Google +12

In late 2006 – early 2007, I outlined an unpublished research monograph for the Smart Internet Technology CRC about Google. This was my first foray into an indepth company study and using mosaic theory to develop a model of the firm. I relied on David Vise and John Battelle‘s books, Fortune journalistic profiles, basic security analysis, and frameworks taken from entrepreneurship, innovation, business strategy, valuation, neurolinguistic programming, and other sources. The research monograph’s topics included: the firm’s genesis, innovation culture, leadership pipeline, looming battles with China, ‘at a distance’ profiling of co-founders Sergey Brin and Larry Page, and search futures (note the multiple futures being considered rather than a ‘single point’ forecast or stance). The project’s internal presentations got positive feedback from CRC industry partners who could see its pragmatic roots in business and competitive analysis.

Often research projects turn into something else not specified in the initial proposal. I realised this as the research monograph outline unfolded. What I was really trying to do was something different: to develop and test a set of analytical tools, informed by other contexts. Google was the perfect case study because it had a lot of publicly available information and was acceptable to a corporate audience. I also drew on personal experiences as an internet site editor and my knowledge of the 1995-2000 speculative bubble in dotcom era stocks. In retrospect I really needed a co-author who was familiar with corporate finance, private equity and value creation models. I found those areas had the conceptual frameworks and the analytical rigour needed yet I didn’t have the subject matter expertise. My immediate team didn’t have those people and their attention lay elsewhere with their own projects. The people who had these skills and who I had tried to build positive working relationships with soon left the CRC. The project was never finished and not ever publicly released.

Here is some of what I learned around Google+9 for the  benefit of readers intrigued by Google+12:

1. Google is shrouded in ‘origin’ myths. Brin and Page benefited from a university environment which gave them the ‘10% time’ rule for individual projects, and had initiatives such as the Stanford Technology Ventures Program (STVP). Some of my team members took this as an argument that universities were vital in the innovation process. They were — yet just as important was how such programs were run and micro-level details such as access to resources. For example, STVP as an exemplar program has a strong alumni network and close links with Sandhill Road investment firms. Stanford’s Office of Technology Licensing dealt with crucial patent issues. These university-market mechanisms enabled Brin and Page — who pragmatically developed a ‘working’ prototype of their BackRub/PageRank algorithms — to meet with VCs from Kleiner Perkins Caulfield & Byers, Sequoia Capital, and other firms. Ron Conway and Ram Shiriram were Google’s ‘angel’ investors’, whilst John Doerr and Michael Moritz were first round investors, respectively. Even then, Brin and Page’s original options for ‘harvesting’ Google included plans to sell the fledgling start-up to a competitor, to develop a new advertising model, or to sign a technology licensing contract.

I knew that a lot of the ‘hype’ was retrospective narrative-building — because that’s what I did as a web site editor with our readership.

2. The ‘echo chamber’ of experts, pundits and search mavens overlooked the basics. Talk to most people and you’ll hear about Google’s university-like culture and its over 200 unique algorithm, metrics and usability innovations. At the time, this ‘chatter’ drove blog discussions and media reports. It’s what feeds a romanticised view of Web 2.0 based on shallow interpretations of Amitai Etzioni’s communitarian, Peter Russell’s ‘global brain’ and Pierre Teilhard de Chardin’s ‘noosphere’ philosophies, or ‘swarm’-like metaphors. This is also why Google hired ‘talent’ like information economist Hal Varian and complexity specialist Shona Brown, whose research you should definitely read.

Yet when I looked closer, I realised that although these are strategic core competencies and knowledge processes that were difficult to copy, those same competencies and processes were founded on things that any ‘corporate raider’ could understand: capex control, decision rights, organisational design, simple rules for productivity, rapid innovation via end-to-end processes, and strategic expecution. This led to subtly divergent views on the same subject. For example, my  team members and some others looked to Google Labs as the vindication of the university structure that they were in. To me, however, it was also clear from industry experience that Brin and Page had modelled Google Labs on their Stanford experience as a ‘bolt on’ capability that they could take from one context and apply in another for competitive advantage. This was one proven way to attract and retain passionate people, and to accelerate Google’s ideation-to-market innovation processes in order to outwit their more mature competitors.

This became even clearer when I compared Google to three different cohorts. The first were a bunch of ‘first wave’ search engines who had more market share and power when Google arose: AltaVista, Excite, Inktomi, Netscape and others. The second were companies such as Apple, Microsoft and Nokia who  had received similar media accolades during their ‘go go’ years. The third were emerging ‘challengers’ like Cha-Cha, Hakia Powerset, and Snap: search engines that contended they had different core competencies and capabilities yet that did not have the strategic execution skills above. Today, I would do a comparative analysis using a company universe and develop custom ‘screening’ tools for cost of capital, investment analysis, market design, and resource allocation. One of the benefits of such practices is to keep the analyst ‘grounded’  rather than to accept blog and media sound-bites.

3. A knowledge base and theory-building can inform analytical rigour and decision-making. I ran into two major problems during team discussions about the draft research monograph.

People had a particular image of Google: they often accepted Brin and Page’s narrative at face value. This meant they potentially fell into the traps of the anchoring and representativeness heuristics: they accepted aspects which fitted their self-narrative (such as the role of universities in the innovation process rather than how this was done) and downplayed the role of chance, luck, timing, and alternative explanations (such as the internal politics of Digital’s Western Labs and the departure of AltaVista’s lead engineer Louis Monier; or reaping the public relations benefits of the DoJ v Microsoft lawsuit). I learned to summarise this in a couple of minutes yet the CRC’s 5-minute presentation style lacked the kind of exploratory Q&A that I got elsewhere from a good strategist or venture capitalist, or from the CRC’s industry partners in a one-on-one meeting.

I could see certain things due to a personal knowledge base and life experiences. Yet I did not convey this well to others, and it was often dismissed as ‘just theory’ or insights that needed to be ‘dumbed down’ for CRC industry partners (who did not feel the same way in face-to-face discussions – in the rare instances when they could actually happen). Six months before it became a major news story, I knew Google was in serious trouble with its Google.cn platform due to just taking Masters level courses on international relations theory and China’s geo-economic re-emergence. Beyond Google’s mantra of ‘Don’t Be Evil’ lay some complex issues about the media’s ‘issues attention’ cycle, how senior managers respond to crises, offshoring and internationalisation processes, and how investors react to firm-specific and  ‘reputational’ risks. I also saw case study parallels with Baring’s, Long-Term Capital Management, Royal Dutch Shell and other companies.

Masters level training in strategic foresight meant I could see a range of potential futures beyond ‘challenger’ firms for Google – including the search engine’s ‘collision course’ with innovations in biotechnology, genomics, and computer science. Likewise, I quickly grasped how their Montessori education, family dynamics and parents’ careers provided early ‘shaping’ experiences for Brin and Page on how to conceptualise higher-order systems; the institutional influence of Stanford, NASA and Wolfram Research on science and technology; and building a leadership team where Page’s cost-cutting and deal-maker skills matched Brin’s contemplative, big picture outlook.

To me, these were issues worth exploring — perhaps in a ‘hypotheticals’ or seminar format — and in capability-building for researchers. Perhaps these are the kinds of ‘soft factors’ that Shiriram, Moritz and other investors saw in Brin and Page. They lie in the dynamic interaction of individual human development and the work environment. I found a similar attention to analytical rigour and decision-making in the day-to-day operations and structure of certain endowment, portfolio and investment funds, regardless of the manager’s style.

I soon left Smart Internet Technology CRC for different reasons. I now build on these reflections and other unpublished work in different contexts.