Google Case

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HAR VA R D B U S I N E SS S C H O O L P R E SS

Aiming for an Evolutionary Advantage
Management Innovation in Action

E xc e r p t e d fro m

The Future of Management
By

Gary Hamel with Bill Breen

Harvard Business School Press Boston, Massachusetts

ISBN-13: 978-1-4221-2515-1

2515BC

Purchased by Laura Jimena Mora Guzm?n (laura_jimenamora@hotmail.com) on March 25, 2013

Copyright 2007 Harvard Business School Publishing Corporation All rights reserved Printed in the United States of America This chapter was originally published as chapter 6 of The Future of Management, copyright 2007 Harvard Business School Publishing Corporation. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163. You can purchase Harvard Business School Press books at booksellers worldwide. You can order Harvard Business School Press books and book chapters online at www.HBSPress.org, or by calling 888-500-1016 or, outside the U.S. and Canada, 617-783-7410.

Purchased by Laura Jimena Mora Guzm?n (laura_jimenamora@hotmail.com) on March 25, 2013

Six

Aiming for an Evolutionary Advantage
Google

nyone who’s ever booted up a pc knows about

Google, the Mountain View, California–based company whose brightly-hued logo is a universal welcome mat to the World Wide Web.1 As the heavyweight of online search, Google is one of the world’s most ubiquitous brands and an indispensable tool for anyone navigating cyberspace. In May 2007, Google handled 65.2 percent of all U.S. Internet searches, compared with 20.7 percent for Yahoo! and 7.7 percent for Microsoft.2 Globally, Google conducts more than two-thirds of the world’s Web searches. Google’s breakneck growth is already part of Silicon Valley lore. In 1996, two Stanford University doctoral students in computer science, Sergey Brin and Larry Page, churned out an algorithm that delivered a quantum leap in Web-search performance. Their insight: rank pages

A

1

Purchased by Laura Jimena Mora Guzm?n (laura_jimenamora@hotmail.com) on March 25, 2013

2

Management Innovation in Action

based on how many links they have to other pages—in essence, an index of popularity. Google’s search service debuted in 1998 and was soon fielding over 500,000 queries a day. Over the next few years, Google’s eponymous service would grow as fast as the Web itself, but unlike the dot-com flameouts of the late 1990s, Google found a magic elixir that turned all those clicks into cash—search-based advertising. In the three years following Google’s 2004 IPO, its revenues more than tripled, from $3.2 billion to $10.6 billion, and its market value soared to more than $140 billion. As an industry revolutionary, Google has profoundly changed the software business. Unlike Microsoft, Google delivers its software over the Web in the form of online services, rather than as a suite of physical products sold through traditional retail channels. While Microsoft’s revenues come largely from licensing fees, Google makes most of its money by selling “click-through” ads that are appended to various forms of Web-based content. And where Microsoft’s applications are designed to work seamlessly with one another and integrate tightly with the Windows operating system, most of Google’s various services, like search, Gmail, and Google Maps, are stand-alone products. As a result, Google doesn’t face the development complexities that Microsoft must confront when it seeks to upgrade a major component of its interlaced product line.

A New Management Model

W

hat makes Google unique, though, is less its Web-centric business model than its...
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