Leading up to Google’s first-quarter earnings report on Apr. 17, investors couldn’t have been more bearish. They had knocked the stock down 35% since the start of the year, concerned that a weak economy would finally hurt the search giant’s advertising business.
But Google defied skeptics–and the economic downturn–with a surprisingly strong showing that sent the stock soaring 20% the next day. More than anything, Google’s continued prosperity is a testament to its ability to keep innovating, both in search and advertising operations and in new lines such as online office-productivity software.
In a recent interview, Chief Executive Eric Schmidt told BusinessWeek Bureau Chief Robert D. Hof how Google manages the tricky process of innovation.
Do companies have to manage innovation differently in a downturn?
Innovation has nothing to do with downturns. A hot product will sell just as well in a recession as it will in a nonrecession. Let’s imagine that we invented a better advertising product for television. What would our revenue growth be for that? Well, you’re into a $50 billion market, so it will be driven not by whether there’s a television ad recession but by what degree we can get people to substitute [our product] for the other. The strong companies understand this, and during a recession, they invest.
Can other companies emulate Google’s famous model of letting engineers spend about 20% of their time on projects outside their main job?
The story of innovation has not changed. It has always been a small team of people who have a new idea, typically not understood by people around them and their executives. [This is] a systematic way of making sure a middle manager does not eliminate that innovation. If you’re the employee and I’m the manager, and I sit down and say, “Our product’s late, and you screwed up, and you gotta work on this really hard,” you can legally say to me, “I will give you everything I’ve got, 80% of [my time].”
It means the managers can’t screw around with the employees beyond some limit. I believe that this innovation escape-valve model is applicable to essentially every business that has technology as a component.
Photo by Ana Nance.
Dunkin Donuts – How to open a Franchise
How to open a Dunkin’ Donuts Franchise In case you hadn’t noticed, Dunkin Donuts is on fire lately. They are opening stores it seems everywhere and delivering up some of the best tasting donuts and coffee in the world. Founded in 1950, Dunkin’ Donuts is America’s favorite all-day, everyday stop for coffee and baked goods. […]
e² Young Engineers
Build Your Tomorrow. Today! CLICK HERE TO VISIT OUR WEBSITE Background: We are e² Young Engineers Young Engineers enrichment programs combine education + entertainment = edutainment. We created a variety of different programs that can be used to teach science, technology, engineering, math (STEM). Children joining our educational community can learn and enjoy arithmetic, physics, […]
Motiply Mobile App Business
Make Money – Start a MOBILE APP Business Mobile websites are hot and in demand like never before thanks to the explosion of mobile devices such as smartphones and tablets. Businesses are paying BIG money for mobile website and app design and now YOU can get a piece of the action! The With our training […]