Lyer and Davenport's Reverse Engineering: Googles Innovation Machine - Essay Example

Analysis of Lyer and Davenport’s “Reverse Engineering: Google’s Innovation Machine” The view that Google is a market leader with unparalleled technological and strategic success in the web-based industry cannot be overstated. Hence, the company offers good insights on business strategic direction to firms in the same industry and even in other sectors outside the internet. Lyer and Davenport’s “Reverse Engineering: Google’s Innovation Machine” seeks to highlight these lessons from Google to show what can be reproduced from the company and how this can be done. This analysis critically studies the article and summarizes the main points while drawing from marketing concepts. According to Lyer and Davenport (60), one of the factors that have set Google apart from the rest of the companies in the internet-based industry is its long-term strategic view. Here, Lyer and Davenport discuss the Google’s practice of strategic patience. Here, the authors highlight Google’s mission and the strategy the firm is using to pursue the set objective. Google’s mission is to seek to organize the world’s information transform it into a universally accessible and useful form. This is broad mission by any measure, but the authors argue that Google have taken the mission seriously, which conforms with the general view that sticking to the mission helps bring success to organizations. To pursue this mission, Google focuses on the long term rather than short-term view; unlike other firms, short term profits do not cloud Google’s pursuit of its mission. Instead of focusing on short term achievements in profits, Google has consciously pursued a long-term approach to build value and capability, which explains Lyer and Davenport’s (60) concept of practicing strategic patience. The extent to which Google would go in practicing strategic patience is clear given the management’s appreciation that it would take about 300 years to achieve Google’s mission of organizing the world’s information. Since the article seeks to enlighten other ventures on Google’s strategy to its current success, the authors make an effort of highlighting the reasons behind Google’s success from practicing strategic patience. First, Google offers a very profitable product through monetizing its information search idea which allows for pursuit of innovations that do not have immediate returns on investments. Besides this, Google has a high clarity of purpose accompanied by great attention to detail; the lesson here is that commitment to clear and simple directives helps firms to gain strategic success. One of the factors behind Google’s success is high innovativeness accompanied by a great ability to monetize innovations into sustainable revenue streams. Whereas other companies may spend proportionately huge amounts of capital in investing in innovations, Google has a unique strategy that results in significantly more success. Lyer and Davenport (62) describes Google’s innovation ecosystem, the unique innovation strategy that allows the company to maximize returns on innovation investments. Google has a platform that ensures innovations are in line with customer needs alongside impeccable marketing. To achieve this, Google’s innovation ecosystem relies on four parties; innovators, content providers, advertisers and consumers. Google’s innovators consist of Google’s own engineers, independent software vendors and open source communities. These innovators create a diverse and wide product-development network, offering new products to keep consumers engaged while at the same time generating revenue streams. Content providers are media companies and individuals who are create information and spark consumer interest on the web. The content providers are integral in Google’s monetization as they provide a mechanism for targeting ads. Google has over 1 million companies and individual advertisers who deliver ad content that is relevant to the search-identified users. They help drive Google’s massive revenue streams and monetize Google’s new innovations. The value created by Google brings in a vast number of consumers, 132 million unique visitors as of 2007. The consumers serve a number of roles on Google’s innovation platform including revealing their interests through information search and consumption of targeted advertising. They also make contributes as to ideas for improvements, provide an audience for test performance and consume Google’s new products. Importantly, Lyer and Davenport (62) insist that it is taking the keystone position in the innovation ecosystem that helps achieve such success. The keystone position is the component that ensures the other components are held in place. Google’s innovation ecosystem, a template for other firms, is important because it enables the firm to control evolution in the innovation ecosystem. Besides, the firm achieves the highest proportion of the value created within the ecosystem. Further, being the hub in the ecosystem grants a firm the ability to maintain perfect and continuous awareness of by-product information, which in turn ensures Google is the center of all new revenue streams. Conforming to the widely accepted view about the power of information, such an innovation ecosystem allows Google to possess all the relevant information in the industry. Upon close analysis, the arguments made by Lyer and Davenport about Google’s innovation cycle may appear irreproducible. However, the authors provide several examples of small firms that have successfully leveraged themselves into the hub position and reaped the benefits. Li & Fung and Salesforce.com are provided as examples of firms that have sought to provide a platform and dominate the supply chains, building successful ecosystems in the apparel and enterprise software sectors respectively. Such exemplifications help the authors underpin the importance of creating an innovation ecosystem and occupying the keystone position in the created ecosystems. As Lyer and Davenport (63) state, Google does not need to undertake statistical analyses and market surveys trends since all the information is already on Google’s databases. Google’s accelerated life cycle for product development covers an enormous computing capability that allows for new products to be introduced seamlessly. As a result, Google’s testing and marketing appear indistinguishable. The firm simultaneously tests and markets its products in the process of moving the innovations from alpha to beta phases of product development. From this discussion, two important areas of Google’s marketing emerge; discretion of use of extensive information in its databases and simultaneous testing and marketing of new products. In terms of success, the first aspect involving having all the information needed brings Google much marketing success. However, issues of privacy in the online world may emerge since Google appears to bear a lot of knowledge on its consumers. The second aspect of Google’s marketing entails using the consumers in the product development process through developing and marketing them at the same time. This strategy scores in terms of being in line with modern marketing concepts such as interactive marketing communication. Here, marketing seeks to identify and live up to the value systems of consumers, helping achieve alignment with consumer wishes (). However, this marketing may lead to failures and negative returns on investments as exemplified by the failure several of Google’s products such as audio ads, web accelerator, Google catalog and most recently, Google Buzz (Wordstream 2011). Lyer and Davenport’s article analyzes Google’s innovativeness, business strategy and aspects of marketing in an impressive manner. Through identifying aspects of Google that are reproducible and backing these up with successful examples, the authors are able to able to showcase how Google’s strategy can serve as a template across various industries. Works Cited Kitchen, Philip & Pelsmacker, Patrick. Integrated Marketing Communications: A Primer. USA: Routledge, 2004. Lyer, Bala & Davenport, Thomas H. Reverse Engineering: Google’s Innovation Machine. Harvard Business Review, 2008. Wordstream. Google Flops & Failures - The Failed Google Graveyard. 2011. Web. 18 Apr. 2012. Read More