By August 2013, Google, Inc., known more for its dominance in the area of internet search till then, began to overtake its major rivals in innovation. The firm started working on a lot of other projects and increased its spending on research and development, thus gaining an edge over its competitors (See Exhibit I for revenue, profits and R&D expenses). Some analysts predicted that Google had started outpacing Apple, Inc. (Apple) in design, an area traditionally dominated by Apple. Google achieved this feat by making innovation an everyday process rather than as a necessity during times of crisis.

It followed a unique ‘launch and iterate’ process to innovation where the new products developed were initially made available to the public as beta versions. Google improved these new products after getting feedback from the early users. It also practiced the system of using lead users to find new and innovative applications for its products. In addition to this, its CEO and co-founder, Larry Page (Page), continuously pushed the employees to go in for ‘moon shots’, i.e., create products and services that were 10 times better than the competition.
According to Page, “How exciting is it to come to work if the best you can do is trounce some other company that does roughly the same thing? That’s why most companies decay slowly over time. They tend to do approximately what they did before, with a few minor changes. It’s natural for people to want to work on things that they know aren’t going to fail. But incremental improvement is guaranteed to be obsolete over time. Especially in technology, where you know there’s going to be non-incremental change.”

Background Note

Google’s roots lay in a research project on search engines taken up by two PhD students at Stanford University, Larry Page (Page) and Sergey Brin (Brin) in 1996. Google pioneered a new technology called ‘PageRank’, which determined the importance of the website by the number of other pages linked to it and their importance that linked back to the original site. This new technology was a shift from the earlier method followed by other search engines which ranked the results by the number of times the search terms appeared on the page.
The search engine was initially called ‘BackRub’ as it determined a website’s relevance by checking its back links. The name was finally changed to Google, based on the word ‘Googol’ – the number one followed by a hundred zeroes.
Google’s primary domain ‘www.google.com’ was registered in September 1997 and the company was incorporated in September 1998 in a friend’s garage in California, USA. In 1999, Google moved its headquarters to Palo Alto, California, home to several other technology companies. Google’s mission was “to organize the world’s information and make it universally accessible and useful.” In addition to its mission, the company wrote “10 things” in Google’s initial years and the founders made it a point to revisit these from time to time to see if they still held true (See Exhibit III for the ’10 things’).
Leveraging Employees In Fostering Innovation

In the year 2005, Google’s former CEO, Eric Schmidt. introduced a business resource management model called the ‘70/20/10’ innovation model for the employees. Under this model, Google’s employees dedicated 70 percent of their working to core business tasks, 20 percent to projects related to the core business, and 10 percent to projects which were totally unrelated to their core business. This model led to better utilization of the skills of its employees and helped the company come up with new products and technologies.
The option to work 10 percent of their time on projects not related to their core business gave the employees a lot of freedom to work on any task they liked and come up with new and innovative ideas. The success of the ‘70/20/10’ model led to the total organization of Google under this philosophy underlying the total organization of Google for a long time.