How Google Works

by Eric Schmidt

This approach can be very effective if you are an incumbent that measures success in percentage points,

but not if you are trying a new venture.

You will never disrupt an industry or transform your business, and you’ll never get the best smart creatives on board, if your strategy is narrowly based on leveraging your ...

market research can’t tell you about solving problems that customers can’t conceive are solvable.

Giving the customer what he wants is less important than giving him what he doesn’t yet know he wants.

There’s nothing wrong with continuous improvement and smart business tactics, but the tail is wagging the dog when market research becomes mo...

Most incumbents get their start through tech...

but then the...

The suits become more important than ...

Our brand had gotten strong enough that any product we launched would gain a certain amount of market momentum just by virtue of coming from Google.

If we measured success by number of users, we could (and did) trick ourselves into believing that the products were successful.

Sometimes they weren’t, though; momentum for many of these offerings flat-out stalled. And in virtually every case, the flatlining products were ...

they lacked that fundamental technical insight that would shift the cost-performance curve nonincrementally and provide significant differentiation.

they all either lacked underlying technical insights from the outset, or the insights upon which they were based became dated as the Internet evolved.

In the Internet Century, all companies have the opportunity to apply technology to solve big problems in new ways.

“combinatorial innovation.”

This occurs when there is a great availability of different component parts that can be combined or recombined to create new inventions.

Love this phrase to describe cool new inventions like the iPhone that rely on technical advancements across a number of dimensions, each remarkable in their own right and magical when brought together in just the right way.

Today the components are all about information, connectivity, and computing.

Would-be inventors have all the world’s information, global reach, and practically infinite computing power. They have open-source software and abundant APIs66 that allow them to build easily on each other’s work. They can use standard protocols and languages. They can access information platforms with data about things ranging from traffic to weather to economic transactions to human genetics to who is socially connected with whom, either on an aggregate or (with permission) individual basis.

Besides these common technologies, each industry also has its own unique technical and design expertise.

in other industries the underlying expertise may be medicine, mathematics, biology, chemistry, aeronautics, geology, robotics, psychology, logistics, and so on.

Find the geeks, find the stuff, and that’s where you’ll find the technical insights you need to drive success.

Another potential source of technical insights is to start with a solution to a narrow problem and look for ways to broaden its scope.

New technologies tend to come into the world in a very primitive condition, often designed ...

When you base your product strategy on technical insights, you avoid me-too products that simply deliver what customers are asking for.

That sort of incremental innovation can work very well for incumbents who are concerned with maintaining the status quo and quibbling over percentage points of market share.

But if you are starting a new venture or trying to transform an existing enterprise, it’s not enough.

Basing products on technical insights seems like a fairly obvious approach, but it is a lot more difficu...

“What is your technical insight?” turns out to be an easy question to ask and a hard one to answer. So for your products, ask the question. If you can’t articulate a good answer, rethink the product.

It used to be that companies got big slowly and methodically.

Well, enjoy those days, because they are short-lived.

If you are trying to do something big, it’s not enough to just grow, you need to scale.

In the Internet Century, this sort of global growth is within anyone’s reach.

it no longer takes a phalanx of people and a widespread network of offices to create a company with global reach and impact.

Scaling needs to be a core part of your foundation. Competition is much more intense and competitive advantages don’t last long, so you have to have a “grow big fast” strategy.

Scale fast and dig big moats around you as Scott Galloway would say. There is a high likrlihood you are in a winer-take-all market.

The ecosystem matters a lot.

The most successful leaders in the Internet Century will be the ones who understand how to create...

pla...

is, fundamentally, a set of products and services that bring together groups of users and provider...

Today, platforms can grow to support billions, and in a much shorter time.

while Excite@Home was trying to monetize its traffic in every way possible, Google patiently focused on growth.

Jonathan went so far as to visit his counterparts at AOL to counsel them against increasing their ads volume.

You are hurting your user experience, he told them, and that will eventually impact your traffic. It didn’t matter.

They prioritized revenue over growth; we did ju...

At the risk of stating the obvious, though, a successful foundation must provide a good ba...

There’s another important benefit of platforms: As they grow and get more valuable, they attract more investment,

which helps to improve the products and services the platform supports.

This is why, in the technology industry, companies always think “plat...

One very compelling—and underappreciated—aspect of the Internet is how it has greatly expanded the potential to build platforms not just in the technology business,