ENTREPRENEURIAL GROWTH OF GOOGLE

A Narrative Report

Presented to the Faculty of the

Graduate School and Institute of Professional Development

Saint Dominic Savio College

In partial fulfillment

Of the requirement for the Degree

Doctor of Philosophy in Business Management

By:

Jay-Ar C. Dimaculangan
Introduction

Large organizations have enormous innovation potential at their disposal. However, the

innovation actually realized in successful products and services is usually only a small

fraction of that potential. The amount and type of innovation a company achieves are

directly related to the way it approaches, fosters, selects, and funds innovation efforts.

To maximize innovation and avoid the dilemmas that mature companies face, Google

complements the time-proven model of top-down innovation with its own brand of

entrepreneurial innovation.

Google

1.1. Background of the Organization

In January 1996, Larry Page and Sergey Brin started Google as a research project for

their PhD studies at Stanford University (Google Milestones 2013). At that time,

conventional search engines ranked search results by counting the number of search

terms on the web page. Page and Brin introduced a search engine with a better

mechanism that was based on the analysis of relationships between websites (Page et

al 1999). They named the new search engine BackRub. This research project became

the foundation of Google Inc. By September 1998, Google was incorporated as a

privately-held company. Together they own about 14 percent of its shares and control

56 percent of the stockholder voting power through supervoting stock. They

incorporated Google as a California privately held company on September 4, 1998, in

California. Google was then reincorporated in Delaware on October 22, 2002. An initial
public offering (IPO) took place on August 19, 2004, and Google moved to its

headquarters in Mountain View, California, nicknamed the Googleplex. In August 2015,

Google announced plans to reorganize its various interests as a conglomerate

called Alphabet Inc. Google is Alphabet's leading subsidiary and will continue to be the

umbrella company for Alphabet's Internet interests. Sundar Pichai was appointed CEO

of Google, replacing Larry Page who became the CEO of Alphabet.

In June 2000, Google was recognized as the world’s largest search engine. By 2002,

Google earned several awards including Best Search Feature and Best Design awards.

The company gained success by continuously enhancing its products and services. The

company also launched a free email account, called Gmail (Google Milestones 2013).

On August 19, 2004 the company has its initial public offering (IPO). The IPO earned

Google USD $1.67 billion, which gave the company a total market capitalization of USD

$23 billion (Elgin, 2004).

Google has achieved great success in growing its internet-related products and

services. In line with this, it has acquired several small entrepreneurial ventures like

Keyhole Inc, YouTube, Double Click, Grand Central, Aardvark and On2 Technologies

(Google Milestones 2013). In recent years, Google has become a significant player in

the telecom industry with its development of the Android mobile system. The company

is also increasing its hardware business through its partnerships with major electronics

manufacturers.
Google LLC is an American multinational technology company that specializes in

Internet-related services and products, which include online advertising

technologies, search engine, cloud computing, software, and hardware. It is considered

one of the Big Four technology companies, alongside Amazon, Apple, and Facebook.

The company's rapid growth since incorporation has triggered a chain of products,

acquisitions, and partnerships beyond Google's core search engine (Google Search). It

offers services designed for work and productivity (Google Docs, Google Sheets,

and Google Slides), email (Gmail), scheduling and time management (Google

Calendar), cloud storage (Google Drive), instant messaging and video chat

(Duo, Hangouts), language translation (Google Translate), mapping and navigation

(Google Maps, Waze, Google Earth, Street View), video sharing (YouTube), note-taking

(Google Keep), and photo organizing and editing (Google Photos). The company leads

the development of the Android mobile operating system, the Google Chrome web

browser, and Chrome OS, a lightweight operating system based on the Chrome

browser. Google has moved increasingly into hardware; from 2010 to 2015, it partnered

with major electronics manufacturers in the production of its Nexus devices, and it

released multiple hardware products in October 2016, including the Google

Pixel smartphone, Google Home smart speaker, Google Wifi mesh wireless router,

and Google Daydream virtual reality headset. Google has also experimented with

becoming an Internet carrier (Google Fiber, Google Fi, and Google Station).

Google.com is the most visited website in the world.Several other Google services also

figure in the top 100 most visited websites, including YouTube and Blogger. Google was
the most valuable brand in the world as of 2017, [but has received

significant criticism involving issues such as privacy concerns, tax avoidance,

antitrust, censorship, and search neutrality. Google's mission statement is "to organize

the world's information and make it universally accessible and useful". The company's

unofficial slogan "Don't be evil" was removed from the company's code of conduct

around May 2018, but reinstated by July 31, 2018.

Corporate Mission and Organizational Culture

Google Inc has promoted its corporate mission of ‘to organize the world’s information

and make it universally accessible and useful.’ The company seeks to empower

individuals by providing its customers with the right products and/or services at the right

time and by encouraging its employees to be innovative and productive. The company’s

human resource policies are vertically integrated with this vision.

Despite its success, Denning (2011) criticizes Google’s corporate mission. Denning

contends that Google’s mission does not truly reflect its core business. The company’s

mission statement, which focuses on organizing the world’s information, describes the

workings of a library instead of a web-based search engine. Denning cites the failures of

Google Health and Google Power Meter, which were tools constructed from a library

mindset and were designed to help people assemble information about their health and

energy use respectively. Adhering to Google’s mission statement caused these

business ventures to fail. However, supporters of Google believe that its mission

statement has paved the way for the creation of innovative products and services.
Google is fundamentally built upon a culture of openness and sharing of ideas and

opinions. This is primarily influenced by the company’s beginnings as an internet startup

company. In line with this principle, the company has encouraged its employees to ask

questions directly to top executives about various company issues (Google 2013).

Google is a dynamic company wherein everyone’s ideas are respected and heard.

In a comparative analysis of Google vis-à-vis other information technology companies, it

was observed that Google has a more employee-friendly working environment. The

company also provides flexibility both in terms of working hours and work place in order

to foster creativity and the flow of ideas (Business Teacher 2011).

Google’s organizational culture is built upon intrapreneurship. Employees are

encouraged to be proactive, self-motivated and action-oriented, with the goal of

developing new and innovative products or services They are motivated through the

challenge of creating something new rather than waiting for their managers to provide

them with next deadline or a prescribed project proposal. The vision of Google is to

sustain the same level of devotion and enthusiasm among its employees as Larry

Page and Sergey Brin themselves had when they were conceptualizing Google at

Stanford University (Hammond 2004).

Google is also well-known for its attractive compensation packages, various on-the-job

perks, and luxurious offices. These have been credited as motivating factors that

encourage Google’s employees to be dedicated and hardworking. The company also

utilizes training and development to maximize employees’ creative potential.

Google’s human resource development policies help the company to align its workforce

with its vision. The company promotes its human resource department as a strategic

partner of employees. Google values innovativeness and creativity in its employees.

Innovation is very important for the long-term success and future growth of the

company. To achieve this, the company encourages new ideas from employees and

provides rewards/incentives to motivate them (Forster 2005). Furthermore, the company

makes an effort to create a workplace with an atmosphere that is conducive to fostering

creativity, imagination, and innovativeness.

The human resource department of an organization has the responsibility of keeping its

work force motivated and helping the company to meets its targets. An important

strategy in helping to achieve these goals is through the continuous provision of training

and development in the work place. In line with this, the human resource department

must ensure that resources allocated to the development and training of employees

does not affect market dynamics in a negative manner. Human resource managers

have to act as service providers to the organization’s workforce by rendering the

employees as internal customers (Gupta 2005). Adhering with this line of thinking,

Google’s work places provide various amenities to enable them to create and innovate.

At Google, the process of employee development starts from recruitment. As such, it is

important for the company to hire the right talent that fits comfortably within Google’s

organizational setting. Google prioritizes hiring employees who are willing to work as

team players, with an attitude of looking for new solutions, and are capable of leading

small creative projects (Horn 2011). Google hires employees who are willing to
continuously train and develop themselves both as individuals and as part of larger

groups within the company. As an organization, Google can shift the burden of learning

to employees because it focuses on hiring individuals who already demonstrate a

passion for self-directed learning (Sullivan 2011).

Growth

In March 1999, the company moved its offices to Palo Alto, California,which is home to

several prominent Silicon Valley technology start-ups.The next year, Google began

selling advertisements associated with search keywords against Page and Brin's initial

opposition toward an advertising-funded search engine.[To maintain an uncluttered

page design, advertisements were solely text-based.In June 2000, it was announced

that Google would become the default search engine provider for Yahoo!, one of the

most popular websites at the time, replacing Inktomi.

Google's first production server.

In 2003, after outgrowing two other locations, the company leased an office complex

from Silicon Graphics, at 1600 Amphitheatre Parkway in Mountain View, California. The

complex became known as the Googleplex, a play on the word googolplex, the number

one followed by a googol zeroes. Three years later, Google bought the property from

SGI for $319 million. By that time, the name "Google" had found its way into everyday

language, causing the verb "google" to be added to the Merriam-Webster Collegiate

Dictionary and the Oxford English Dictionary, denoted as: "to use the Google search

engine to obtain information on the Internet". Additionally, in 2001 Google's Investors

Schmidt as the Chairman and CEO of Google

Innovation and Growth Potential

The concept of innovation potential and growth is a critical, but often overlooked,

element in the discussion of innovation; defining and understanding this potential is

important because it is the source of all innovation within a company.

Resources

A company’s innovation potential can be defined as the combination of its human,

intellectual, physical, market, leveraged, and financial resources. Consider, for example,

Google’s assets. Human. Google has more than 20,000 employees spread across

several functions such as engineering, operations, marketing, and sales. In addition to

expertise in their field, all Googlers bring to the company their individual passions and

interests, which play a key role in driving innovation.

Intellectual. The company possesses significant knowhow and intellectual property in

many areas—most notably in crawling, storing, indexing, organizing, and searching data

on a massive scale and with an extremely fast response time. Physical. Google has a

network of datacenters as well as a variety of custom, open source, and commercial

hardware and software to harness this computing power and make it easily and

seamlessly accessible to both customerfacing products and internal tools.

products generate revenue as well as goodwill that is useful to the company when it

needs to try out, and get feedback on, its latest innovations.

Leveraged. Google fosters an ecosystem that allows other companies to prosper by

providing additional value and content on top of its services. By lowering the impedance

between itself and the outside community, Google facilitates a symbiotic relationship

that enables and accelerates innovation for all.

Financial. The company has the ability to invest significant capital in many speculative

projects and innovative ideas.

Example: Google Search

Google’s Search platform, and the development of the infrastructure on which it runs,

illustrates how the combination and interaction of all of these resources helped the

company to grow and enabled—and sometimes forced—it to innovate. In the beginning,

passion for a better way to search the Internet led to Google’s innovative PageRank

algorithm.1 The quality of PageRank results generated a lot of interest in, and millions

of users for, Google in a very short time, requiring the company to scale its

infrastructure as fast as possible. To keep costs reasonable, Google built its servers in-

house with cheap commodity parts and Velcro fasteners for fast swapping of

components, and it operated these servers with open source software. At the time, this

approach was considered highly novel. Google had to develop its own software layers

to make its commodity servers work seamlessly and in a fault-tolerant way. This led to

several additional innovations such as MapReduce,2 the company’s patented software

The highly scalable, distributed, and fault-tolerant hardware and software infrastructure

and tools originally developed for Search, combined with access to a massive user base

and a growing number of employees, made it possible for Google to conceive, launch,

test, and rapidly scale many new products like Gmail, News, and Ads.

INNOVATION MODELS

As a company grows, its innovation potential grows along with it and, more often than

not, so does its need for innovation. The amount and type of innovation that a company

actually realizes are determined by its cultural, organizational, and technical beliefs and

practices with respect to innovation, which can result in various models. As Figure 1

shows, two different innovation models starting from exactly the same innovation

potential will produce dramatically different subsets of actual innovation. While some

models produce innovation that is closely aligned and easily integrated with existing

technology and products, others lead to innovation in areas peripheral to the

organization’s current focus. Some models result in incremental innovations; others are

highly disruptive. The concepts of open and closed innovation developed by Henry

Chesbrough3 are examples of such models. Open innovation involves ongoing

collaboration with, and contributions to and from, people outside the company. In

contrast, closed innovation is kept in-house and “under wraps” until the product hits the

market. Not surprisingly, a company that favors open innovation will achieve very

different results from one that favors its counterpart. Google has many projects that

follow either the open or closed model, and others that do not cleanly fit either
stereotype. Android and Chrome OS are examples of permeable interfaces between

Google and the outside community, and would be defined as open on the surface.

However, both projects periodically “go dark” on the community to surprise the market.

In a sense, they are both open and closed depending on business needs at any given

time. Google Wave is a good example of closed innovation because it was developed

without significant external influence.

TOP-DOWN INNOVATION

Arguably, nothing has more influence on a company’s future than the innovation models

it chooses to adopt. In addition to open and closed innovation, Google practices both

top-down and entrepreneurial innovation. Top-down innovation is the default model for

most established organizations after they reach a certain size and maturity. It is

characterized by several traits including • the creation of one or more entities focused

on research or advanced development—for example, Bell Labs, Xerox PARC, and Sun

Microsystems Laboratories; • recruitment of dedicated researchers, including many

PhDs, to staff the research organization; • a small number of ambitious and often

expensive long-term projects that are usually chosen, or at least vetted, by the

organization’s top layers; • formal and extensive research proposals, plans, and

reviews; and • a relatively closed and secretive environment, with limited sharing of

resources and information with other parts of the company. An example of top-down

innovation at Google is its Translate technology. Language translation is widely

acknowledged as a very difficult problem in computer science. Given Google’s goal to

organize the world’s information, having an effective translation technology is critical to

the industry and gives them time to innovate at their own pace. Google integrates this

group’s innovations in its products as they become available—the company recently

introduced a feature that lets Chat users who speak different languages send instant

messages in real time. Another notable example of top-down innovation at Google is

the ambitious self-driving car project led by Stanford University’s Sebastian Thrun, a

pioneer researcher in this area and codeveloper of Street View.

Top-down innovation has produced groundbreaking results and is irreplaceable for

innovation that requires longterm commitment, substantial investment, and significant

domain expertise. However, it is unsuitable for pursuing innovation that requires limited

time and resources and is best served by an open, lightweight approach.

ENTREPRENEURIAL INNOVATION

In The Innovator’s Dilemma, Clayton M. Christensen described the challenges that

established companies, especially industry leaders, face delivering breakthrough

innovation. As a company grows in size and market stature, keeping existing products

competitive and satisfying customers’ needs with incremental features can easily

consume all of its resources, leaving the door wide open for start-ups with disruptive

offerings. The dilemma Christensen poses is more than just a possibility—it is the most

likely outcome for most businesses.

Google believes that the best way to stay on top of the market and remain competitive

over the long term is to promote, foster, and invest in entrepreneurial innovation in all
areas of the company. The ability to drive, and participate in, innovation is not limited to

a select few PhDs working in designated research labs—it is open to all employees.

Further, Google’s entrepreneurial innovation model mimics, with some obvious and

necessary limits, the experience that entrepreneurs would have in a start-up: fighting for

funding and resources, dealing with competing products, and, if successful, earning

significant financial rewards for their efforts. Two core beliefs drive Google’s approach

to entrepreneurial innovation. The business of Google is innovation. If you randomly ask

10 people what business Google is in, most will say Internet search and advertising. But

if you ask Google’s CEO, Eric Schmidt, or its founders, you will get different answers,

such as “our business is innovation” or “we take our jobs to be innovators and we are

failing if we are not innovating quickly enough.” While Google invests heavily in

maintaining, supporting, and continually improving already established products such as

Search, Ads, and Gmail, it realizes that to ensure long-term growth and success, it must

also commit resources to innovation in several areas. Schmidt made that clear in 2009

when he said that “innovation is the technological precondition for growth.”

Expect innovation from every employee. Google strongly believes that innovation can

come from any employee at any time. “We prefer [our engineers] to run rampant,”

Schmidt explained in 2005. “The cleverest ideas don’t come from the leaders, but rather

from the leaders listening and encouraging and kind of creating a discussion.”6 In his

2009 commencement address at Carnegie Mellon University, Schmidt said, “You

cannot plan innovation, you cannot plan invention. All you can do is try very hard to be

in the right place and be ready.”7 What does it mean to “try very hard to be in the right

place and be ready,” and what does that take? For Google, it means organizing the
entire company to foster and support “unplanned” innovation and entrepreneurship.

Google puts these beliefs into practice through • a flat, data-driven organizational

structure; • a “20 percent time” policy; • open and powerful development environments; •

services and tools to help launch, test, and get user feedback as early as possible; and

• generous rewards and recognition for successful innovation. Each of these efforts

requires significant commitment, investment, and participation by almost every company

group and project. As practiced at Google, entrepreneurial innovation is not a matter of

simply making a few tweaks and adjustments here and there; it is woven into the very

fabric of the company, coloring every activity.

FLAT ORGANIZATIONAL STRUCTURE

The most immediately visible evidence of Google’s policy of entrepreneurial innovation

is its organizational structure and associated management philosophy. On the surface,

Google is organized and managed like most other companies. It has different groups—

for example, engineering, finance, human resources, operations, product management,

and sales—and within each group are vice presidents, directors, managers, project

leads, and so on. But that is where the similarities end. One of the first things people

new to Google notice is its very flat management hierarchy. While the company has a

traditional job ladder with familiar titles, it has always tried to keep the ratio of engineers

and other individual contributors to managers as high as possible. It is not unusual for

30 to 40 people to report directly to a manager, or even to a director or VP. In addition,

the key role of managers at Google is to guide and connect, not control. As one senior

executive put it, “I am a very expensive e-mail router.” While no two groups or
managers are exactly alike, titles and seniority do not carry as much weight at Google

as they do at most companies, especially when it comes to making product decisions

and launching or assigning activities.

The most notable effect of Google’s flat management hierarchy is that, at any given

time, there is a certain amount of chaos. But the company is not only comfortable with

this, it sees some chaos as a necessary ingredient for innovation. Shona Brown,

Google’s senior VP of business operations and coauthor, with Kathleen Eisenhardt, of

Competing on the Edge: Strategy as Structured Chaos (Harvard Business School

Press, 1998), summarized this philosophy in a 2006 Fortune interview: “The company’s

goal is to determine precisely the amount of management it needs—and then use a little

bit less. … If I ever come into the office and I feel comfortable, if I don’t feel a little

nervous about some crazy stuff going on, then we’ve taken it too far.”8 While Google’s

organizational structure can result in, for example, project duplication, it also increases

the number of projects and accelerates their time to market. By “letting more flowers

bloom,” the company can collect more feedback on what customers consider valuable.

TWENTY PERCENT TIME Another notable aspect of Google’s culture derived from its

core beliefs is its well-known 20 percent time policy, which allows engineers to invest

roughly a day each week pursuing projects outside their official area of responsibility.

The most important thing about 20 percent time is not how long employees are allowed

to spend on side projects, but that Google encourages them to think and be

entrepreneurial. There is no formal accounting of time spent—some people use more,

others less. Googlers engrossed in their primary responsibilities may not be inclined to
work on anything else right then; others may choose to spend approximately a day each

week on a side project or accumulate their 20 percent time over several months and

then spend several weeks in a row on the project. Google employees working on 20

percent projects often join forces and create the internal equivalent of a small start-up,

recruiting their first “employees” from the company ranks. As in the real world of start-

ups, most 20 percent projects do not make it to the next level. But the few that achieve

critical mass eventually lose their 20 percent status and become official Google

projects—the equivalent of a start-up getting venture capital funding. We estimate that

about half of Google’s products, including Gmail and News, started out as 20 percent

projects.

POWERFUL DEVELOPMENT ENVIRONMENTS

One advantage that entrepreneurs outside Google do not have is access to its

unparalleled computing resources and the ability to use and leverage all of its code.

Unlike other organizations of comparable size, at Google thousands of engineers share

a single, gigantic code base. This means that someone working on Maps can see, use,

and even modify the code developed by colleagues working on Ads, Gmail, or

Calendar—and vice versa. The lack of “code silos” enables all kinds of code reuse,

mashups, and product cross-pollination that inspire innovation. Allowing thousands of

developers to work concurrently on hundreds of projects in an open development

environment of this magnitude and diversity—Google supports several programming

languages and frameworks—requires a massive investment in tools and computing

power. Predictably, most commercial or open source software development and testing
tools were never meant to scale to Google’s requirements in terms of size, diversity,

and speed. To address this problem, the company had no choice but to think like

entrepreneurs and innovators.

Google employees working on 20 percent projects often join forces and create the

internal equivalent of a small start-up.

Several years ago, a few Googlers got together and created the Engineering

Productivity organization to design and implement the tools, infrastructure, and services

required to support the company’s uniquely demanding development environment. The

“customers” of Engineering Productivity are the thousands of Google developers; the

following statistics indicate the scale and speed of development that this organization

has made possible: • 6,000 developers in more than 40 offices, • 2,000 projects under

active development, • 100,000 builds each day, • 150 million test case executions each

day, • 20+ code changes per minute, • 50 percent of code changes every month, and • a

single monolithic code tree with mixed-language code. Google’s very-large-scale

development and testing tools are among its most valuable assets—and they

significantly accelerate the company’s ability to experiment and innovate.

LAUNCH, TEST, AND FEEDBACK TOOLS

Startups can move fast and take the kind of risks that their bigger counterparts are

unable or unwilling to take. It is difficult to be entrepreneurial if launching a new product

takes months or years instead of weeks. To foster innovation, Google has a “launch

early and iterate” philosophy. How early? One of the company’s rules of thumb is: “If
you are not embarrassed by your first launch, you have not launched early enough.” In

addition, Google makes internal entrepreneurs’ new ideas accessible to thousands of

coworkers and millions of external users who are ready and willing to try out

applications and tell the company what they think of them. Two early-access programs,

Internal Labs and Labs, provide innovators with progressive market exposure and

visibility. As the name suggests, only Googlers have access to Internal Labs. This gives

innovators an opportunity to obtain feedback from 20,000 people on a proposed

application, when expectations are low. Among the categories of Internal Labs

applications is one called “R.I.P.,” the final resting place for innovation not considered

worth pursuing. Most applications end up here, which shows that Internal Labs is

effective at helping employees test ideas and fail fast.

To foster innovation, Google has a “launch early and iterate” philosophy.

Innovators who are ready to share early versions of their innovation with external users

can take advantage of Google Labs. As described in its FAQ (www.googlelabs.

com/faq): Google Labs is a playground where our more adventurous users can play

around with prototypes of some of our wild and crazy ideas and offer feedback directly

to the engineers who developed them. Please note that Labs is the first phase in a

lengthy product development process and none of this stuff is guaranteed to make it

onto Google.com. While some of our crazy ideas might grow into the next Gmail or

iGoogle, others might turn out to be, well, just plain crazy. … Google engineers and

researchers are always looking for a way to show off their pet projects, and Google

Labs seemed like a great way for them to get feedback without forcing every new
feature on all of our users. So, please follow the “Details and Feedback” link under each

experiment and post a comment to let them know what you think of how they’ve been

spending their time—and be frank. It doesn’t help anyone if a bad idea is encouraged to

spread like a noxious weed. Note the emphasis on getting honest user feedback. While

Google Labs provides employees an opportunity to showcase their innovation with the

rest of the world, its primary function is not self-promotion but weeding out bad ideas.

Some established products have their own version of Google Labs where users can

experiment with new features. Product-specific labs, along with their taglines, include •

Calendar Labs: Latest ideas from the Calendar team, • Gmail Labs: Dozens of Gmail

experiments, • Google Maps Labs: Experimental Maps features, • Search Experiments:

Alternate search views and more, and • YouTube TestTube: YouTube’s ideas incubator.

The importance of these labs in the context of innovation and entrepreneurship at

Google cannot be overemphasized. The expression “say it with numbers” is an integral

part of the company’s DNA. When it comes to deciding whether to invest in new ideas,

there is no more compelling set of numbers than the actual usage data obtained from

labs launches. REWARDING SUCCESSFUL INNOVATION One major motivator for

entrepreneurs is the prospect of substantial financial rewards if their start-up is

successful. While for many Googlers the main incentive for innovation is seeing their

idea become reality and reach millions of users, employees who take innovation from

idea to successful product receive both monetary and honorary recognition. The Google

Founders’ Award, launched in 2004 to reward outstanding entrepreneurial achievement,

can amount to millions of dollars. The approximately two dozen recipients of the first

award shared around $12 million worth of stock. As in a real start-up, the shares were
divided in proportion to recipients’ contributions; the core contributors received awards

of $1 million or more. Google cofounder Sergey Brin explained that the award was

largely created “to give people incentives to apply for jobs at Google even after the

promise of getting rich from the company’s initial public offering last August had

passed.”9 Google offers many other incentives and awards that recognize and reward

internal entrepreneurship. However, because only a fraction of innovation succeeds,

how the company deals with failure is just as important as the way it deals with success.

In the “outside world,” entrepreneurial success—in the form of venture capital funding,

acquisition, or an initial public offering—is the result of actual market success. Likewise

for Google innovation, user adoption, not opinion, largely determines a project’s future.

A good example of this is the genesis—and termination—of Google Wave. Wave began

as an idea to create a new paradigm for online collaboration, with the ambitious goal of

augmenting and possibly replacing e-mail. Its creators pitched the idea to Google

executives, who funded it much like a venture capital firm would a start-up. Wave

received luxuries not normally accorded to in-house projects including near isolation (in

Sydney, Australia) to allow for greater independence, plentiful resources, and a long

runway. However,Wave failed to reach and maintain a specific number of active users

by a given time and was cancelled. While Wave’s end result was disappointing, it

demonstrates the effectiveness of Google’s entrepreneurial innovation model. The

application was given sufficient time and room to flourish and only terminated when it

became evident that it was not popular enough to justify the further commitment of

resources. And the effort was not wasted: many of Wave’s breakthrough ideas and

technology are finding their way into other Google products. Trying something new and
not succeeding is an inescapable and important part of the innovation process. Google

knows that if it never fails, then it is probably not being as innovative as it needs to be.

When a project fails to meet expectations, the company acknowledges it, learns

whatever lessons it can, and moves on to something different.

Putting Google’s entrepreneurial innovation model into practice requires significant

commitment, investment, and participation from all functions and areas of the company.

For example, the annual cost of 20 percent time alone is hundreds of millions of dollars.

Overall, however, the ongoing stream of cutting-edge projects and features that directly

result from entrepreneurial innovation amply demonstrate that the model is working.

Quantifying the costs and benefits more precisely might be possible, but it would be

difficult—and perhaps pointless. Entrepreneurial innovation is so tightly woven into

everything Google does that is hard to imagine the company without it.

The Eight Pillars of Google Innovation

How does a company like Google continue to grow exponentially while still staying

innovative? Susan Wojcicki, Google's Senior Vice President of Advertising, discusses

some of the processes and principles in place to make sure that the company doesn't

get bogged down in the past as it keeps moving forward.

The greatest innovations are the ones we take for granted, like light bulbs, refrigeration

and penicillin. But in a world where the miraculous very quickly becomes common-
place, how can a company, especially one as big as Google, maintain a spirit of

innovation year after year?

Nurturing a culture that allows for innovation is the key. As we’ve grown to over 26,000

employees in more than 60 offices, we’ve worked hard to maintain the unique spirit that

characterized Google way back when I joined as employee #16.

At that time I was Head of Marketing (a group of one), and over the past decade I’ve

been lucky enough to work on a wide range of products. Some were big wins, others

weren’t. Although much has changed through the years, I believe our commitment to

innovation and risk has remained constant.

What’s different is that, even as we dream up what’s next, we face the classic

innovator’s dilemma: should we invest in brand new products, or should we improve

existing ones? We believe in doing both, and learning while we do it. Here are eight

principles of innovation we’ve picked up along the way to guide us as we go.

As we’ve grown to over 26,000 employees in more than 60 offices, we’ve worked hard

to maintain the unique spirit that characterized Google way back when I joined as

employee #16.

Have a mission that matters

Work can be more than a job when it stands for something you care about. Google’s

mission is to ‘organize the world’s information and make it universally accessible and
useful.’ We use this simple statement to guide all of our decisions. When we start work

in a new area, it’s often because we see an important issue that hasn’t been solved and

we’re confident that technology can make a difference. For example, Gmail was created

to address the need for more web email functionality, great search and more storage.

Our mission is one that has the potential to touch many lives, and we make sure that all

our employees feel connected to it and empowered to help achieve it. In times of crisis,

they have helped by organizing life-saving information and making it readily available.

The dedicated Googlers who launched our Person Finder tool (to learn more

see Missions that Matter) within two hours of the earthquake and tsunami in Japan this

March are a wonderful recent example of that commitment.

Think big but start small

No matter how ambitious the plan, you have to roll up your sleeves and start

somewhere. Google Books, which has brought the content of millions of books online,

was an idea that our founder, Larry Page, had for a long time. People thought it was too

crazy even to try, but he went ahead and bought a scanner and hooked it up in his

office. He began scanning pages, timed how long it took with a metronome, ran the

numbers and realized it would be possible to bring the world’s books online. Today, our

Book Search index contains over 10 million books.

Similarly, AdSense, which delivers contextual ads to websites, started when one

engineer put ads in Gmail. We realized that with more sophisticated technology we

could do an even better job by devoting additional resources to this tiny project. Today,
AdSense ads reach 80 percent of global internet users – it is the world’s largest ad

network – and we have hundreds of thousands of publishers worldwide.

Strive for continual innovation, not instant perfection.

The best part of working on the web? We get do-overs. Lots of them. The first version

of AdWords, released in 1999, wasn’t very successful – almost no one clicked on the

ads. Not many people remember that because we kept iterating and eventually reached

the model we have today. And we’re still improving it; every year we run tens of

thousands of search and ads quality experiments, and over the past year we’ve

launched over a dozen new formats. Some products we update every day.

Our iterative process often teaches us invaluable lessons. Watching users ‘in the wild’

as they use our products is the best way to find out what works, then we can act on that

feedback. It’s much better to learn these things early and be able to respond than to go

too far down the wrong path.

Iterating has served us well. We weren’t first to Search, but we were able to make

progress in the market by working quickly, learning faster and taking our next steps

based on data.

As the leader of our Ads products, I want to hear ideas from everyone – and that

includes our partners, advertisers and all of the people on my team. I also want to be a

part of the conversations Googlers are having in the hallways.

Google’s headquarters in Mountain View. On a Friday night, an engineer went to the

board and wrote down the details of a convoluted problem we had with our ads system.

A group of Googlers lacking exciting plans for the evening began re-writing the

algorithm within hours and had solved the problem by Tuesday.

Some of the best ideas at Google are sparked just like that – when small groups of

Googlers take a break on a random afternoon and start talking about things that excite

them. The Google Art Project, which brought thousands of museum works online, and

successful AdWords features like Automated Rules, are great examples of projects that

started out in our ‘microkitchens.’ This is why we make sure Google is stocked with

plenty of snacks at all times.

Share everything

Our employees know pretty much everything that’s going on and why decisions are

made. Every quarter, we share the entire Board Letter with all 26,000 employees, and

we present the same slides presented to the Board of Directors in a company-wide

meeting.

By sharing everything, you encourage the discussion, exchange and re-interpretation of

ideas, which can lead to unexpected and innovative outcomes. We try to facilitate this

by working in small, crowded teams in open cube arrangements, rather than individual

offices.
When someone has an idea or needs input on a decision, they can just look up and say,

‘Hey…’ to the person sitting next to them. Maybe that cube-mate will have something to

contribute as well. The idea for language translation in Google Talk (our Gmail chat

client) came out of conversations between the Google Talk and Google Translate teams

when they happened to be working near one another.

Spark with imagination, fuel with data

In our fast-evolving market, it’s hard for people to know, or even imagine, what they

want. That’s why we recruit people who believe the impossible can become a reality.

One example is Sebastian Thrun who, along with his team, is building technology for

driverless cars to reduce the number of lives lost to roadside accidents each year.

These cars, still in development, have logged 140,000 hands-free miles driving down

San Francisco’s famously twisty Lombard Street, across the Golden Gate Bridge and up

the Pacific Coast Highway without a single accident.

We try to encourage this type of blue-sky thinking through ‘20 percent time’ – a full day

a week during which engineers can work on whatever they want. Looking back at our

launch calendar over a recent six-month period, we found that many products started

life in employees’ 20 percent time.

What begins with intuition is fueled by insights. If you’re lucky, these reinforce one

another. For a while the number of Google search results displayed on a page was 10

simply because our founders thought that was the best number. We eventually did a
test, asking users, ‘Would you like 10, 20 or 30 search results on one page?’ They

unanimously said they wanted 30. But 10 results did far better in actual user tests,

because the page loaded faster. It turns out that providing 30 results was 20 percent

slower than providing 10, and what users really wanted was speed. That’s the beautiful

thing about data – it can either back up your instincts or prove them totally wrong.

Be a platform

There is so much awe-inspiring innovation being driven by people all over the globe.

That’s why we believe so strongly in the power of open technologies. They enable

anyone, anywhere, to apply their unique skills, perspectives and passions to the

creation of new products and features on top of our platforms.

This openness helps to move the needle forward for everyone involved. Google Earth,

for example, allows developers to build ‘layers’ on top of our maps and share them with

the world. One user created a layer that uses animations of real-time sensor data to

illustrate what might happen if sea levels rose from one to 100 meters. Another famous

example of open technology is our mobile platform, Android. There are currently over

310 devices on the market built on the Android OS, and close to half a million Android

developers outside the company who enjoy the support of Google’s extensive

resources. These independent developers are responsible for most of the 200,000 apps

in the Android marketplace.

Google is known for YouTube, not Google Video Player. The thing is, people remember

your hits more than your misses. It’s okay to fail as long as you learn from your

mistakes and correct them fast. Trust me, we’ve failed plenty of times. Knowing that it’s

okay to fail can free you up to take risks. And the tech industry is so dynamic that the

moment you stop taking risks is the moment you get left behind.

Two of the first projects I worked on at Google, AdSense and Google Answers, were

both uncharted territory for the company. While AdSense grew to be a multi-billion-

dollar business, Google Answers (which let users post questions and pay an expert for

the answer) was retired after four years. We learned a lot in that time, and we were able

to apply the knowledge we had gathered to the development of future products. If we’d

been afraid to fail, we never would have tried Google Answers or AdSense, and missed

an opportunity with each one.

Our growing Google workforce comes to us from all over the world, bringing with them

vastly different experiences and backgrounds. A set of strong common principles for a

company makes it possible for all its employees to work as one and move forward

together. We just need to continue to say ‘yes’ and resist a culture of ‘no’, accept the

inevitability of failures, and continue iterating until we get things right.

As it says on our homepage, ‘I’m feeling lucky.’ That’s certainly how I feel coming to

work every day, and something I never want to take for granted.
Ever wonder what makes the Google the holy grail of productivity and creativity?

There’s no magic in the drinking water at the Mountain View, CA company. The tech

giant draws from what Google’s chief social evangelist, Gopi Kallayil, calls the nine core

principles of innovation.

Kallayil shared his insights at this week’s San Francisco Dreamforce summit. Here are

the nine rules that any enterprise, large or small, can adopt to steal Google’s innovative

culture.

1. INNOVATION COMES FROM ANYWHERE

It can come from the top down as well as bottom up, and in the places you least expect.

For example, a medical doctor on Google’s staff argued persuasively that Google had a

moral obligation to extend help to those typing searches under the phrase “how to

commit suicide.” He ignited the charge to adjust the search engine’s response so that

the top of the screen reveals the toll free phone number for the National Suicide

Prevention Hotline. The call volume went up by nine percent soon thereafter. The same

change has been adopted in many other countries.

2. FOCUS ON THE USER.

Worry about the money later, when you focus on the user, all else will follow. Google

improved the speed of its search capabilities with predictive analysis so search

suggestions come up after the user types a few keystrokes. This Instant Search feature

saves the user a few microseconds with each entry. Google sales reps were concerned
that this shortened the time customers would view ads, but the company went ahead

and believed that it was worth the risk.

End result? Thanks to Instant Search, Google estimates the time saved is equivalent to

giving back mankind 5,000 years after a year of collective use. “Create a great user

experience and the revenue will take care of itself,” says Kallayil. In addition, more

customers will be attracted to your product’s increased benefits.

3. AIM TO BE TEN TIMES BETTER

If you come into work thinking that you will improve things by ten percent, you will only

see incremental change. If you want radical and revolutionary innovation, think 10 times

improvement, and that will force you to think outside the box. For example, in 2004,

Google started its Google Books project and set forth a challenge to organize all the

world’s information and digitize all the books ever printed in history.

Google co-founder Larry Page built his own book scanner, and the initial process

required having someone manually turn its pages in rhythm, one at a time, according to

the pace of a metronome. Google has now scanned 30 million of the 130 million books

they first set out to scan, and dozens of libraries around the world are participating in

the project.

4. BET ON TECHNICAL INSIGHTS

Every organization has unique insights, and if you bet on it, it leads to major innovation.

Google engineers, not the auto industry, came up with the idea of driverless cars after

seeing that millions of traffic deaths come from human error. Google already had all the
building blocks in place to build a self-driving car–Google Maps, Google Earth, and

Street View cars. Working with an artificial intelligence team at Stanford University,

Google engineers have produced experimental cars that now have travelled to Lake

Tahoe and back to the Bay Area and have given the blind more independence by

driving them to shop and carry out errands.

5. SHIP AND ITERATE

Ship your products often and early, and do not wait for perfection. Let users help you to

“iterate” it. When Chrome was launched in 2008, every six weeks Google pushed out an

improved version. “Today, using that approach, Chrome is the Number One browser in

many countries,” says Kallayil, “You may not have perfection in your product, but trust

that your users will get back to you.”

6. GIVE EMPLOYEES 20 PERCENT TIME

Give employees 20 percent of their work time to pursue projects they are passionate

about, even if it is outside the core job or core mission of the company. “They will delight

you with their creative thinking,” Kallayil promises. At Google, engineers and project

managers have the freedom to set aside one day a week to work on a favorite idea.

Many can wind up as products or product improvements. Case in point: an engineer

planning a trip to Spain found that he could not get a close-up view of the hotel since

the road was too narrow for the Google Street View car to enter. He later adapted a

Street View camera to fit on a specially-made Google tricycle to go places too narrow

for a car and tourist locations that ban autos from approaching the premises.
7. DEFAULT TO OPEN PROCESSES

Make your processes open to all users. Tap into the collective energy of the user base

to obtain great ideas. When Google created the Android platform, it knew it could not

hire all the best developers on the planet. For that reason, it “defaulted to open,” and

encouraged developers outside of Google to create apps for the one billion people

using Android devices daily. “That is how an ecosystem is formed,” says Kallayil. In

marketing, Google asked users how they would market its voice search app, and

children sent clever videos that rivaled the campaigns of the big ad agencies.

8. FAIL WELL

There should be no stigma attached to failure. If you do not fail often, you are not trying

hard enough. At Google, once a product fails to reach its potential, it is axed, but the

company pulls from the best of the features. “Failure is actually a badge of honor,” he

says. “Failure is the way to be innovative and successful. You can fail with pride.”

9. HAVE A MISSION THAT MATTERS

“This is the most important principle,” Kallayil says. “Everyone at Google has a strong

sense of mission and purpose. We believe the work we do has impact on millions of

people in a positive way.” Each person should have his or her own story.