8.Pretty Basic, No?

How are you guys? This semester has been over a half. While I’m taking this Business Strategy class, one thing which I have been learning is Innovation, also it is so-called Differentiation. Then, one of the most famous companies for innovation is Google. Although now the U.S economy has been depression, the company does not seem to concern about it.

I read an article interviewing with Eric Schmidt, CEO of Google, and could find a way which Google really think from the article.

Innovation

He thinks that the star products are not affected by economy environment, which means that consumers will consume the products as well in a depression as in a no recession. How? He insists that strong company should consider the substitution effect which means consumer could be more likely to change their shopping habit because of recession. Therefore, in that situation, the company which is more creative and innovative will be able to get attentions from consumers. In that way of thinking make Google keep investing their creative work, R&D.

Business culture

Then, why do not other companies follow the Google’s strategy which is to spend about 20% of employees’ work time on project outside their main job. The CEO said that there is reason other companies cannot easily follow the unique strategy even though the strategy is considered very strong point of the company. The reason is the culture. Each company has their own culture, and the culture is not easy to be changed, so many companies know that they need the strategy but cannot dramatically change the culture.

Obstacle

What is the obstacle which Google really think? The most serious problem the CEO concerns is that employees are separated. Located in many sites disturbs the communication with other fellow workers. He thinks that workers should be together for the project or be connected by phone call at least. Other options are not efficient.

According to his interview, Google still has optimistic perspective about their future. Everyone might agree to it. Not only stock price but also their corporation image tells people some optimism. In fact, the things the CEO of Google mentioned seems to be pretty normal and basic. However, he emphasize that the things are not often practiced, also innovation comes from places that people do not expect.

Reference: http://www.businessweek.com/ "How Google Fuels Its Idea Factory"



posted by 20300121(Kim, Jae-Yoon)