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In our information-heavy world, the rise of an IT service that helps you find information is a great example of a business occupying a niche which simply wasn’t available before. Google is truly a business which has grown because of the “business as usual” cycle being broken. Google has demonstrated how its new people-and-IT business model can deliver strong returns with its successful flotation on NASDAQ. Google demonstrates how an IT business can transmit its value set and achieve phenomenal growth without ‘traditional’ promotion and business management approaches. Word of mouth is what underpins Google’s success.
BUSINESS INSIGHTS
Turnover:
Forecast at $6.1bn in 2005 (approx. $4.2bn from first three quarters).
Core Service:
Google’s main source of revenue is selling advertisements that appear next to search results on www.google.com or one of the dozens of other Google domains. Google generates revenue primarily through two programs: highly targeted advertising and online search services.
Employees:
4,183 as of 30 June 2005.
In our information-heavy world, the rise of an IT service that helps you find information is a great example of a business occupying a niche which simply wasn’t available before. Google is truly a business which has grown because of the “business as usual” cycle being broken. Vision:
“To organize the world's information and make it universally accessible and useful”.
Google’s motto: “do no evil”.
TRANSFORMATION
Google's utility and ease of use have made it an extremely successful brand, almost entirely through word of mouth from satisfied users. Few company names become verbs, but to be "Googled" is to be looked up on the Internet's most popular search engine.
Google was started in traditional Silicon Valley form by college friends Larry Page and Sergey Brin, both fascinated by maths, computers and programming from an early age. Google’s success as a company with strong CSR associations has two distinct aspects:
the persistent pursuit of technical innovation; and the unapologetic focus on creative, people values.
Google’s innovation is focused, extraordinarily so. It is focussed on the issues of the search engine alone. With one of the world's largest research groups solving search problems, the search engine has broken its own speed records many times. Google’s innovation is based on challenging assumptions – are large servers the fastest way to handle massive amounts of data? Google found networked PCs to be faster, and so on.
The range of services offered by Google’s websites continues to grow: you can find information in many different languages; check stock quotes, maps, and news headlines; lookup phonebook listings; search more than two billion images. As the world goes wireless, the company is developing its products to function from platforms including WAP and i-mode phones.
There was, we suggest, the need to reach critical mass before Google was able to accelerate its company performance and outpace its competitors through innovation. Google managed to index more of the HTML pages on the Internet than any other search service giving them an advantage, which they then consolidated by turning their attention to information that was not as readily accessible like business directories, images and a way to view pages that were originally created as PDF files.
Google's founders have often stated that the company is not serious about anything but search. From its Californian headquarters, named ‘the Googleplex’, Google broadcasts a company culture which suggests a business model focussed on ideas. The list of “10 things Google has found to be true” offers a fascinating insight into the company’s values:
Focus on the user and all else will follow. It's best to do one thing really, really well. Fast is better than slow. Democracy on the web works. You don't need to be at your desk to need an answer. You can make money without doing evil. There's always more information out there. The need for information crosses all borders. You can be serious without a suit. Great just isn't good enough.
The company is built around the idea that work should be challenging and the challenge should be fun. Google's website describes the company culture as “unlike any in corporate America, and it's not because of the ubiquitous lava lamps and large rubber balls, or the fact that the company's chef used to cook for the Grateful Dead”. At a practical level, in terms of layout, few walls separate those who write the software code from those who write the cheques. This highly communicative environment aims to foster a productivity and camaraderie fuelled by the belief that millions of customers rely on Google results.
Google is translating its financial success to another aspect of its company culture. In October 2005, it announced that it had donated $1bn of stock and profits to its new charitable arm, Google.org, to fund social investment projects across the developing world.
END GAME
Google revenue, largely from advertisements, has grown every quarter since 1993. Google sites provide 34.5% of all searches carried out on the internet (Source: Comscore Networks) that means handling 200 million search requests a day in almost 100 languages, half of which come from outside the US.
Google was floated on NASDAQ in August 2004. The desire to innovate, and the company’s values, translated into a flotation process that reflected the founders’ wish to make sure they could still keep running the company without being dominated by the traditional Wall Street focus on quarterly results.
"A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half-hour”, they wrote in an "Owner's Manual" attached to the SEC filing.
The company has two classes of share. The founders and original shareholders have ten times the voting power of the Class A shares to be floated, and the Class B cannot be sold to public investors.
Innovation continues on a scale which is mind-boggling. At the end of 2004, Google announced an ambitious plan partnering with the world’s most prestigious libraries to scan books into a searchable database. This library project will make countless volumes of rare and out-of-print books accessible to anyone with Internet access. Once again, Google will be instrumental in underpinning huge social change based on access to information.
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© Article 13 - December 2005
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