Reference no: EM131881265

Problem: Started in the late 1990s, Google grew rapidly to become one of the leading companies in the world. Google's mission is "to organize the world's information and make it universally accessible and useful." It is operating on a simple but innovative business model of attracting Internet users to its free search services and earning revenue from targeted advertising. In the winner-takes-all business of Internet search, Google has captured considerably more market share than its next highest rival, Yahoo!. This has turned Google's Web pages into the Web's most valuable real (virtual) estate. Through its two flagship programs, AdWords and AdSense, Google has capitalized on this leadership position to capture the lion's share in advertisement spending. AdWords enables businesses to place ads on Google and its network of publishing partners for as low as 25 cents per thousand impressions. On the other hand, it uses AdSense to push advertisements on publishing partners' Web sites targeting specific audience and share ad revenue with the publishing partner.

This creates a win-win situation for both advertisers and publishers and developed Google into one giant sucking machine for ad revenue. Even as a large company, Google continues to take risks and expand into new markets. It currently offers over 120 products or services. Sergey Brin and Larry Page, the founders, declared in Google's IPO prospectus, "We would fund projects that have a 10% chance of earning a billion dollars over the long term. . . We place smaller bets in areas that seem very speculative or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas." They further add that they are especially likely to fund new types of projects when the initial investment is small. Google promotes a culture of creativity and innovation in a number of ways. IT encourages innovation in all employees by allowing them to spend 20% of their time on a project of their own choosing. In addition, it offers benefits such as free meals, on-site gym, on-site dentist, and even washing machines at the company for busy employees.

Despite open and free work culture, a rigid and procedure-filled structure is imposed for making timely decisions and executing plans. For example, when designing new features, the team and senior managers meet in a large conference room. They use the right side of the conference room walls to digitally project new features and the left side to project any transcribed critique with a timer clock giving everyone 10 minutes to lay out ideas and finalize features. Thus, Google utilizes rigorous, data-driven procedures for evaluating new ideas in the midst of a chaotic innovation process. Google's vice president for search products and user experience, Marissa Mayer, outlines nine notions of innovations embedded in the organizational culture, processes, and structure of Google18:

1. "Innovation; not perfection": Google employees can take a good idea and experiment to improve upon it.

2. "Ideas come from everywhere": All Google employees can innovate.

3. "A license to pursue dreams": To help promote innovation, Google employees get one "free" day each week to work on their pet ideas.

4. "Morph projects, don't kill them": Google employees should always to find something salvageable in projects that aren't pursued

5. "Share everything you can": Google employees have a lot of collective knowledge. To encourage sharing, each employee writes an e-mail on Monday with five to seven bullet points of what they learned earlier and Google then consolidates this information and makes it available to the employees.

6. "Users, users, users": Google will be successful if we can please the users; advertisers (and their money) will follow the users.

7. "Data is apolitical": Design is a science at Google. Good ideas must be supported with evidence.

8. "Creativity loves constraints": Google employees work best when they are challenged and have to think outside the box.

9. "You're brilliant? We're hiring": Google likes to hire really smart people-even if they may not have a lot of experience.

10. Worry about usage and users, not money: Provide something simple to use and easy to love. The money will follow.

Keeping up with the organizational strategy of Google, its IT department provides free and open access to IT for all employees. Rather than keeping tight control, Google allows employees to choose from several options for computer and operating systems, download software themselves, and maintain official and unofficial blog sites. Google's intranet provides employees information about every piece of work at any part of Google. In this way employees can find and join hands with others working on similar technologies or features. In building the necessary IT infrastructure, Google's IT department balances buying and making its own software depending on its needs and off-the-shelf availability. For example, it uses Oracle's accounting software, whereas it built its own customer relationship management (CRM) software, which it then integrated with its ad systems.

It also supports open source projects both by extensively using open source software within the organization and by paying college students to contribute to them through programs like Summer of Code. In addition, Google also develops generic applications such as GoogleApps for both internal and external use. Given the nature of business, security of information resources is critical for Google. For instance, its master search algorithm is considered a more valuable secret formula than CocaCola's. However, rather than improving IT security by stifling freedom through preventive policy controls, Google puts security in the infrastructure and focuses more on detective and corrective controls. Its network management software tools combined with 150 security engineers constantly look for viruses and spyware, as well as strange network traffic patterns associated with intrusion.

Discussion Questions: 1. How is Google's mission statement related to its business strategy?

2. How does Google's information systems strategy support its business strategy?

3. How does Google's organizational strategy support its business strategy?

4. Which of Porter's three generic strategies does Google appear to be using based on this case? Provide a rationale for your response.

5. Analyze Google's strategy and the type of market disruption it has created using a dynamic environment perspective.