Archive for December, 2009

Google’s Continued Innovation of Technology Evolution

Google has the uncanny ability to introduce non-core disruptive innovations while simultaneously defending and expanding its core, and an analysis of the concepts and framework in Clayton Christensen’s book Seeing What’s Next offers insight into how.

Recently, Google introduced free GPS on the Android phone through a strategy that can be described as “sword and shield.” This latest disruptive innovation seeks to beat a current offering serving the “overshot customers,” i.e. the ones who would stop paying for additional performance improvements that historically had called for price premium. Google essentially entered into the “GPS Market” to serve said overshot customers by using a shield: asymmetric skills and motivation in the form of Android OS, mapping data and a lack of direct revenue expectations. Subsequently, Google transformed its “shield” into a “sword” by disinteremediating the map providers and using a revenue-share agreement to incentivize the carriers.

Examples of “incremental to radical,” to use Christensen’s terms, sustaining innovations in which Google sought out the “undershot customers” are GMail and Google’s core search technology. Frustrated with the products’ limitations, these customers are willing to swap their current product for another better one, should it exist. Web-based email solutions and search engines existed before the Google-introduced ones, but those introduced by Google solved problems that were frustrating users of other products. For example, users relished in GMail’s expansive email quota (compared to the limited quota they faced before) and also enjoyed the better indexing and relevancy algorithms of the Google search engine. Although Microsoft is blatantly targeting Google with Bing, Google appears unruffled and continues to steadily, if somewhat slowly, invest in its sustainable innovation (such as with Caffeine, the next-generation search platform, Gmail labs, social searches, profiles, etc.) to continue to maintain the revenue stream out of its core business.

By spending money on lower-end disruptive innovations and not “cramming” sustaining innovation, Google managed to thrive while most companies are practically destined to fail. The issue between Google’s sustaining and disruptive innovations was even coped with by using this strategy! According to insiders at Google, the GMail team was not used to create Google Wave, a fact unbeknownst to the GMail team. If Google had added wave-like functionality to Gmail, it would have been “cramming” sustaining innovation, while innovating outside of email can potentially serve a variety of both undershot and overshot customers.

So what does this mean for AT&T? Basically, AT&T needs to watch its back and keep an eye on Google! Smartphone revenue is predicted to surpass laptop revenue in 2012, after the number of Smartphone units this year surpassed the number of laptops sold. The current number of subscribers to Comcast exceeds 7 million (eight-fold what it used to be). While Google pays a pricey phone bill for Google Voice, which has 1.4 million users (with 570,000 of them using it seven days a week) Google is dedicated to making Google Voice work—and if it does Google could potentially serve a new brand of overshot customers that want to stay connected in realtime but don’t need or want a landline.

Although some argue that Chrome OS is more disruptive, using disruptive innovation theory it can be said that Chrome OS is created for the breed of overshot customer that is frustrated with other market solutions at the same level, not for the majority of customers. Should Google currently be scheming around Chrome OS, the business plan would be an expensive one, not to mention timely and draining in its use of resources. For more information on Google’s continued innovation efforts, please visit Nubifer.com.

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