Tuesday, July 23, 2013

Google's Culture Wars - Will Innovation Still Thrive?

Google's "20% time" has been legendary in terms of how many successful innovations it has helped Google bring to the market. Basically, Google allows its employees to use up to 20 percent of their work week at Google to pursue special projects. That means for every standard work week, employees can take a full day to work on a project unrelated to their normal workload. Google claims that many of their products in Google Labs started out as pet projects in the 20 percent time program.

That might be a thing of the past in the not so distant future...

At least that's what many in the industry are thinking out loud based on the recent demise of Google Reader, a popular tool for reading RSS feeds. Adding salt to injury, the original Google Reader, Chris Wetherell, says that he wouldn't have founded Google Reader within Google as the company exists today. Instead, he would have just gone elsewhere or started his own company. As Alex Kantrowitz explains in his blog on Forbes.com, "Wetherell’s comments highlight a problem Google might face now that Reader is shutting down. The company has long benefited from a culture of innovation which has helped it turn employee side projects like Gmail, Google News and Ad Sense into core offerings. But, with the understanding that even successful products can be killed in the future, the company’s employees might now have less of an incentive to launch their ideas within Google, and innovation at the company may suffer as a result."

The Bottom Line
Personally, here's what I think:
  1. Google is devoting significant resources to it's social networking endeavors and has decided to redirect resources utilized on Google Reader to Google Plus. As a publicly traded company with a shareholder price to worry about, this type of cost/benefit analysis is to be expected. 
  2. There could be a bit of "sour grapes" on part of the Google Reader's founder who of course would be personally attached to his invention.
  3. It is a stretch to extrapolate that Google might either discontinue to 20% time or that employees would not use this time to explore their ideas in fear that their ideas would be squashed at some later time. One data point is just not enough to arrive at that conclusion. In statistical terms, this one observation could be deemed as an "outlier" - an observation that is numerically distant from the rest of the data and is often excluded from analysis.
I really don't think Google is going to be any less innovative than it was before. Let's not proclaim that the sky is falling just yet...

Wednesday, July 3, 2013

Tesla - An Evolving Ecosystem and A Tale of Business Model Innovation

Tesla's Model S is designed to allow a fast battery swap, exchanging a depleted battery for a fully charged battery in less than half the time it takes to refill a gas tank. To facilitate this, Tesla has introduced an innovative switching station based infrastructure based on a model pioneered by the now bankrupt electric vehicle company, Better Place. These switching stations serve a similar purpose to what gas stations serve for fossil fuel vehicles - if and when a motorist runs out of charge, they can replace their depleted battery with a fully charged battery. Realizing efficiencies and gains from economies of scale, these switching stations can be a win-win for both motorists and Tesla. Motorists are relieved of their anxiety of being stranded with a drained battery and the car company can get many more motorists to buy their vehicles and sign up for use of the stations. Tesla's latest battery swapping switching stations builds upon its evolving strategy of building a complete and robust electric vehicle (EV) ecosystem that started with aspirational cars (0 to 60 miles in 4.2 seconds), batteries with up to a 300 mile range, and supercharging stations. 

Innovations come in many forms forms the essence of Principle #5 of my recent book, Living in the Innovation Age (TekNirvana, 2011). I compare these forms of innovations to the concept of avatars of Lord Vishnu in Hinduism - each form unique and specifically designed for a purpose but none any better than the other. While most associate innovation with technology, a crucial and often necessary form of innovation occurs in business models, such as the Tesla switching stations described above. As Karan Girotra and Serguei Netessine discuss in their HBR blog, At Last, a New Business Model for Tesla, groundbreaking technology rarely achieves mass adoption without a corresponding innovation in the business model around the sale/use of the technology. I concur with the authors' assessment that these patterns extend far beyond Tesla — there are numerous innovative technologies that are waiting for an innovative business model that could facilitate their use and adoption.

The Bottom Line
Innovation has many forms. One such form is Business Model Innovation, which is often the catalyst that enables groundbreaking technology to achieve mass adoption. It is a well-known fact that much of Apple's iPod's success can be attributed to its business model innovation of the iTunes Platform. Such is the story with Tesla as well. Tesla realizes that it is not enough just to build a great electric car. In order to make their product truly useful, they are creating an entire ecosystem around it - long range batteries, supercharging stations, and now high speed battery swapping switching stations. So, will Tesla's switching station concept finally be the tipping point that will position its flagship product as the first all-electric, no-compromises, luxury sedan? Only time will tell...