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Clayton Christensen's "The Innovator's Dilemma" was motivated by DEC getting killed. He claims that DEC was a victim of a disruption: a new technology that off

by 6ren 15y ago

Clayton Christensen's "The Innovator's Dilemma" was motivated by DEC getting killed. He claims that DEC was a victim of a disruption: a new technology that offered something that didn't seem to be a threat, become successful in other markets and eventually improved enough that it was threat - then it was too late. There, the old technology was minicomputers; the new technology was workstations. The new technology isn't perceived as a threat because it is not as good and will never be as good in the old market. It manages to survive in a different new market (because it really can't compete in the old pond). As it improves, it never catches up with the old technology - but it becomes good enough. That is, the old technology has also improved, and is definitely better - but the old market doesn't care for that extra improvement. You can see there are a few things that have to happen for disruption to occur. One of the reasons for Google's 20% was to try to prevent this kind of thing, but it never worked out. Some business types redefine terms, so that "invention" is a new technology (make something), and "innovation" is a new business (people want). Google's made a lot of stuff, but most isn't wanted and didn't create a business. They aren't innovations. Closing down businesses that aren't making enough to move the needle is the classic mistake of disrupted businesses: Christensen suggests setting up separate, autonomous business units (even separate businesses; startups), with limited resources, that will get excited by small wins - because new disruptions start small. (YC is pretty much doing it right...) However, right now, Google is fighting for its life. At the beginning, facebook didn't seem threatening - or at least not that threatening. Then again, I'm not sure that Google ever could win this fight; social is such a different kind of business. Perhaps the best that google could hope for is to settle back into owning search forever. My only disappointment is that google didn't manage to transform its internal inventions into innovations. I'm not saying it's easy or that I could do better, it's just that unlike winning social, it seems possible... and who knows what new disruptions might have come from that? As it is, Google seems closer to Xerox: one fantastic invention/business, invents the future, makes no money from it.

nostrademons 15y ago
Eh, people said the same thing about Microsoft and the Internet, and IE managed. I predict that Google will win this fight and lose every fight thereafter. That seemed to be the pattern with Microsoft.
jrockway 15y ago
Here are my thoughts as an engineer at Google. These are my own thoughts, not Google's :) I don't think Google is fighting for its life; people are not defecting away from search to use Facebook's search or Bing or whatever. Right now, Google+ is something like, "let's see what happens if we build a social component and integrate it with our products". It doesn't seem like much right now and it's certainly not killing Facebook, but that's not the goal; the goal is to have something in case being able to post pictures and "interact with brands" turns out to be important in the future. (Do people like ads? I say no; I avoid them at any cost. But many people like ads and like companies and like products. So we'll see how that goes! Look at the brand Apple has built. That's advertising, my friends.) It's easier to understand if we look at past events. So let's take Picasa, for example. It was never as popular as Flickr or even SmugMug. Why bother maintaining it when it's clear that Google "lost" to Flickr? The answer is because it could later become relevant. Now that people are running around taking pictures with Google phones, sharing them with GMail and Google+, it's logical to have a Google-owned picture repository. That way, we get total control over the user experience and can make a really integrated product. Take a picture on your phone, instantly share it with your friends from your computer. Pretty neat! Google Play is similar. People loved iTunes' integrated payment system, music store, book store, movie store, app store, and phones. Google had all the infrastructure for these things (Checkout, Music, Books, YouTube / Video, Android Market, and Android), but not integrated, so people didn't tend to buy Android phones to get apps and content. But, time allowed Google to unify these discrete components into Google Play, and now users have access to something very much like iTunes. It was a very slow incremental thing, which people aren't as excited by as "one more thing" style announcements, but now we have something that's pretty cool and will make Google products more attractive than they were before. It was worth keeping stuff like Checkout and Books alive, even if they were not exactly putting PayPal and Amazon out of business. So today, Google+ is maybe not the best thing ever. But some day, it might be a useful piece of software to have, and so we have it. Right now, I think it's really great as an internal bulletin board that I can fine-tune to exactly my interests. It may not be as cool as Facebook, but it's still a useful piece of software that was worth writing. (I've never seen an internal bulletin board system that lets me subscribe to certain topics and people, after all.) Rather than ensure that everything we push is an epic success on day one, we're putting it out there for people to try. Some people don't like Google+, some do. I use it as a better Twitter; the interface is nicer, I can write more, and so I use it more than I used any "social" products before Google+. So there's one data point, though I realize I am not the average user. (Facebook never excited me and I didn't have an account. Google+ was interesting enough to entice me into trying social networking.) Yes, management sounds a lot more excited about Google+ than I do, and that's fine, Google is not my company and I am more practical :) Worst case: G+ is a nice internal tool for Apps customers. Middle case: something that's good to have if we want to play with social ideas. Best case: a new way to use computers that people love. All are good. (Remember Google Checkout? It was a nice foundation for Google Wallet. So it's worth trying things and having products that may not be the industry leader, because you can always improve them!) Personally, I'm working on a new product at Google that will make computers do something that they've never done before, something that many people have wanted for a long time. I have no idea how it will ever make money, but we're doing it anyway because people will like it. And no, this is not some rogue 20% project. :) So to summarize; I'm not upset with Google for creating products that are not overnight successes. Yes, social is where your friends are, and everyone is on Facebook today. Clearly Google+ isn't enough to get people to abandon their friends for a while. But it's worth continuing to develop, because it will only get better with time. I don't think that means the end of Google :)
deleted 15y ago
[deleted]
ChuckMcM 15y ago
Its an interesting comment but lets put a few things in perspective: 1) "However, right now, Google is fighting for its life." Any company that is dumping 2 - 3 BILLION dollars into the bank each quarter is not 'fighting for its life.' Google is doing just fine at the moment. 2) "My only disappointment is that google didn't manage to transform its internal inventions into innovations. " This is a huge thing, and its important to know that it isn't that Google didn't make money, its that Google didn't make enough money. When I was their 2006- 2010 I saw projects that were nominally making a profit of several million dollars a year get cancelled. That is they were covering the cost of the group working on them and they earned their bit of the advertising pie enough revenue to make money. But it was 'nominal' since at the time Google didn't charge internally anything for using the physical infrastructure which clearly did have a cost associated with it. So when they started figuring out their costs (which they needed to do if they were going to charge for AppEngine) they got a kind of rude surprise (a nuanced description of that surprise is covered by NDA but suffice it to say they learned new stuff about themselves). At the time I suggested that rather than penalize folks who were running their product on infrastructure that was ill suited to them, they allow those folks to change the infrastructure, and I might as well have been telling the Church that the Earth revolved around the Sun. That is where Clayton would have said, "Guys, you aren't looking at this like an entrepreneur..."
- 6ren 15y ago
  1) DEC also had bumper years just before they failed. That's a common pattern, according to Christensen (and his empirical data), caused by the incumbents' retreat upmarket (away from the new threat) - where the margins are higher. For Google, this is optimizing its advertising reach and effectiveness. I haven't checked trends, but I'm sure that over time higher margin goods have began advertising online, and the competition for ad ranking has increased, bidding up google's price (they worked that system out well). Overturning everything, in order to match a competitor, is a sign of something. As facebook figures out how to use its data to sell to people, it can target advertising more effectively than google's approach can. I think facebook is a threat because you can advertise better the more you know about your audience - google's been gathering personal data, but they aren't in the same league as facebook (and I get the impression they haven't exploited it as effectively as they could). i.e. it's not really a contest between two companies so much as between the approaches they champion. Of course, Google is trying to become a champion of social; so the second issue is whether google can beat facebook at its own game. Christensen found that incumbents practically never win this. It's because they are not incumbents in this new approach - here, facebook has had years of experience in social, of the technology, of the needs of people, how to address them, what works, what doesn't, and an organizational structure with values shaped over time around improving those issues, and synchronized to the rhythms of that business - and of course, astonishing marketshare and mindshare. Google beating them is like some other company beating Google at search. It's really hard to do, because there are so many advantages that an incumbent can build up over time. It's different for "sustaining" technologies (which support the same way of doing business, same market, same values) - incumbents almost always win those. For example, if a new way of doing search came along, totally different from PageRank, google would likely still win that: they have habits of customers and advertisers; they have engineers that are great at doing it; and their whole organization is naturally galvanised around any such technology. Everyone involved would be excited about this new technology, because that's what they were hired for. They would probably also try to buy the competitor, paying whatever it took (which wouldn't be that high, since they'd be on the lookout and would catch them early). 2) Thanks for your insight on costing those innovations. Unwillingness to adapt is bad sign (i.e. change infrastructure). It makes sense: google's infrastructure is great. Excellent technically, and a world-beater when applied to Google's way of making money. It might not be valuable for other approaches, other ways to make money in other markets, based on other values.

by 6ren 15y ago

nostrademons 15y ago

Eh, people said the same thing about Microsoft and the Internet, and IE managed. I predict that Google will win this fight and lose every fight thereafter. That seemed to be the pattern with Microsoft.

jrockway 15y ago

Here are my thoughts as an engineer at Google. These are my own thoughts, not Google's :) I don't think Google is fighting for its life; people are not defecting away from search to use Facebook's search or Bing or whatever. Right now, Google+ is something like, "let's see what happens if we build a social component and integrate it with our products". It doesn't seem like much right now and it's certainly not killing Facebook, but that's not the goal; the goal is to have something in case being able to post pictures and "interact with brands" turns out to be important in the future. (Do people like ads? I say no; I avoid them at any cost. But many people like ads and like companies and like products. So we'll see how that goes! Look at the brand Apple has built. That's advertising, my friends.) It's easier to understand if we look at past events. So let's take Picasa, for example. It was never as popular as Flickr or even SmugMug. Why bother maintaining it when it's clear that Google "lost" to Flickr? The answer is because it could later become relevant. Now that people are running around taking pictures with Google phones, sharing them with GMail and Google+, it's logical to have a Google-owned picture repository. That way, we get total control over the user experience and can make a really integrated product. Take a picture on your phone, instantly share it with your friends from your computer. Pretty neat! Google Play is similar. People loved iTunes' integrated payment system, music store, book store, movie store, app store, and phones. Google had all the infrastructure for these things (Checkout, Music, Books, YouTube / Video, Android Market, and Android), but not integrated, so people didn't tend to buy Android phones to get apps and content. But, time allowed Google to unify these discrete components into Google Play, and now users have access to something very much like iTunes. It was a very slow incremental thing, which people aren't as excited by as "one more thing" style announcements, but now we have something that's pretty cool and will make Google products more attractive than they were before. It was worth keeping stuff like Checkout and Books alive, even if they were not exactly putting PayPal and Amazon out of business. So today, Google+ is maybe not the best thing ever. But some day, it might be a useful piece of software to have, and so we have it. Right now, I think it's really great as an internal bulletin board that I can fine-tune to exactly my interests. It may not be as cool as Facebook, but it's still a useful piece of software that was worth writing. (I've never seen an internal bulletin board system that lets me subscribe to certain topics and people, after all.) Rather than ensure that everything we push is an epic success on day one, we're putting it out there for people to try. Some people don't like Google+, some do. I use it as a better Twitter; the interface is nicer, I can write more, and so I use it more than I used any "social" products before Google+. So there's one data point, though I realize I am not the average user. (Facebook never excited me and I didn't have an account. Google+ was interesting enough to entice me into trying social networking.) Yes, management sounds a lot more excited about Google+ than I do, and that's fine, Google is not my company and I am more practical :) Worst case: G+ is a nice internal tool for Apps customers. Middle case: something that's good to have if we want to play with social ideas. Best case: a new way to use computers that people love. All are good. (Remember Google Checkout? It was a nice foundation for Google Wallet. So it's worth trying things and having products that may not be the industry leader, because you can always improve them!) Personally, I'm working on a new product at Google that will make computers do something that they've never done before, something that many people have wanted for a long time. I have no idea how it will ever make money, but we're doing it anyway because people will like it. And no, this is not some rogue 20% project. :) So to summarize; I'm not upset with Google for creating products that are not overnight successes. Yes, social is where your friends are, and everyone is on Facebook today. Clearly Google+ isn't enough to get people to abandon their friends for a while. But it's worth continuing to develop, because it will only get better with time. I don't think that means the end of Google :)

deleted 15y ago

[deleted]

ChuckMcM 15y ago

Its an interesting comment but lets put a few things in perspective: 1) "However, right now, Google is fighting for its life." Any company that is dumping 2 - 3 BILLION dollars into the bank each quarter is not 'fighting for its life.' Google is doing just fine at the moment. 2) "My only disappointment is that google didn't manage to transform its internal inventions into innovations. " This is a huge thing, and its important to know that it isn't that Google didn't make money, its that Google didn't make enough money. When I was their 2006- 2010 I saw projects that were nominally making a profit of several million dollars a year get cancelled. That is they were covering the cost of the group working on them and they earned their bit of the advertising pie enough revenue to make money. But it was 'nominal' since at the time Google didn't charge internally anything for using the physical infrastructure which clearly did have a cost associated with it. So when they started figuring out their costs (which they needed to do if they were going to charge for AppEngine) they got a kind of rude surprise (a nuanced description of that surprise is covered by NDA but suffice it to say they learned new stuff about themselves). At the time I suggested that rather than penalize folks who were running their product on infrastructure that was ill suited to them, they allow those folks to change the infrastructure, and I might as well have been telling the Church that the Earth revolved around the Sun. That is where Clayton would have said, "Guys, you aren't looking at this like an entrepreneur..."

6ren 15y ago
1) DEC also had bumper years just before they failed. That's a common pattern, according to Christensen (and his empirical data), caused by the incumbents' retreat upmarket (away from the new threat) - where the margins are higher. For Google, this is optimizing its advertising reach and effectiveness. I haven't checked trends, but I'm sure that over time higher margin goods have began advertising online, and the competition for ad ranking has increased, bidding up google's price (they worked that system out well). Overturning everything, in order to match a competitor, is a sign of something. As facebook figures out how to use its data to sell to people, it can target advertising more effectively than google's approach can. I think facebook is a threat because you can advertise better the more you know about your audience - google's been gathering personal data, but they aren't in the same league as facebook (and I get the impression they haven't exploited it as effectively as they could). i.e. it's not really a contest between two companies so much as between the approaches they champion. Of course, Google is trying to become a champion of social; so the second issue is whether google can beat facebook at its own game. Christensen found that incumbents practically never win this. It's because they are not incumbents in this new approach - here, facebook has had years of experience in social, of the technology, of the needs of people, how to address them, what works, what doesn't, and an organizational structure with values shaped over time around improving those issues, and synchronized to the rhythms of that business - and of course, astonishing marketshare and mindshare. Google beating them is like some other company beating Google at search. It's really hard to do, because there are so many advantages that an incumbent can build up over time. It's different for "sustaining" technologies (which support the same way of doing business, same market, same values) - incumbents almost always win those. For example, if a new way of doing search came along, totally different from PageRank, google would likely still win that: they have habits of customers and advertisers; they have engineers that are great at doing it; and their whole organization is naturally galvanised around any such technology. Everyone involved would be excited about this new technology, because that's what they were hired for. They would probably also try to buy the competitor, paying whatever it took (which wouldn't be that high, since they'd be on the lookout and would catch them early). 2) Thanks for your insight on costing those innovations. Unwillingness to adapt is bad sign (i.e. change infrastructure). It makes sense: google's infrastructure is great. Excellent technically, and a world-beater when applied to Google's way of making money. It might not be valuable for other approaches, other ways to make money in other markets, based on other values.