In my previous post I mentioned the various problems with relying on incubation teams to bring innovation into a product or organization. The obvious follow up question is that if carving off some subset of your team to work on the "next big thing" while the rest of your employees work on the boring bread and butter product(s) that pay the bills doesn't work, how do you revitalize an organizations products and make them innovative?

My advice is to look at companies within your industry that are considered innovative and see what you can learn from them. One such company is Google which is widely considered to be the most innovative company on Earth by many in the software industry. A number of Google's competitors have several internal groups whose job is to "incubate ideas" and foster innovation yet it seems that Google is the company most associated with innovation in the online space. For example, Yahoo! has Brickhouse and Yahoo! Research while Microsoft has Microsoft Research, Live Labs, Search Labs, and Windows Live Core among others. 

Below are some of the ways technology companies can follow their example without having to resort to some of their more eccentric practices like free food prepared by gourmet chefs and on-site massages, dry cleaning and oil changes to motivate your employees.

  1. Everyone is Responsible for Innovation: There are several ways Google has created a culture where every technical employee feels that innovation is expected of them. First, there is the strong preference for people who have a track record of producing original ideas such as Ph.D's [who are required to produce original research which advances the state of the art as part of their thesis] and founders of Open Source projects (e.g. Spencer Kimball (GIMP), Aaron Boodman (Greasemonkey), and Guido Van Rossum (Python)). Secondly, employees are strongly encouraged but not required to spend 20% of their time on projects of their own design which are intended to benefit the company and/or its customers. Not only does this give employees an outlet for their creativity in a productive way, working on multiple projects at once gives developers a broader world view which makes it less likely that they will develop tunnel vision with regards to their primary project. Finally, Google has a single code base for all of their projects and developers are strongly encouraged to fix bugs or add features to any Google product they want even if they are not on the product team. This attitude encourages the cross pollination of ideas across the company and encourages members of the various product teams to keep an open mind about ideas from outside their particular box.

  2. Good Ideas Often Come from Outside your Box: A lot of people in the software industry often criticize Microsoft for its practice of innovation through acquisition and have compiled lists of Microsoft's innovations that were actually acquisitions but the fact is that the road to success lies in being able to spot good ideas whether they come from within your company or without. Google is no exception to this rule as the following table of acquisitions and the Google products they resulted in shows

    Acquired Company/ProductGoogle Product
    Applied Semantics Google AdSense
    Kaltix Google Personalized Search
    Keyhole Corp. Google Earth
    Where2 Google Maps
    ZipDash Google Ride Finder
    2Web Technologies Google Spreadsheets
    Upstartle Google Docs
    Urchin Software Corporation + Measure Map Google Analytics
    Zenter + Tonic Systems Unreleased Google Web-based Presentation application

    As you can see from the above list, a lot of Google's much lauded products were actually the products of acquisitions as opposed to the results of internal incubation. Being able to conquer the NIH mentality is important if one wants to ensure that the products that exhibit the best ideas are produced by your company because quite often they won't originate from your company.  

  3. Force Competition to Face the Innovator's Dilemma: One reason that a number of Google's products are considered innovative is that they challenge a number of pre-existing notions about software in certain categories. For example, when Gmail [a product of an engineer's 20% time spent on side projects] was first launched it was a shock to see a free Web-based email service qive users 1 gigabyte of free storage. A key reason that this was a shock was because most free Web-based email services gave users less than a hundredth of that amount of storage. This was because the business model for free email was primarily to give users a crappy user experience (2MB of storage, obnoxious advertising, etc) and then charge them for upgrading to a decent experience. Thus there was little incentive for the major players in the free email business to give free users lots of storage or a rich online experience because isn't how the business worked. Another example, that is likely to be a classic case study of the innovator's dilemma in the years to come is Google Docs & Spreadsheets vs. Microsoft Office. From the Wikipedia article on disruptive technology

    In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with a good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in a not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market.

    As someone who now maintains several wedding lists in collaboration with his future spouse I can say without a doubt that universal access to our files from any computer without my fiancèe or I having to install or purchase any software is head and shoulders beyond the solution provided by traditional desktop productivity suites. In addition, it is quite clear that Google will move to address the gaps in time (see Google Gears) so we are likely on the cusp of a multi-billion dollar software category undergo upheaval in the next few years.

    The main lesson here is Change the Game. Do not play by the rules that favor your competitors.

The key thing for people wanting to learn from Google's practices isn't to follow each of Google's specific policies but instead to understand the philosophy behind their practices then apply those philosophies in your specific context.


Monday, July 9, 2007 9:33:03 PM (GMT Daylight Time, UTC+01:00)
google is churn and burn. they won't be able to dominate the web for long.
Monday, July 9, 2007 10:07:31 PM (GMT Daylight Time, UTC+01:00)
It's funny you mention wedding lists as that is exactly how I came to understand the utility of Google Docs. My company uses Sharepoint which is barely better than a shared file server.
Tuesday, July 10, 2007 3:57:54 AM (GMT Daylight Time, UTC+01:00)
Hey - nice post. It's worth noting that many of the practices Google uses were developed by 3M decades earlier. 20% time is a recasting of 3Ms similar policy of 10% time.

What's more interesting is that in both cases it's much more of attitude that a policy - I've yet to meet a Google employee who's told me his manager reserves one day out of five for him to do whatever s/he wants, or understands why an assigned project is late "Oh, I was working on my 20% time project" instead. So the real secret is rewarding people who take initiative, and, in the case of g-mail and adsense, actually adopting ideas that were developed without official approval. That's the real magic of things like 20% time.

Good post.
Wednesday, July 11, 2007 4:03:51 PM (GMT Daylight Time, UTC+01:00)
Great post, well researched! But I have a big nit to pick. I strongly believe that software product innovation can be driven by incorporating successful techniques outside the software product industry. Of course, that does increase the fog factor: there are a lot more consultants and fads "out there." But maybe bringing in the pragmatism from other industries could expose the weird and foolish trends in ours.

I have to say that Google has established their share of magnificent weird and foolish trends in the software industry.

Here is one technique that seems to work for some companies: the skunk works. Or should I say Lockheed Skunk Works ( Boeing, which has historically favored multiple preliminary design groups for a product (pick the better team), has their corresponding Phantom Works ( The advantage of a large corporation is the capacity to establish organizations with special resources and independence. I think the difficulty in a software development corporation is in establishing an appropriate level of product integration without killing the independence of the skunk works. But maybe that is also an advantage because the boundary is better defined.

So there's my small contribution to the discussion.

And also, thanks to Scott Berkun for an interesting book. Amazon just delivered my copy yesterday!
Thursday, July 12, 2007 4:50:50 AM (GMT Daylight Time, UTC+01:00)
Gmail was not a 20% time project. It was Paul Buchheit's main work.
Saturday, July 14, 2007 11:49:43 AM (GMT Daylight Time, UTC+01:00)
Great description of disruptor vs incumbent.

Being currently employed at an incumbent, we are facing extreme competition from a small startup working in a space we did not have much of a presence in before, with them using it as a launching point for cannibalizing our broader business.

Management, of course, is flailing and have no idea how to respond, and have retreated to serving our larger corporate customers, after the FUD tactics, and attempted squashing by anti-competitive means didn't go anywhere.

Textbook, and I'm finding it very interesting to watch the whole process as an example of how not to respond :)
James Wu
Saturday, July 21, 2007 8:31:13 PM (GMT Daylight Time, UTC+01:00)
Sometimes, what we call innovators are simply the ones who wound up in the right place at the right time. A lot of this stuff happens less by design and more by serendipity.

But then again, there is a degree of innovation in that, too. I do not think that the web space is a malleable construct as much as it is an evolving sandbox.

Cool toys and new *stuff* will always generate interest.

What perseveres will prove to have been innovative. You can make plenty of money on things that are transient and in vogue.

- Josh
MIT Technical, Boston
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