peoples’ vote at your peril.

Google learned this the hard way when it ventured into the mobile phone business with its ill-fated Nexus One phone. Being an Internet company, Google revealed a bias for the Internet way of buying stuff when devising its distribution strategy. It decided that the Nexus One would only be sold online via a web store.

Failure and low sales ensued. Google is now retreating from that ‘innovative’ way of selling mobile phones, and adopting the more traditional route of selling through mobile phone retailers. It turns out people like to see and touch phones before they buy them, and their considered set of potential purchases is the phones they see at retail.

Lesson? Don’t try to get customers to change their behavior. Your product is unlikely to be great enough for them to go to the trouble. Instead, find out how they like to buy stuff, and offer it to them through their preferred channels. It’s possible to be a little too innovative for your own good.

The Chastisement of Google

March 15, 2010 Leave a comment

Pride goeth before destruction, and a haughty spirit before a fall“- Proverbs 16:18

Organisations are like people: products of their experience and history. Some are old and wise, and take the long view. Some are young and hotheaded and certain to feel the fierce lash of society’s chastisement before long. Others are spoiled by sudden success young in life, and high on hubris, headed for a fall. One such is Google.

Google is one of the world’s most valuable brands, but an over-rated company. More than 90% of its profits come from its first product, search advertising. Google didn’t invent the search engine or its advertising model. Its success was a combination of luck, the prodding of early investors (the founders didn’t want to sully their search results with advertising but were forced to do so by VCs) and a laser focus on search. None of Google’s more than 120 other products make any money.

Nonetheless, cash mountains and rapid growth have created a monumental cultural hubris in Google. A megalomaniacal self-confidence has led to recent product debacles, unfocused diversification, privacy missteps and rash maneuvers, such as the decision to unwisely threaten to pull out of China, a bluff the Chinese government looks likely to call.

Google Groupthink is in evidence. With a leadership so spoiled by success and certain of its own divine infallibility, there is no dissenting voice to counsel caution. The tides will turn for Google, and the lessons will be hard.

 

Categories: Business Tags: , , ,

The Enemy of my Enemy is my Friend

March 10, 2010 Leave a comment

In business, be careful whom you offend. This salutary lesson may be a bitter one for Google as it threatens to find itself pincered between the ruthless jaws of Microsoft and the venomous claws of Apple.

Not too long ago, Apple and Google enjoyed a touching bromance. Google CEO Eric Schmidt served on Apple’s board. Both loathed Microsoft, and all was well in the world. Then Google’s hubris, stoked by their swift and sweeping success, urged a fatal error.

Google announced an operating system, Chrome OS, and later released a phone, the ill-fated Nexus One. Apple CEO Steve Jobs fumed at this direct attack on his beloved iPhone. He declared war on Google, after Eric Schmidt resigned from Apple’s board. The former allies slowly morphed into bitter competitors.

Meanwhile, Microsoft hates Google with an unforgiving and unholy passion. They too had seen their crown jewel products, Windows and Office, assaulted by Google’s Chrome OS and Google Docs products. With Apple now accusing Google of crossing the line into the competitive arena, it looks like Microsoft is making affectionate noises in Apple’s direction.

Google should have stuck to its core business of search and advertising. By casting its net in too many directions, it is picking up competitors and enemies it doesn’t need. It may learn the hard way to pick its fights more wisely.

VoIP: Vexed over Internet Phonecalls

September 22, 2009 2 comments
Fighting for survival

Fighting for survival

A Titanic Greek drama is afoot, starring Google, Apple and the US’s FCC. As a corporate intrigue, it would be riveting enough on its own. But for added drama, it has at its heart a battle over one of the most disruptive technologies of our time: VoIP, the technology for making Internet phone calls.

The leading VoIP provider, Skype, was recently valued at £1.9bn in a part-sale by eBay. Whether it was worth that much is debatable- precisely because the revenue models of VoIP are great for users, but not so much for providers. Providing free phone calls brings in no revenue- which is the nub of the Google-Apple-FCC brouhaha.

Apple is accused of unfairly rejecting a Google application from its iPhone application store that would have enabled iPhone users to make free Internet phone calls. This would have meant lost revenue to AT&T, the phone company supporting the IPhone in the US.

On a larger scale, VoIP is a terminal threat to mobile service providers everywhere. Most ban the use of  VoIP services on their networks. Resistance of course, is futile. As ubiquitous Wi-Fi allows users to access the web bypassing their phone companies, free phone calls will become the norm. They must adapt, or die.

Categories: Technology Tags: , , ,

Brand Hyperextension- Harvard Boxer Shorts

September 15, 2009 13 comments
Merchandising or Mercenary?

Merchandising or Mercenary?

Brand equity is hard to build and truly valuable. That’s why like any hard-wrought asset, there’s a natural inclination to milk it. But when does it go too far?

Calvin Klein, a once-revered brand, was decimated by over-extension. Slapping a brand name on bed sheets or licensing it to manufacturers of varying quality may boost the bank balance in the short run, but in the long run it confuses consumers and degrades the brand.

A Google browser, why not? A Google sweatshirt, perhaps. Google boxers, you’re pushing the envelope. Google toilet paper, you’ve crossed the line.

Harvard University is threatening to do just that. Apparently, the revered business school is not giving its parent university much business advice, resulting in the disturbing possibility of a line of Harvard-branded clothing comprising a line of WASPY atrocities.

The problem is, the urge to extend a valuable brand is nigh-on irresistible to empire-building managers. The thing is seen as just…sitting there unutilized, when it could be used to launch a potent assault on the market in the form of a new product line.

But perhaps we’re too harsh. In times like these, ailing businesses can’t be blamed for looking for creative revenue sources. AIG sweatpants, anyone?

Google: Better Mousetrap or Better Brand?

August 10, 2009 3 comments
Best technology or best brand?

Best technology or best brand?

What is the world’s best search engine? You’d probably reply, Google. But is it really?

That reply is akin to saying that Coke is the world’s best soft drink or McDonald’s makes the world’s best hamburger. It’s the one you’re most likely to choose, but the best? Probably not.

This is the power of successful brands: by positioning in the public’s head as the preeminent choice, they generate loyalty out of proportion to their actual product superiority.

Google was recently adjudged the world’s most valuable brand. The Google logo itself is worth $100bn, because people are more likely to choose a product with the Google brand plastered across it, even when it isn’t significantly better than alternatives.

One informal way to test this is a search engine blind test. You enter a search term into the box, click it and three blind searches from Google, Yahoo and Microsoft’s Bing are displayed. You choose which you think is the best, and it then reveals the answers. They may surprise you.

Despite Yahoo’s assertion that it’s not a search engine, in our tests it consistently provided the best search results. Google was a distant second, with Bing dead last. Hardly scientific, but with Google holding 78% of US searches (to Yahoo’s 11% and Bing’s 8%), it is unlikely that this market dominance is explained solely by the superiority of Google’s product.

What did YOU find?

Categories: Technology Tags: , , ,

Microsoft: Strategy by Imitation

July 15, 2009 2 comments
Google points the way for Microsoft

Google points the way for Microsoft

Never interrupt your enemy when he is making a mistake“- Napoleon Bonaparte

There are many ways to develop strategy. Someone should teach Microsoft a few of them.

Napoleon’s timeless aphorism suggests that whatever you do, blindly imitating your competitors cannot be considered strategic best practice. In fact, you may just find yourself doing precisely what they want you to do.

Ever since Bill Gates left Microsoft, the once-mighty eater of rivals has floundered as the Internet undermined its PC and server-based business models. Its strategic response has been simple: look at what competitors are doing, and despite differences in resources, focus, expertise and markets, just copy them. It’s much easier than thinking through evolving customer needs.

Since Apple had an iPod, Microsoft released the Zune, a device completely unrelated to its core software competence. Failure was the swift result. Since Apple was famed for its physical stores, Microsoft opened physical stores, despite already having established sales channels. Since Google has a stand-alone search engine, Microsoft launched one, or two, before settling on Bing.

The latest move may be the worst of all. MS Office is Microsoft’s most profitable product along with Windows. People pay for it, and like doing so. However, Google has a free online suit, so Microsoft will now offer Office online for free. The fabric of the universe is rent asunder by the sound of billions in revenue evaporating into the cloud.

Google makes money from advertising. It can afford to give away free spreadsheets. Microsoft cannot. Nor does it need to- we would gladly have paid for the online version of Office. Google must be delighted. Their enemy is making a mistake.