Competitive Strategy – Google

One thing that stuck with me about the Google case was the fact that Google was the exception to the rule in terms of a startup’s revenue model. Ben Hallen, our Entrepreneurship professor would tell you that ‘How you will make money’ is likely the most important question you need to ask before starting a ‘For Profit’ business. Without it, getting funding is next to impossible. There were no plans in terms of how revenue would be generated as far as Google was concerned. But Google was lucky since this was at the time of the .com bubble and just about any tech company would find funding. Looking for a revenue model is one of two key lessons I learned from the history of Google. The other thing I learned was figuring out the most important value proposition of your business. Once again – The rent yielding factor of production. For Google, it was the search engine. You’re probably thinking that you wouldn’t want to spend $100,000 to learn that. However, when you look closer, you realize that Google owns Blogger – their first major acquisition. They also own Youtube, Android, Waze, Chrome, Nest, Motorola Mobility and parts of HTC. Most of what you use is free. Android – Free and open source. Waze – Free. Chrome – Free. Youtube – Free.

Why give away services you spent billions acquiring for free? Because activities on all of these platforms lead to their rent yielding factor of production – the search. What you do on Chrome and what you watch on Youtube has a direct impact on the search results you see. Your android phone – regardless if it is made by Samsung or Xiaomi or Micromax – It allows google to collect data about what matters to you by giving them the OS for free and letting them customize it to meet their needs. That is genius. Microsoft also has its web browsers and operating systems that could do the same for them which allowed them to attempt Bing – However, Google has a longer history which gives them not only the first mover advantage but also a richer search experience.

Once google had figured out a way to monetize their search, they never sold out on the integrity of their search. While you always see a couple of ads up top that are sponsored, the overall search results are always optimized based on keywords and tagging. This allows them to maintain their edge for being the place where people find what they are looking for as opposed to results that display who paid the most. This is also an important business lesson from my standpoint. Never compromise the integrity of what makes you successful in the first place.

Along the way, Google has acquired and dabbled into certain other things mostly because you never want to become complacent. Some of it has worked, some of it – not so much. While Google absolutely crushes Microsoft on search, Google docs has nothing on the Microsoft Office365 suite. That is where Microsoft reigns king because of their longer history of optimization and compatibility with their other office applications.

Overall, Google was a very important case study from learning strategic thinking and continuous improvement of your most important assets to maintain an edge in the business space.

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