Innovation, Creativity and Enterprise in Markets - Essay Example

An Evaluation of Opportunities, Innovation and Entrepreneurial Behaviour in Google, Inc. First Last Matriculation number Program ofstudy The module title Word count: 2293 Words Submission date Plagiarism Declaration I declare that this coursework embodies the results of my own work, and that it has been composed by myself. Following normal academic conventions I have made due acknowledgement of the work of others. Name (Typed or Printed) Signature Date Table of Contents Executive Summary 3 Introduction 5 Creating and Developing Opportunities 6 Managing Innovation 7 Behaving as an Entrepreneurial Organisation 9 Conclusion 11 References 12 Executive Summary Google Inc. is a trendsetter in developing and creating opportunities. It offers many attractions for job candidates who prefer working at Google rather than its competitors. There is a requirement for employees to create something on their own, and to contribute to Google’s policy of creating opportunities. Shared value products created at Google can be considered hybrids of corporate culture and social dynamics. Google also looks for venture capital investment from around the world - people just need to come up with lucrative useful business idea and if Google likes it, the company will fund it. Other companies probably consider innovation to be something that adds value to their corporate profile, but it is daily business at Google. Both disruptive and incremental innovations come out of Google’s software houses. To innovate is their job. Managers at Google try to create an environment for their employees in which they can think freely and innovatively. This is so important, they have built a facility called Google X where technology scientists work secretively on innovative ideas for their products, applications, and overall business growth. According to Google CEO, Eric Schmidt, employees need to think of an idea, and then they need to pursue it. This is the basis for its innovations, and there is no way around it. Managing innovation is not Google’s only highlight, it has splendid financial figures that speak of its excellent entrepreneurial abilities. It grew into a multi-billion dollar company after starting with just $100,000 just over 13 years ago. Since then it has made so many successful partnerships and acquisitions it is now considered the most valued brand internationally. Google in an excellent example of managing innovation, creating opportunities, and displaying smart entrepreneurial tactics. Orthodox definitions of management cannot grasp Google’s successful business tactics. It is going stronger and growing bigger without showing any signs of stopping or slowing down. Introduction The purpose of this business report is to analyze Google from three perspectives; its innovation, its entrepreneurial abilities, and its way of creating opportunities. The report draws a conclusion as to why Google is such a successful organisation. The reason for choosing Google is that its fits the purpose perfectly. It is one of the biggest organisations of the world and showcases all three factors: innovation, unique opportunities, and an excellent entrepreneurial system. Google was founded in 1981 by Larry Page and Sergey Brin, also known as the ‘Google Guys’ (Ignatius, 2006), who were PhD candidates at Stanford University. Since Google’s $85 per share IPO back in 2004, it has increased by 800 percent and now sits at around $642. This company is now recognised as the most valued brand worldwide (Nehls, 2011). This report looks at Google’s business history, their innovative strategies, their partnerships, and acquisitions. The focus here is to outline the key strategies used by Google that have given them an edge and made this organisation such an amazing success story. After discussing Google from the three aspects stated above, this report draws solid conclusions as to what can be deduced from the discussion and analysis. Creating and Developing Opportunities Google is recognised for creating and developing opportunities. Being in the software industry, they always need to stay ahead in creating opportunities for investors and their customers, as well as producing state-of-the-art software applications. Google has been extremely active in 2011. It announced in January this year that it intends to hire 6200 people - this is Google’s largest expansion so far. More specifically its target is to hire 1000 people from European countries. Additionally, Google CEO Eric Schmidt was one of the few corporate executives who had a meeting with the U.S. President Barrack Obama this year to discuss ways in which new strategies can revive the sluggish U.S economy. Google has proved to be quite aggressive when it comes to creating opportunities, even to the point of annoying Wall Street traders. Last year, Google grew by 23 percent and made a lot of people angry at Wall Street as it was advising Google to take a more prudent and steady approach in the their expenditures in order to get healthier returns on their investments (Associated Press, 2011). According to the Harvard Review, companies like Google are already on their way to creating shared value for their customers and investors. Even though such shared value between corporate dynamics and societal crescendos is extremely useful, people’s knowledge about them is only in the beginning phase (Kramer, 2011). Google is way ahead of many big names in the corporate sector when it comes to creating opportunities. Google-Venture, the venture capital department of Google, has attracted innovative businesses from around the globe. The purpose of this ‘Google arm’ is to be forward-focused in terms of identifying interesting investment opportunities in the world, and to help these businesses take off and be successful. This division searches for talented entrepreneurs who have innovative business ideas and have the potential to become significant in their fields with above average financial returns. The great thing about this opportunity is that it not only looks for ideas that fit Google’s business strategy, it looks for potential business ideas everywhere and from all sectors. Google invests through its venture capital division from seed funding to tens of millions of dollars, depending on its development stage and the opportunity presented (Google Ventures, 2011). Managing Innovation When it comes to innovation in the business sector, it is common these days to instantly think of Google. Innovation is like fuel to their corporate system. It has been the creator and leader of unique business solutions and management innovation since the year 2000 (Thomas, 2008). Google started with only search engine software, which in and of itself was an innovation. Google has since come up with both kinds of innovations, the incremental, and the disruptive, meaning they have single amazing software applications, and consistent improvement in their inventions. With the astonishing returns that Google has shown on its IPOs, it is lucrative in terms of its financials and in its game-changing innovations. This ability has earned them economic returns and news headlines (Cukier, 2011). Another reason for Google’s successful innovation strategy is that it needs its innovative engine running on all pistons since it doesn’t have a captive user group - people can easily switch from one search engine to another (Bry, 2011). Google hasn’t only been innovative in software design; it has shown innovation in all business sections including marketing and advertisement, and only some of them have been matched by competitors. For instance, Yahoo is older than Google, but it gives the best spot to its advertisers who produce most consumer clicks. Google on the other hand, gives the top spot in its search engine results to those advertisers who have the potential to pay them the most. This is done by multiplying cost per click (CPC) by the estimated revenue that the advertisement will be able to earn. According to Anil Kamath, a chief technology officer, by applying this strategy Google has been able to earn 30 percent more on each ad than Yahoo (Business Week, 2006). At Google interesting management strategies have been adopted to encourage employees to be innovative. According to its 20 percent substantial rule, employees should spend 20 percent of their work hours inventing something of their own. This move has benefited Google in many ways. When employees create something themselves, they naturally tend to work hard on their ideas. Google then gets stronger when these highly useful innovative ideas and products keep adding to their output. This practice encourages the development of entrepreneurial skills in employees, and many entrepreneurial employees who have a choice about their employer choose Google because of this 20 percent offer (Huisman, 2009). One primary question relates to how Google innovates in the first place. According to Eric Schmidt; “Innovation always has been driven by a person or a small team that has the luxury of thinking of a new idea and pursuing it. There are no counter examples. It was true 100 years ago and itll be true for the next 100 years. Innovation is something that comes when youre not under the gun. So its important that, even if you dont have balance in your life, you have some time for reflection” (Manyika, 2008). On another occasion Schmidt said ‘between the birth of the world and 2003, there were five exabytes of information created. [Google now] creates five exabytes of information in only two days’ (Daniels, 2011). This is why Google focuses heavily on innovation. Hal Varian, an economist at Google says that on any given day they test 100-200 strategies with alternative design patterns and algorithms (Andrew, 2011). Google has taken a step further in innovation. In fact this company has gotten rid of conventional innovation methods and has constructed a top-secret lab called ‘Google X’. Technology scientists there think and experiment to create a ‘Jetsons’ type of world, where garden planters and coffee machines will be connected to the internet, and controlled remotely and as easily as checking emails (Tsukayama, 2011). Behaving as an Entrepreneurial Organisation Since its inception, Google’s business path had been a roller coaster ride complete with innovative products, acquisitions, and partnerships that stretch for millions of miles, far from its search engine seed. Gmail, Orkut, Google Buzz, and Google Plus are some of its most recognised online products. Desktop items from Google include Google Chrome, Picasa, and its instant video talk software, Google Talk. Its mobile operating system, Android, is a trendsetter and is used in phones like the Samsung Galaxy and Motorola Droid (Google, 2011). Products like Acer AC700 and Samsung Series 5 got their market name from Google. These devices are known as Chromebooks, a name originated from Google’s web browsing software, Google Chrome (Samsung, 2011). Andy Bechtolsheim, co-founder of Sun Microsystems, was the first investor to fund Google back in 1998 with $100,000. At that time, Google was not incorporated (Fost, 2004). Later in 1999, Google had its first venture capital investment of $25 million (Google, 2011). In 2004, it offered its initial public offering IPO at a price of $85 per share with a total of 19,605,052 shares (Elgin, 2004). This sale of $1.67 billion provided Google with market capitalisation of $23 billion (Webb, 2004). Google’s entrepreneurial abilities shine most brightly in its partnerships and acquisitions. Since 2001, Google has been involved in various partnerships with a major focus on small venture capital firms. Keyhole Inc. was its first acquisition followed by much lucrative procurements (Google, 2011). A couple of years later, Google bought the video sharing site YouTube for $1.65 billion in stocks (Monica, 2006). After that Google made a very smart move that gave it access to various web publishers and advertising agencies - acquired DoubleClick for $3.1 billion (Helft, 2007). Major partnerships for Google range from research institutes to advertisement agencies. NASA Ames Research Center partnered with Google in 2005; both companies agreed to build 1,000,000 square feet of offices space to occupy. These offices are to be used for data management of humongous volumes along with nanotechnology research, entrepreneurial space technology, and distributed computing (Mills, 2005). In 2010, Google Energy invested $38.8 million in renewable energy projects, that is, two wind energy farms in North Dakota. They expect 169.5 Mega Watts of power from these two farms, which is sufficient to power 55,000 homes. NextEra Energy Resources sold 20 percent stake to Google for their funding (Morrison, 2010). According to this deal NextEra sold two farms to Google; a 120 Mega Watt wind farm in Barnes County N.D called Ashtabula 2 and a 49.5 Mega Watt wind farm called Wilton Wind 2, located in Bur Leigh County, N.D (Shahan, 2010). In the same year, Google also acquired Global IP Solutions, which provides web based teleconferencing and related services. This business move will provide Google with telephonic applications and services (Gomes, 2010). This year Google’s business activities are no less vigorous than in previous years. In 2011, Google bid $900 million for Nortel Network patents (Marlow, 2011). It also announced that it would purchase Motorola Mobility contingent upon U.S.A and European regulator approval (Tsukayama, 2011). This move is expected to make Google’s patent portfolio stronger. Google is in dire need of a stronger patent portfolio as the competition, Apple Inc., and Microsoft, have contacted courts to dispute the use of the Android operating system in phones like HTC, Samsung, and Motorola. An acquisition of Motorola Mobility will serve Google in two ways: it will make Google’s position against Apple and Microsoft stronger in the case proceedings, and it will allow Google to freely use Android in popular mobile phones (Cheng, 2011). Conclusion Google is a very successful company because it excels in the three fields of innovation, entrepreneurial skills, and developing opportunities. Its business success is probably unprecedented. Google has grown into a multi-billion dollar industry in just over 13 years. This is amazing because it started with an investment of only $100,000. Despite being a software house at the core, it employs over 30,000 employees worldwide and is still hiring (Google Investor, 2011). It is hard to squeeze Google into management theories because it only innovates; that is how it runs its operations and finances. Marketing theories are based on creating/selling products that people demand, whereas at Google, employees work hard to create something new that is good enough to create its own demand. 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