Innovation Lessons from Google

This is part three of a four part series covering the inner working of Google. If you haven’t already read parts one and two you can find them here: Think Like a Google CEO and How to be an Effective Communicator. In part three I cover understanding your context, failing fast, and focusing on the user.

In today’s world, the only way to succeed is to create great products. Customers will see past the veil of a poorly designed or poorly executed product; they want something truly innovative. What does it mean for something to be innovative? It needs to be something new, surprising, and radically useful. The XPRIZE Foundation regularly supports the creation of innovative products and ideas. Since 1994, the XPRIZE Foundation has launched seventeen competitions in areas such as space, oil cleanup, and global learning. No one can argue that big, innovative products and ideas have resulted from XPRIZE competitions.

Go out there and have huge dreams, then show up to work the next morning and relentlessly incrementally achieve them

The other side of the innovation coin is the daily incremental innovation that happens on products like Google search engine. Every year, Google releases over 500 improvements to search. Individually, are any of these changes radical? Probably not. But over the course of a year and many small incremental improvements, Google arrives at a radically improved product. These 1-2x incremental changes are outlined in the Roofshot Manifesto by Luiz André Barroso, Google Fellow and VP of Engineering. In it, Barroso describes that during his 15 years with Google, many of the innovative products that seemed like moonshots were actually a sequence of roofshots. A 1.3x roofshot per quarter is an easy way to achieve a 10x moonshot in three years.

Understand Your Context

How do you determine what great ideas to pursue? Google [x] uses a simple Venn diagram to make that decision. According to the Google [x] team, the idea must be radically different from what is in the market today, it must be feasible and achievable in the not too distant future, and it must address a big challenge, something that affects many people.

Google[x] started in 2010 as Google’s moonshot factory, looking 5-10 years into the future to develop new technologies and launch them into the world. Since the inception of Google[x], the team has worked on the technologies behind self-driving cars, Google Glass & Google Brain, and most recently is tackling the problem of cyber security. You can read more about Google[x] on their blog.

An important thing to remember is that Google[x] makes up only a small portion of Google’s entire portfolio. They dedicate a small portion of their resources to these moonshot projects and are very careful about delivering a good return on investment.

How much of your organization's resources are dedicated to new ideas? When you pitch a new idea to leadership, are they inclined to to say yes or no? Saying no lets leadership mitigate risk and reserve their resources for projects that are more likely to succeed. For a company looking to create a culture of “yes” there needs to be some type of framework in place to enable it. Back in 2002, Google was maintaining a list of top 100 projects. They feared that as the company grew, this simple system of tracking projects would not scale and a “no” culture would be bred. So what they did was group all 100 projects into three buckets. 70% of the projects were related to the core business, 20% to emerging products, and 10% to completely new things. It became known as the 70/20/10. Spend 70% of your resources on the core, 20% on emerging, and 10% on new.

The 70/20/10 rule works because it ensures the core business receives the bulk of resources, up-and-coming projects receive some investment, and the big, bold, new ideas also have some support too. 10% isn’t a lot of resources and solves the problem of over investing in unproven technology but also has the added benefit of driving creativity. Creativity loves constraints - a lack of resources forces ingenuity.

Prototyping Fast (and failing fast)

Now that you have an idea, it's time to get it to market. Think about the type of culture in your own company - are you enabled to create quick prototypes and get them into the hands of customers or are you not able to launch a product until it is polished to a fine gloss? It’s more important than ever to be able to fail fast and often. Prototype quickly, get your product in the hands of customers and immediately start to get feedback. The companies that are able to ship and iterate will win.

Ship and iterate

In the world of ship and iterate, your job as a product manager must be to feed the winners and starve the losers. All too often we try to feed the losers in hopes of making them winners but ultimately this does not work and only wastes resources. To decide which products are winners, use data. You need to decide which data to use to evaluate the winners from the losers and set up a system to collect that data. The data you use will often be dependent on the product you develop and the industry your business serves. Some general metrics include revenue targets, page visits, user retention, and user feedback.

You’ve analyzed the market, designed a product that will solve a big problem in a radically different way and you had the technology to develop that solution. The day is finally here, you launch your product… and it fails. Not every idea or product will be successful but you can turn that failed product into a new opportunity. Any failed project should result in valuable insights that can be applied to the next project.

“If you are thinking big enough it is very hard to fail completely. There is usually something very valuable left over.” - Larry Page

It is important for leadership not to stigmatize this type of failure. Teams who fail fast and smart, and are able to learn from the failure should be given leeway. Other teams will be watching to see if the failed team is punished. If they are, others will take notice, people will be afraid to fail and innovation will be stifled. If your teams are not failing, it means you aren’t really pushing the bounds of innovation.

Management’s job is not to mitigate risks or prevent failures, rather to create an environment to take on risk and deal with the failures - to become what Nassim Taleb describes as being “antifragile”. Being antifragile goes beyond resilience. Resilience implies resisting shock and staying the same; antifragile on the other hand gets better with shock. Viewing a failure this way turns the failure into a road, not a wall and it allows teams to gain valuable experience.

Although failures happen, they are not the objective. It is necessary to fail fast - get your product into the market place and immediately start to collect data you deem important, then use that data to iterate on your product and gather more data. With each iteration, determine if your product is getting closer to success. If, after several iterations, your product is no closer to being a success, pull the plug and move on to the next project.

Focus On The User

During your innovation efforts it's important to keep in mind who you are doing this for - the user of your product. User trust is just as important as dollars. Launching excellent products is the only way for a company to be consistently successful. Google coined the phrase, “focus on the user and all else will follow”. This means that Google will always strive to do what's right for the customer and let their employees figure out how to monetize it. Focusing on the user should be deeply rooted into your company’s culture - if there are no users, there is no company. If you lose sight of who you’re working for, the company will surely suffer.

It’s easy for Google to launch a user driven product and figure out how to monetize it at a later time, but how does a small company that is reliant on immediate revenue achieve this? Small companies should still focus on the user but be scrappy and spend as little money as possible until the idea is proven. Even if profits are still further down the road, you can make a sound financial decision based on proven value.

A company cannot realize the vision of focusing on the user without having user focus as part of its culture. At Google, they run several programs to build user-centeredness into the company’s culture.

Summary

Below are some key takeaways you can apply to your innovation strategy.

• Roofshot vs Moonshot - remember, not every innovative product is the result of a moonshot. A 1.3x roofshot per quarter is an easy way to achieve a 10x moonshot in three years.

• For something to be truly innovative it must solve a big challenge, be radically different from what is in the market today, and be feasible to achieve in the short term.

• Ship and iterate - it is better to launch your best product now then to wait for a fully polished version. Get your product in the hands of users and start collecting data. Use that data to iterate and make your product a success.

• Your prime directive should be to focus on the user. This needs to be built into the DNA of your company. Without users, there is no company.