Google’s Big Thing

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Like so many tech companies before them, Google now faces its greatest challenge yet: Finding the “next big thing.” With the vast majority of Google’s revenues coming from AdWords, Google is still a one-trick pony, despite the tremendous success of that pony. Like all amazing tech success stories before it, Google now faces the challenge of figuring out how to drive the future of its business beyond AdWords. But unlike the rare few companies who have found their next big thing, Google is taking a fundamentally different approach. Instead of looking to a visionary executive to lead a new revolution, Google is taking a systematic and evolutionary approach to reinventing its business.

Finding the “next big thing” doesn’t mean growing your business incrementally or having new product lines that are profitable. It means finding a new and rapidly growing market that is fundamentally different from your current market (sometimes even competitive with your core business) and becoming the dominant player in that market while it is still emerging. The next big thing drives a substantial percentage of a company’s revenues once the market matures.

Only a slim minority of successful tech companies ever find the next big thing. The history of software and Internet companies is littered with highly successful one-trick ponies whose corporate success hinged on the lifecycle of the one product category they came to dominate. As that category matures, corporate growth slows; and as the category declines, so too does the company. These companies often spend many years attempting to find their next big thing, but succeed only in finding incremental growth opportunities, diversifying their businesses to reduce risk, and slowing the decay of the one category they mastered.

Few companies have managed to find the next big thing, and not just once, but repeatedly. Microsoft and Apple both come to mind. You might think of Microsoft’s first “little big thing” as its BASIC program for the Altair. Its next big thing was to move entirely out of the programming language business and into the operating system business with DOS and later Windows. Then they found the next big thing in the market for office productivity desktop applications when they introduced Microsoft Office. I would argue they’ve been trying to find the next big thing with the Internet ever since Bill Gates’ famed “Internet Tidal Wave” memo, launching the browser wars with Netscape, MSN, the creation of .Net, and so on.

Apple found its first big thing with the Apple II. When IBM introduced the PC, Steve Jobs all but completely abandoned Apple’s cash cow business and the Apple III project to focus exclusively on Apple’s next big thing, GUI-driven computers such as the Lisa and Macintosh. In more recent times, Apple has found its next big thing in personal computing devices like the iPod, iPhone and now the iPad.

Companies like Microsoft and Apple repeatedly find their next big thing by relying on a single visionary (and revolutionary) executive. Bill Gates took every major leap Microsoft ever made to its next big thing. Steve Jobs took Apple to every one of its next big things, sometimes dragging Apple by the hair kicking and screaming. The longest period of Apple’s history when it failed to jump to its next big thing was the twelve year period of Steve Jobs’ exile from Apple.

So who is Google’s revolutionary visionary? Is it Sergey Brin, Larry Page, or someone else? My answer is, “None of the above.”

Google appears to be conducting a fascinating experiment in how a company can find its next big thing systematically and without needing a revolutionary visionary. Google’s goal has been to systematize everything in its business, from its search algorithm to its news aggregation algorithm to its auction-based advertising platform. Now I believe Google is attempting to systematize the process of finding its next big thing. And I’m going to bet its grand experiment will succeed.

Google doesn’t have a top executive declaring a new era for the company, sending out employee memos setting a new corporate direction, and driving the company forward with great bravado and reckless disregard for the company’s current cash cow business.

Instead, Google is using an evolutionary process in place of a revolutionary new direction. Google is continually brewing a petri dish full of embryonic projects, any one of which could grow into its next big thing. Single cell organisms grow in the test tubes of Google Labs fighting for survival and the hopes of becoming another highly successful product like Gmail, Google News, and Google Maps, and business directory among others.

Google’s evolutionary approach breeds numerous projects vying to become the next big thing rather than betting everything on a single revolutionary project. Android threatens to disconnect Apple’s iPhone. Google Books and Google Products threaten to sell Amazon’s e-commerce business down the river. Google Docs and Google Wave threaten to evaporate the milk of Microsoft’s cash cow (Office).

Google’s evolutionary approach to growth creates a fertile ground for many ideas to be tried. The success of each idea is decided by survival of the fittest, not by a single omniscient executive charged with deciding on the company’s next high-risk revolution. And evolutionary fitness is defined by the laws of supply and demand, not by a revolutionary visionary. If a project can’t attract enough users, it continues to adapt in its test tube or eventually die. When a project receives overwhelming popularity, driving more eyeballs and revenues, the project leaves the test tube, getting greater investment to continue evolving.

There are plenty of advantages and disadvantages to Google’s evolutionary approach to finding its next big thing. There are also many lessons smaller companies can take from Google’s approach. I’ll explore these topics in future blog posts.

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