Piaras Kelly PR - Public Relations in Ireland

I noted a post by Damien Mulley the other week asking whether Google is losing its innovative power. There’s been some grumbling about the Internet giant of late. In fairness to Google, the world has never witnessed a faster ascent to the top of the corporate ladder, let alone the same rate of innovation. As David A Wise points out in the ‘Google Story‘:

In the rich and storied history of American invention and capitalism, there had never been a meteoric rise comparable to theirs. It had taken Thomas Edison a quarter of a century to invent the lightbulb; Alexander Graham Bell had spent many years developing the telephone; Henry Ford created the modern assembly line and turned it into the mass production and consumption of automobiles only after decades of work; and Thomas Watson Jr. labored long and hard before IBM rolled out the modern computer. But Brin and Page, in just five years, had taken a graduate school research project and turned it into a multi-billion-dollar enterprise with global reach.

While Google may be experiencing some growing pains, the reason why I think that they will succeed ultimately boils down to one thing:

Its founders are keenly aware that someone, somewhere, is always attempting to find a better, faster, and smarter way to do things.

Hugh MacLeod sums it up much better with one of his great cartoons which reads:

It’s all about thriving in markets that are smarter and faster than you are. It’s all about being utterly fucked if you don’t know what I’m talking about

If you look closely at the world that surrounds you, change is everywhere. The barriers that once separated businesses are crumbling apart quickly and companies that once offered alternative products or services are suddenly finding themselves on the same battlefield. One company I’m watching closely of late is Xtravision, an Irish rental store, which all of a sudden has competitors in the form of Netflix, Video-On-Demand and firms that are incorporating the items they sell as complimentary products. It’s no coincidence that they have started to rent DVD boxsets. It’s as much of a tip of the hat to the growing trend of people wanting to watch media on their own schedule as opposed to how the TV stations dictate that they should, as it is to the number of rentals their online competitors are racking up for the same product.

As Hugh MacLeod points points out, if you don’t accept change then you are ultimately doomed. The problem with a number of companies is that they are unable to respond to their changing environment for a number of reasons. As Clayton M. Christensen discusses in ‘The Innovator’s Dilemma‘:

When managers assign employees to tackle a critical innovation, they instinctively work to match the requirements of the job with the capabilities of the individuals whom they charge to do it…Unfortunately, some managers don’t think as rigorously about whether their organisations have the capability to successfully execute jobs that may be given to them

Three classes of factors affect what an organisation can and cannot do: its resources, its processes, and its values

Resources are the most visible of the factors that contribute to what an organisation can and cannot do. Resources include people, equipment, technology, product designs, brands, information, cash, and relationships with suppliers, distributors and customers

Organizations create value as employees transform inputs of resources into products and services of greater worth. The patterns of interaction, coordination, communication, and decision-making through which they accomplish these transformations are processes…One of the dilemmas of management is that, by their very nature, processes are established so that employees perform recurrent tasks in a consistent way, time after time. To ensure consistency, they are meant not to change - or if they must change, to change through tigthly controlled procedures. This means that the very mechanisms through which organisations create value are intrinsically inimical to change

The third class of factors that affect what an organisation can or cannot accomplish is its values. The values of an organisation are the criteria by which decisions about priorities are made…The larger aand more complex a company becomes, the more important it is for senior managers to train employees at every level to make independent decisions about priorities that are consistent with the strategic decision and business model of the. company

I don’t believe that Google’s woes stem from these three factors. Instead I believe that the conflict inherent with acquisitions is responsible for the disruption that Mulley discusses. It’s much harder for a company to suddenly become assimilated and shift their mindset to that of their new employer. If you look at the second factor in particular - value - it must be tough moving from a situation where your service which was the primary focus of your company suddenly becomes complimentary in the mind of the wider organisation instead.

Sure Google is going to come up with some duds, but as Jim Collins and Jerry I. Porras quote R.W Johnson Jr brilliantly in ‘Built to Last:

With his oft-repeated statement ‘Failure is our most important product,’ R.W. Johnson Jr. understood that companies must accept failed experiments as part of evolutionary progress.

So what drives a company that can change with the times? As Google founders and Hugh MacLeod point out - a company that accepts change is constant. Or as Collins and Porras put it:

A visionary company continually pursues but never fully achieves or completes its purposes - like chasing the earth’s horizon or pursuing a guiding star. Walt Disney captured the enduring, never-completed nature of purpose when he commented, ‘Disneyland will never will never be completed, so long as there is imagination left in the world.

Do such companies exist? While a lot of people are keen to think that Google are the first such company, have a read of 3M’s wikipedia page - it makes for a fascinating read. This is a company that started out making scotch/masking tape and now offers products and services as diverse Post-Its and data storage. It’s also interesting to read about the mechanism’s that stimulate 3M’s progress in Collins and Porras’ book:

‘15 percent rule’: A long standing tradition that encourages technical people to spend up to 15 percent of their time on projects of their own choosing and initiative.

‘25 percent rule’: Each division is expected to generate 25 percent of annual sales from new products and services introduced in the previous five years

‘Own business’: 3Mers who successfully champion a new product then get the opportunity to run it as his or her own project, department or division.

Sound familiar?

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