By definition, not all experiments succeed. If that's the case with a company's portfolio of experiments, then they are experimenting within a much narrow domain. The very focus of experiments is to test, evaluate and learn from initiatives where the future success is not a given.
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Google recently pulled its plug on a few initiatives and the blogs are somewhat confused. As we discussed in class, the challenge of balancing innovation with implementation is non-trivial. Here is one blog that seems to imply that because of failures, Google is retreating to its core. I do not think that it is that easy to come to that conclusion. Google's innovation DNA is such that it should pulls the plug on initiatives that are not reaching intermediate benchmarks.
Learning from failures and adapting to the changed market conditions is hallmark of a good strategy rather than staying the course when conditions have changed. Companies often do a lot of analysis and vetting before starting projects or embarking on new initiatives. Many companies fail in stopping the project before it is too late.
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Balancing innovation and implementation is a delicate dance and this is what Google is doing with its decision to pull out of radio advertising.
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The author does seem to imply that Google has made a mistake and is withdrawing to its core, at least in the fact that it is selling off some of its radio products.
ReplyDeleteHowever, when we assess the success or failure of these initiatives we have to be careful of the scope we consider. The author uses the word Google when discussing the withdrawal from the radio space implying that we are taking the perspective of the organization. From the perspective of the group devoted to radio products, this may have been a failure, however, from an organizational perspective I would say that this represents Google executing its strategy.
Google devotes 20% of its time to innovation. As an organization it maintains a portfolio of projects and new business ventures on an ongoing basis. If any one of these takes off there is huge upside. As long as Google pulls the plug on these projects early on it can minimize the downside. This is similar to buying financial call options. Google is willing to take small losses on many projects that have a large potential gain. When Google hits upon that project that takes off it more than recoups the cost of the many projects that were discontinued.
So one could take the opposite view of the author and say "Great job Google! You have exited a project early, minimized the cost of failure, and saved resources to devote to your many other potentially lucrative ongoing projects".