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Polytechnic Institute of NYU

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1 Polytechnic Institute of NYU
Module 4: Ambidextrous Organizations: Microsoft and Google as Cases in Point? Professor Nina D. Ziv Polytechnic Institute of NYU New York City, New York

2 Key Questions – Amdextrous Organizations
According to Tushman and O’Reilly, what is an ambidextrous organization? What are the three kinds of innovation? What constitutes a successful ambidextrous organization? Do Tushman and O’Reilly’s ideas apply to Microsoft and Google?

3 “Ambidextrous” Organizations
Major challenge for organization is explore new opportunities in the marketplace while at the same time, exploiting existing capabilities. A successful ambidextrous organization does both. Three kinds of innovation Incremental – company continues to produce what it has produced and incrementally improve existing products and services Architectural – redesign some components of the business (a process or product) Discontinuous or radical innovation – Profoundly alter the basis of competition in an industry and render old products obsolete Tushman and O’Reilly believe that key to successful ambidextrous organization is: Tightnit communication across functional units to share resources (cash, talent, expertise and customers) while letting each organization function independently New Units not overwhelmed by business as usual Old units can operate as usual without distraction of launching new products Coordination among senior managers and communication of vision by senior management team is crucial to success of ambidextrous organization Key questions: Was Microsoft an ambidextrous organization as it developed in the 70s and 80s and is it ambidextrous now? Is Google ambidextrous?

4 Microsoft - Background
Founded by Bill Gates and Paul Allen in by developing a version of BASIC for the MITS Altair computer Gates and Allen then hired Steve Ballmer, as Microsoft’s first professional manager Later they sold the license to Q-Dos to IBM Made its initial money from sale of operating system software and applications After Netscape went public in 1995, Gates and Microsoft leadership reposition company to create products for the Internet, e.g., MSN, IE etc. Microsoft’s DNA? Proprietary Top down leadership Strength is brand, not necessarily products Ability to change direction almost instantaneously (Internet in 1995) Standardization across products important

5 Microsoft – Discussion Questions 2009
What is Microsoft’s concept of innovation? What are the organizational and cultural challenges facing Microsoft in 2011? What are the human talent issues facing Microsoft? What are Microsoft’s main markets and can it compete in all of them successfully? Who are Microsoft’s competitors, e.g. Google and can it stay ahead of them? What is your assessment of Microsoft and what would you do to get the company moving again?

6 Lessons Learned Microsoft has positioned itself as a technology broker but may be exploiting the model in ways which stifle innovation in the marketplace Microsoft seems to thrive on a variety of innovation strategies (de novo innovation, integrated innovation and category exploder) but it is unclear whether it will be successful in the future and can sustain its growth indefinitely because of organizational, cultural and talent issues Microsoft is a good follower, not a first mover which might be a good strategy in the volatile software industry It is questionable whether Microsoft is an ambidextrous organization since it has not been able to really embrace radical changes and be a true innovator while at the same time continue to focus on its core competencies and create incremental innovations well.

7 Key Questions – Google What was Google’s business model when it first began? In other words, what business was it in? Who comprises the leadership of Google? What kind of organization does Google have? What kind of people are in the Google organization? How does the company use technology (applications etc)? How does Google differentiate itself in the marketplace?

8 Anthony Agrusa & Anita Louis
Enter Title of Presentation Here Google Leadership Dr. Eric Schmidt Chairman of the Board and Chief Executive Officer Eric has focused on building the corporate infrastructure needed to maintain Google's rapid growth as a company and on ensuring that quality remains high while product development cycle times are kept to a minimum. Sergey Brin Co-Founder & President, Technology He is currently on leave from the Ph.D. program in computer science at Stanford University, where he received his master's degree. Larry Page Co-Founder & President, Products Brin and Page - early home life came from families with expertise in computer science and mathematics Anthony Agrusa & Anita Louis

9 Anthony Agrusa & Anita Louis
Enter Title of Presentation Here Googol or Google? The word googol in mathematics means 10^100 power or represented in decimal notation is: 10,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Larry Page, one of the founders, was fascinated with mathematics and Googol and decided he wanted to name the company after Googol it. Rumor has it that the reason Google is not spelled like the mathematic term is because Larry spelled the name wrong while registering it. Anthony Agrusa & Anita Louis

10 Anthony Agrusa & Anita Louis
Enter Title of Presentation Here Google's Mission: Google's mission is to organize the worlds information and make it universally accessible and useful. It will take, current estimate, 300 years to organize all the world’s information says Eric Schmidt Anthony Agrusa & Anita Louis

11 Anthony Agrusa & Anita Louis
Enter Title of Presentation Here Google’s IPO IPO Date: August 19, 2004 First Trade: 11:56 am ET at $100.01 Price: $85.00 Method: Modified Dutch Auction Lead Underwriters: Morgan Stanley Stock Symbol: GOOG Exchange: NASDAQ No. of Shares Offered: 19,605,052 Anthony Agrusa & Anita Louis

12 Anthony Agrusa & Anita Louis
Enter Title of Presentation Here Google’s IPO Value of Offering: $1.67 billion Initial Market Cap: $23.1 billion Total Initial Shares Outstanding: 271.2 million (33.6 mil. class A, mil. class B) Anthony Agrusa & Anita Louis

13 Anthony Agrusa & Anita Louis
Enter Title of Presentation Here Google outperforms Anthony Agrusa & Anita Louis

14 What makes Google so successful - I
Enter Title of Presentation Here What makes Google so successful - I Never settle for the best "The perfect search engine," says Google co-founder Larry Page, "would understand exactly what you mean and give back exactly what you want.“ Google has, and is; staying as close as possible to the following ten ideas it has came up with since the beginning of Google. Focus on the user and all else will follow. The interface is clear and simple. Pages load instantly. Placement in search results is never sold to anyone. Advertising on the site must offer relevant content and not be a distraction. Anthony Agrusa & Anita Louis

15 What makes Google so successful - II
Enter Title of Presentation Here What makes Google so successful - II It's best to do one thing really, really well. Although Google has branched out to various other products and services it hasn’t loose focus on search. Fast is better than slow. Democracy on the web works. Google works because it relies on the millions of individuals posting links on websites to help determine which other sites offer content of value. This technique actually improves as the web gets bigger, as each new site is another point of information and another vote to be counted. You don't need to be at your desk to need an answer. Wherever search is likely to help users obtain the information they seek, Google is pioneering new technologies and offering new solutions.

16 What makes Google so successful - III
Enter Title of Presentation Here What makes Google so successful - III You can make money without doing evil. you may have never seen an ad on Google. That's because Google does not allow ads to be displayed on our results pages unless they're relevant to the results page on which they're shown. So, only certain searches produce sponsored links above or to the right of the results. Google has also proven that advertising can be effective without being flashy Google does not accept pop-up advertising, which interferes with your ability to see the content you've requested. Any advertiser, no matter how small or how large, can take advantage of this highly targeted medium, We never manipulate rankings to put our partners higher in our search results. No one can buy better PageRank. Anthony Agrusa & Anita Louis

17 Anthony Agrusa & Anita Louis
Enter Title of Presentation Here Search without ads Anthony Agrusa & Anita Louis

18 Search with relevant ads only
Enter Title of Presentation Here Search with relevant ads only Anthony Agrusa & Anita Louis

19 What makes Google so successful - IV
Enter Title of Presentation Here There's always more information out there Google is extremely committed to providing the best search on the planet. Along with HTML pages Google indexes Microsoft Word, Excel and PowerPoint files, PDF’s, and Photos, The need for information crosses all borders. Google search results can be search pages written in more than 35 languages You can be serious without a suit. Google's founders have often stated that the company is not serious about anything but search. They built a company around the idea that work should be challenging and the challenge should be fun. Great just isn't good enough. Always deliver more than expected. Google does not accept being the best as an endpoint, but a starting point. Anthony Agrusa & Anita Louis

20 Advertise with AdWords – A great Business Model
Enter Title of Presentation Here Set your budget No matter what your budget, you can display your ads on Google and our advertising network. Pay only if people click on your ads. You create your ads You create ads and choose keywords, which are words or phrases related to your business. Your ads appear on Google When people search on Google using one of your keywords, your ad may appear next to the search results. Now you're advertising to an audience that's already interested in you. You attract customers People can simply click your ad to make a purchase or learn more about you. You don't even need a webpage to get started. Pay only for results Anthony Agrusa & Anita Louis

21 Anthony Agrusa & Anita Louis
Google Culture Enter Title of Presentation Here 70/20/10 Rule for Engineering Time 70% on the core business—web search &paid listings 20% on projects to extended core — such as Gmail 10% on fundamentally new businesses — such as a proposed initiative to offer Wi-Fi service in San Francisco We Make Our Own Rules Don’t give earnings guidance to Wall Street Secretive with future directions “we will not unnecessarily disclose all of our strengths, strategies and intentions” Google search is objective Searches based on “votes” Anthony Agrusa & Anita Louis

22 Anthony Agrusa & Anita Louis
Google Culture Enter Title of Presentation Here Commitment to Small Teams 3 to 5 people Everyone shares an office Communication is easy work in high density clusters or 4 staffers sharing spaces with couches and dogs. Improves information flow and saves on heating bills Non-Hierarchical Little middle management Everyone wears several hats The chief operations engineer is also a licensed neurosurgeon. Because everyone realizes they are an equally important part of Google's success, no one hesitates to skate over a corporate officer during roller hockey Anthony Agrusa & Anita Louis

23 Lessons Learned Need for a sound strategy and understanding how companies and organizations evolve. Companies always have to move forward with technology and innovate. They must be ambidextrous (stick with core competency and simultaneously develop new product lines) With a good business model, culture conducive to innovation, the right kind of talent and leadership as well as a good technology strategy which differentiates the company, it is possible to be successful

24 Reverse Engineering Google’s Innovation Machine – 2008 - I
Google is the ultimate ambidextrous organization because its search business allows it to be profitable even as it tries out new innovations. The company has a great technology strategy: it has invested in a robust infrastructure which is scalable and it has a rapid product development life cycle. Third parties can plug into the infrastructure easily and create new applications on the platform Google is the keystone in the ecosystem, the component which holds everything else in place and seemingly helps everyone to be successful Employees encouraged to innovate and be creative and managers also are encouraged to spend time on innovation Change happens quickly and efficiently, e.g., Gmail was implemented quickly Google lets users determine success of innovations – the market decides

25 Reverse Engineering Google’s Innovation Machine – 2008 - II
The leadership of the company takes risks and is not afraid of products failing in the marketplace Key ingredient of innovation is the extensive use of data and testing to support the ideas Vast clickstreams of its own and its partners’ websites 300 prediction markets consisting of panels of employees which are set up to assess customer demand for products Idea management system whereby employees can ideas for new products and services to a suggestion box Culture is technocratic in that individuals prosper based on the quality of their ideas and technological acumen A great deal of emphasis on the human aspect of innovation WHAT ARE THE LESSONS LEARNED?

26 Google in 2011 and beyond What is Google’s strategy for competing in 2009 and beyond? What are some of the challenges that Google faces in 2011 – organizational, cultural, leadership? Can Google’s current business model help it to sustain its competitive advantage in the future? Do companies like Facebook and Twitter pose threats to Google? Is Microsoft a threat to Google? What business is Google in? WHAT ARE THE LESSONS LEARNED?

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