Posted on Thursday, 27th December 2007 by LMN
The big news within the last few weeks was Google’s impressive 1 year 46% jump in profits of and 57% jump in revenue. Amazingly, all of this impressive growth occurred during what CEO Eric Schmidt called a “weak quarter”. Many have speculated for some time that Google will inevitably replace Microsoft as the dominant global technology company, and to further fuel the speculation, the media is attributing Google’s recent success to a seemingly divine presence that they are calling the holy trinity. Google’s next set of strategic business priorities - search, online ads and applications.
Call it what you will, but there are valuable lessons to be learned here. Google is putting up impressive numbers because Google is boldly focused on growth.
They are applying time honored and proven principles for growth:
- Know your customer. Deliver what he or she wants, and don’t get caught off guard by the voracity of his or her appetite
Specifically in Google’s case, customized search and customized advertising that actually tracks results and charges you when it performs. If you are using a website as a billboard then it also pays you for performance when someone views your sight and clicks on the ad. Not perfect, but definitely much more transparent than your traditional ad agency charging you for a campaign that produces “untraceable” results.
- Give your team what it needs to get the job done, and get out of the way
It is said that Google provides its team with a choice of hardware, Mac or PC, flexible schedules that meet the needs of the engineer and few management intrusions as long as the work is getting completed on schedule. Apparently, the typical Google coder can expect to have only 1 management meeting per month. What’s she doing with all of her free time, then!
- Master the core elements of commercial excellence: create a product or service, deliver and sell them, and get paid in the process
Despite the complexity and mystery associated with Google’s ad algorithm, they have managed to create an easy to understand service called AdSense that is just as easy to use. Everything from sign up to collections is web based and automated. In fact, AdSense is so popular that there are countless independent blogs and fee based services that explain how to take full advantage of the more complex features of the service. Talk about word of mouth!
- Remain adaptable. The actions of your competitors and the preferences of your customers evolve like an aggressive strain of influenza
Since the birth of the web in 1991 we have experienced a rapid evolution of internet consumer preference and web based competitors attempting to meet consumer needs.
A Brief History of the Web
o The term “surfing” the web was coined in 1992
o Pizza Hut took its first online orders in 1994
o Banner ads were introduced in October of 1994
o Yahoo debuts in March of 1995
o June 1997 “business.com” sold for $150,000
o March 1998 USPS posts digital stamps
o Google.com sheds its “beta” label September 1999
o July 2001 Napster goes dark
o Microsoft wins the browser war May 2003
o Firefox 1.0 released in November 2004
Source: History of the Big Idea, CNN.com
As a competitor, Google benefited from the maturation of online advertising and the inability of Yahoo and other search engines to adapt. Today, Google’s “holy trinity” of search, online ads and applications illustrate its adaptability.
- Enter new markets because that’s where the growth is, and growth is all there is
One of the most lucrative and closely held markets within tech has been software, particularly under the tight control of Microsoft. Today, we see Google expanding its reach into apps (software) on Google’s terms while riding the wave of the growing software as a service (SaaS) marketplace. Software as a service is software such as a contact management tool for businesses or a word processing application for consumers that is offered online rather than as a software that the user owns.
According to the Gartner Group (a technology forecasting company), worldwide total software revenue for software as a service (SaaS) within the enterprise software markets is projected to surpass $5.1 billion in 2007, a 21% increase from 2006 revenue. SaaS is poised for strong growth through to 2011, when worldwide revenue will reach $11.5 billion. As this market continues to grow on the back of cheaper bandwidth and web optimized applications and devices, traditional ownership of the software will decline. Given the projected expansion of this market and Google’s naturally applicable strengths it is easy to understand why Google is moving into this new space.
- Continuously work to make your solution more relevant to your customers or they will quickly make you irrelevant
Making a product or service better has no market value unless making it better also makes it more relevant to your customers. The components that define your relevance are also the components that determine your brand:
o The right solution (product or service features and benefits that match your targeted customer’s continuously changing expectations, and a whole bunch of potential customers that want to buy what you are selling)
o Sold at the right price
o Easily accessible (easy to find and buy)
o Delivered with the right experience (packaging and presentation that surprises and delights)
o Supported with the right quality of service
o Further supported by an appropriate motivational campaign (PR and advertising)
Based on the list of Google firsts, it appears that Google understands the power of keeping its solution relevant and has committed to doing just that.
List of Google Firsts
o 1999, Google sheds “beta” label
o 2000, first to introduce dictionary and toolbar for IE
o 2001, first to introduce spell checker on engine & non HTML search
o 2002, Google launches its own context-sensitive adSense
o 2003, launches Froogle, wireless search, big Googleplex
o 2004, launches Deskbar, Local, Maps, Video, Gmail.
o 2004.5, Google captures over half of global search market
o 2005, Google wows with Earth, Moon and hybrid view in maps
o 2007, Google Apps introduced and rumors of the Google phone
Source: Getting the Most from the Post-Google Web Winter/Spring 2006,
Joe Barker for the Infopeople Project [infopeople.org]
So, the first lesson is that we can learn something from a billion dollar high-growth company. The principles that they apply are relevant for the rest of us because they are the principles of sound business - no matter what the size. In fact, I think high growth companies that started in garages or university dorm rooms are of particular interest because they experienced the same growth stages as rest of us.
Ask yourself:
- “What can I learn from the success (and failure) stories around me?”
The second lesson is that an investment in growth is required separate from the daily operational functions of the business. Surely, Google could devote additional resources to deepening its AdSense advantage rather than building an expensive infrastructure to gamble on the new and unproven SaaS market. In contrast, we can’t forget that the “stick to your knitting” principle is precisely what Yahoo and other now forgotten search engines applied.
Ask yourself:
- “Am I spending enough time trying to figure out how to attract new business?”
- “Can I apply my core skills in unique and innovative ways and create solutions where unmet needs exist?”
The final lesson is that if it doesn’t matter to your customers then it just doesn’t matter. Google has accepted that the preferences of its customers are evolving virally, and in response Google aggressively introduces new features to match evolving customer preferences. However, the key to their success is that their features are relevant. They are what their customers need and want. As a result, Google has created a user experience that just fits. It makes us feel like we are pulling on our most comfortable pair of shoes.
Ask your customer:
- “What are all of the things you want from my product or service, and of the things you want what am I giving you?”
- “What am I giving you that you don’t want?”
Principles guide action and action produces results. Clearly, Google’s results indicate that it operates based on principles of growth. If your company’s results are not what you want them to be, then first check your principles and then take the appropriate action.
Growth is Good!
Leamon Crooms
The Guru of Growth®
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