Pick the top 3 factors/actions/strategies that Google took advantage of that you believe were critical in Google becoming a platform leader in its business ecosystem, and explain why you picked those. 1-Constant innovation:
Constant innovation is a core to Google’s business and success. In every stage of company’s operations and strategies innovation plays a significant role. From very tough interview and hiring process to the 20% time projects, the importance of innovation and engineering brilliance is obvious. This innovation allowed Google to become the market leader in many areas. Other players trust Google as a dependable company with very capable workforce that has a significant effect on the future of the internet.
The constant development of core businesses (search and online text advertisement, AdWord & AdSence) along with expanding it into new areas (e.g :display advertisement through doubleclick and mobile advertisement through Admob) created a competitive advantage and almost a monopoly in online advertisement ecosystem. Google’s innovative solutions and platforms such as AdServer, AdExchange and adword and content networks facilitate the relationship between advertisers (buyers) and publishers (sellers) 2-Market domination in a very high margin core business:
Google spends a lot of resources on research and innovation which in some cases seem to be too far fetching and futuristic. The 20% time project allows for engineers to test their ideas and creativity to further increase Company’s success. Google Labs create and test market creative ideas. All these require vast resources that cannot be afforded by most companies. Google’s main source of the revenue, online advertisement, is a very high margin business. Through putting advertisement on the left hand side of the organic search results on Google web site as well as by intermediating between publishers and advertisers created complete market dominance on the online advertisement market. This grants Google with very large revenue which can fuel its innovation machine. 3-Open, easy to use and dependable platforms and API’s and emphasis on partnerships: oth Unlike some other major companies (e.g. Apple Inc.), Google focuses on open platforms which allows for distributed innovation and usage by numerous partners and user.
Easy to use API’s (e.g. AdSence and Doubleclick’s DART for publishers) encourages webmaster’s from smallest web sites to the largest to endorse Google’s platforms. Also partnerships with major websites (e.g. Amazon.com, AOL,Expedia.com) creates a significant revenue and keeps these websites dependant on Google’s platform.
What are the risks and threats that Google faces in its innovation ecosystem ? Can they mitigate those risks by increasingly continuing to be a keystone player (if you think they are acting as a keystone player already) ? * Social media:
The biggest trend that currently is working against Google is the ever increasing focus on social media. Until this point Google had two experiments with social Networks: the first one, Orkut, launched at 2004 and despite of its initial success, soon it lost its users to Myspace and Facebook .currently Orkut has a very significant user base in Brazil and India, but a very small market share in the rest of the world. The second social media experience by Google was Google Buzz.Buzz, Launched at 2010, although being fully integrated with lots of Google’s offerings (such as Gmail, YouTube, Latitude, Picasa, SideWiki,..) failed to attract users.
Also according to Wall street analysts, another social media offering by google, YouTube, fails to generate enough revenues to compensate for its costs. Because of the legal issues Google was not able to monetize the popular video content provider as it expected. These unsuccessful experiences further increased the already existing idea of Google’s being a engineering focus and tech heavy company, prevent it from understanding of social dynamics and users behaviors. To mitigate this risk, Google has started to incorporate social media in its organic search results. Currently, through partnership with Tweeter, Google offers results from this popular social media. Further and smoother combination of social media and search can sustain Google’s competitive advantage both in search and online advertisement.
* Loss of “Hotness”: For quite a few years, Google has been known to be the best company in IT industry. As a result it was able to hire the best of the best and the most talented engineers. Now, there are new companies that generate more buzz and is turning to a destination for top talents. Companies such as Facebook might attract some of the top talents that are essential to Google’s innovative approach. By keeping its competitive advantage Google can mitigate this risk and stays as one the best companies to work for as well as top destination for engineers.
* Mobile: Soon mobile devices surpass computers in web browsing. This is a significatnt trend that if not by Google can generate serious problems for the company. However, through developing Andoid for mobile phones and tablets and acquisition of AdMob, Google tries to keep its keystone status and current trends shows that Google is in its way for success..
* Legal issues and possibility of market panic: Google search engine retains a lot of information about its users, legally Google cannot use a lot of this information and keeping them might impose legal complications for Google. Following this, there is the notion of, if the amount of data that google retains would become available to public, how market would react. Some industry analysists believe that users might start to fear Google which leads to abandonment of Google’s products. This can severely hurts Google’s positions in the market.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 3 January 2017
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