Google is a data-driven technology company whose core competences are technical rather than service oriented. A number of these competences are unique to Google, hard to replicate, and have a major impact on improving the quality of the end-user experience.
Google’s major breakthrough was its Page Rank algorithm that created meaning from links between websites. Now, in addition to Page Rank, Google’s search engine uses around 200 factors that determine the relevance of results. These include search terms, synonyms, and website quality. Massive quantities of user data and query logs allow Google to intelligently guess what was meant by a certain request, and improve the experience with spelling correction, or more recently Google Instant – where results are displayed in real time as the user types the letters of their query.
As a result of its search capabilities Google has created new platforms for innovation. Not only does it extract meaning from data it also gives it commercial value. The ability to create value out of search – not only for itself but for other organizations prepared to pay for the benefits that this provides – puts it on the frontline of innovation in the online world. The company sits at the center of an ecosystem, which means that it has visibility of a large amount of data generated by its products such as Google Ad Words, which allows companies to bid for keywords and appear next to relevant search results; and Ad Sense, which allows online publishers to earn revenue by displaying relevant ads on a wide variety of content. Content creators can now get meaningfully paid for the work they are doing.
Google’s two founders are strong advocates of user-centric design. Users have been encouraged to help refine pretty much all of the add-on products from Google Finance and Google Scholar to Maps, Mail, and Picasa. For Google 90% or so has been good enough to go public, knowing that users will help finish things off and suggest the adjustments needed. Participative product development is very much part of the core Google strategy.
To many observers, Google’s strategy has been hard to discern: sandwiched between the lofty goals of organizing the world’s information and the reality of many disparate consumer services. In sum, Google’s strategy can be thought of as extending the breadth and depth of its interactions with people. A broader reach comes from a plethora of services built off its core search and advertising platforms that share a common goal of increasing users and page views. And deeper engagement comes from using an internal innovation marketplace for ideas, together with data analytics, to make the services ever more relevant, efficient, and personalized. Google’s challenge will be to ensure that its algorithms and business model stay relevant in an increasingly fragmented, yet increasingly social world.