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How Google's Novel Management System Aids Growth
Carl Bialik from WSJ writes "Gary Hamel, visiting professor at London Business School, argues in a Wall Street Journal commentary that Google's 'novel management system seems to have been designed to guard against the risk factors that so often erode an organization's evolutionary potential.' Among Google's advantages: The 20% rule, an 'expansive sense of purpose' and the credo, 'keep the bozos out and reward people who make a difference.' Hamel also traces the company's evolution from Google 1.0, 'a search engine that crawled the Web but generated little revenue,' to Google 5.0, 'an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base. More than likely, 6.0 is around the corner.'"
of 'The Seven Day Weekend' from Ricardo Semmler. The CEO of SemCo with revolutionary ideas about business. A lot of his ideas are mentioned in TFA.
Really great book if you're interested in the ideas behind firms like Google.
Google 1.0 was a search engine that crawled the Web but generated little revenue; which led to Google 2.0, a company that sold its search capacity to AOL/Netscape, Yahoo and other major portals; which gave way to Google 3.0, an Internet contrarian that rejected banner ads and instead sold simple text ads linked to search results; which spawned Google 4.0, an increasingly global entity that found a way to insert relevant ads into any and all Web content, dramatically enlarging the online ad business; which mutated into Google 5.0, an innovation factory that produces a torrent of new Web-based services, including Gmail, Google Desktop, and Google Base. More than likely, 6.0 is around the corner.
It should be:
Google 1.0: A nobody search engine
Google 2.0: Outsourcing search engine
Google 3.0: Contextual ads in searches
Google 4.0: Adsense network
Google 4.1: Information hoarding of users
My version 4.1 highlights Google's recent overt interest in aggregating data on its users through services like the personalized homepage, Gmail, Gcal, Gchat, and the Google Desktop. Why is it not 5.0? Because these enhance the previously established revenue streams without changing the way they make money. It is not an evolution in Google's financial model, just new ways to better target their contextual ads (3.0 and 4.0).
In order for a 5.0 to happen, Google has to redefine its primary revenue stream or add a new one that pulls in revenue from a seperate audience. My point is made most clear by highlighting the benefiting party of each evolutionary step:
Google 1.0: A nobody search engine - You and me
Google 2.0: Outsourcing search engine - Yahoo/AOL/portals
Google 3.0: Contextual ads in searches - Web advertisers
Google 4.0: Adsense network - Web masters
Google 4.1: Information hoarding of users
Likely candidates for a 5.0 would be:
Television or radio advertisement domination
Online music store, or other type of goods for cash type of business
Online payment system (clone paypal)
A novel online service as a subscription service (seems least likely with Google's history)
Those would be Google 5.0.
Another example of a company that utilizes unorthadox business methods, but still manages to please share holders; look at Costco, because they were able to convince their orthodox share holders of the benefits of supporting Costco's unorthdox business methods.
If these companies continue to communicate to their share holders the sustained benefits of long term gain, we won't see a signifigant change in their unorthadox business methods.
I don't know if it means anything, but one of my former coworkers left a (very good) NASA engineering position to get his MBA from Columbia. He'd been with NASA for about 10 years, and was looking to shift out of engineering for a change. He certainly came from a background that was a lot different and much more technically oriented than almost all of his classmates.
Google just hired him to do business development. Unlike the stories I hear about how difficult it is to get hired there, he did very little work to get the position except submit a resume - in fact, it was more like they were actively looking for someone like him.
Anyways, perhaps that's some sort of indicator of the MBA types Google is recruiting.
Worst...sig...ever!