This is the followup to yesterday’s feature, War and Peace.
Google: There is hardly a business writer who hasn’t praised Google’s various innovation-friendly policies, notably the 20% time rule. Everyone loves this story, and rightly so. What innovator wouldn’t want to live in Google-land? Twenty percent of your time devoted to doing something different – innovator crack!
No doubt, Google has learned the lessons of the past decade: 1) Big things can come from tiny beginnings; 2) You can’t tell what the right bets are in advance. Let 1,000 flowers bloom.
Heaven forbid I should quibble with that strategy in general, but was it exactly right for what Ben Horowitz calls peacetime? Steve Jobs famously told Larry Page to “figure out what Google wants to be when it grows up…It’s now all over the map” (Isaacson, 2011). Now they are focusing. That’s good, perhaps, but remember yesterday’s war and peace lesson:
Focus and build an overwhelming advantage in peacetime and then paradigm shift in wartime.
If Horowitz is right and Google is now entering a war zone, then they have this lesson reversed. Sure, they did alright in peacetime. Nobody can scoff at Google’s success. But they ran their innovation engine incredibly hard – indulging everything from self-driving cars to dodgeball. And what are they doing now? They are going into an era of disruption, where they really need to find and execute new opportunities, with the peacetime strategy of heavy pruning and focusing.
That said, a recent Forbes article suggests Google may be demonstrating one of the key symptoms of a peacetime innovation engine run amok: innovation addiction. They say they want to focus (whether that is the right wartime innovation strategy or not), but then they explode their active portfolio again like a struggling dieter wolfs down entrees at a buffet.
Contrast this with Amazon.
Jeff Bezos and team are possibly the very best business model innovators in the world today. Amazon has followed the “war and peace” strategy perfectly for nearly two decades. The formula:
- Establish a repeatable, scalable business model in an attractive market.
- Employ the peacetime strategy of focusing on radical improvement.
- Reinvest heavily in the core and achieve total market domination.
- Then go to war by pivoting hard, paradigm-shifting into an adjacent space by focusing on competencies that had merely supported the previous peacetime operation (e.g., world-class logistics, manufacturing, IT infrastructure).
- Rinse and repeat.
Over and over, when Amazon found a repeatable, scalable business, it doubled-down, pouring in resources and boldly sacrificing short term profits to go all in. Focus, focus, focus – a classic peacetime strategy. First, the online bookstore, then supply chain for anything from A-to-Z, then eBooks, crowd-sourced services, and cloud computing. These are really different businesses, but you can see how the company used the lessons of one to attack the next.
And they are doing it again. Just yesterday – thank you, gods of blogging, for your excellent timing – Forbes reported that Amazon is signaling revenue growth but net loss as it aggressively pushes the Kindle Fire, a bold move into tablet computers leveraging lessons from making eBook readers.
That’s the cool thing about paradigm-shifting innovation: you can make small moves that are huge.
How Amazon maintains a team of active paradigm-shifters during peacetime periods of focus is less obvious from the outside than it is for Google, but they are doing something right. You don’t roll this many “hard-sixes” in a row without knowing how to manage your innovators in both peacetime and at war.
So both Google and Amazon are inventive, vibrant, very cool companies. Both have strong innovators that they have to manage, and both are balancing ever-more diversified business portfolios.
But where Amazon really has the “war and peace” formula nailed, Google appears to be stumbling into it.
Fortunately for Google, they do a lot of things right, and one of them is the subject of a future post: how to keep a standing army of innovators fit and ready even when you aren’t going to throw your weight behind their ideas any time soon.
Tune in for the next installment of Innovation Wars: Shock and Awe.
Caveat: This post is more of a journey than a destination. Using the “war and peace” lens to look at how companies handle innovators and innovation portfolios is not well established, and for me it raises many questions. If there were ever a post of mine that called out for comment, this would be it.