Thursday, 22 September 2011

Google as a Strategic Disrupter

Gartner has analysts who specialise in looking at particular vendors. This morning, early, I listened to Tom Austin, lead Gartner Google analyst talk about Google. Short presentation, but some interesting stuff. Amongst the analysts, Google is viewed as either naive, arrogant or brilliant.
They are definitely viewed as disruptive amongst all of them, along with Apple.

What does that mean? Disrupt as a verb, means to break apart, throw into disorder, to interrupt the normal course or unity of.

Google's drive to defy conventional wisdom is disruptive, and some examples are:
New business models (adsense)
Revolutionary technology (googles infrastructure),
Asymmetric warfare ( google apps)
Head fakes (reshaping wireless). Apparently this is a sports term, meaning to look one way and go the other

They are similar to other firms in these areas:
Worried about cash flow, growth
Threats from security, reliability, privacy, patent claims
Fear of obsolescence
Innovators dilemma, someone more agile coming in and undercutting them

But there are differences in:
Critical assumptions
Operating model
Business model
Investment approach

The Google operating model is based on the following principles:
Question authority. Don't trust experts. Very analytical. Don't accept conventional wisdom
They don't share everything, like roadmaps. The transparency master lives in an opaque castle. I like this quote. The company that has made the world transparent....
30% of their investment goes into long term projects which they don't tell anyone about until they're unveiled. Rest is short term projects, experiments, upgrades every two weeks. Rapid iteration with hard data and analytics.
Constantly dissatisfied with the way things are.

Their revenue is mainly from ads. Gartner estimates that Google Apps is only 0.5% of total revenue. It is growing but is a very small part of their business.
R and D spending is going up, and Sales and Marketing. They are generating a lot of cash flow and bought 27 firms last year.

Their strengths are Ads, search appliance, analytics, apps, android, cloud development and chrome.

Their weaknesses are antitrust, patents, Office 365 pressure, opacity. There's also the "Google knows best" culture which some see as a weakness.

Google apps are far more capable than the Microsoft office web apps, but inferior to the full suite of Office. But they cost a lot less. So, Google apps cost less, but you get less. That is probably good enough for many organisations.

Google develops what its data says enterprises need, not what enterprises say they need.

Interesting quick overview of Google and their philosophy.

- Posted using BlogPress from my iPad

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