Google CEO's view on the future of business
I came across an interview that McKinsey Quarterly conducted recently with Google CEO Eric Schmidt, on Google's view on the future of business. He discusses how the Internet will change the nature of competition, innovation, and company operations.
I scribbled some notes on my laptop as I watched the video:
- We will become more reliant on technology.
- Device becomes your PA, showing you where to buy, what to buy, best price, best quality etc.
- Time has gotten more and more compressed over history. Process cycles becoming shorter. Older people feeling stressed out. A new generation growing up with this as normal pace.
- The power law: a small number of things highly concentrated. The “long tail” is interesting, but vast revenue still in the head. Counter-intuitive: more concentration of brands, not diversity. Will lead to bigger blockbusters. global scandals, global brands etc
- Need the head and the tail to make the model work.
- Free is better price than cheap. Different business model to what we're used to.
- With traditional manufacturing, over time pricing moves towards marginal cost of production. Marginal cost of production and distribution of digital services is zero.
- eg Telephony infrastructure is sunk cost. Everything else is next to free. Operating costs minimal. The brand that's famous is scarce. So
model may morph into prepaid cost of phone + free use afterwards
- The internet is a leveller- distribution, branding, access
- Corporations can't be as controlling. Have to listen to customers etc
- A more porous / transparent company= better organisation
- In the new world, people won't wait.
- Groups make better decisions than individuals
- Organisations can operate by consensus. But need 2 things. Need someone who enforces a deadline, otherwise you become a university. Leader doesn't force outcome, but forces a deadline. Need dissent, otherwise you have a king. It's an art to encourage this.
- The best ideas don't come from the executives.
- For senior execs, balance is no longer possible. Not PC to say this. But if you sleep, a story breaks somewhere in the world and you lose out.
- Organisations will select executives who are drawn to the sense of speed and rush. Those are the ones who will rise to the top.
- Innovation driven by person with luxury of dreaming up new ideas. Innovation does not come from people sitting in a classroom going through a textbook.
- Innovation comes from you not being under the gun. Need time for reflection
- At Google, 20% time undirected. To think outside box. Look for small companies to acquire
- Google is a “Systematic innovator of scale”. portfolio theory: don't know which one will make it.
- Executives always want to simplify running of business. But nature of technology to become more complex and more variants. competitive barrier to entry.
- Try to avoid at Google: business unit structure that prevents cross-unit collaboration. This cuts down informal ties.
- If people in organisation understand values of company, they should be able to self-organise.
- the last war is never like the next war. to build a successful global platform requires understanding of interchange points, distribution, channel etc. easy for people to switch over the internet.
- the term platform is overused. unlikely to see single regime for copyright law etc. per country domains – likely to be legal and political challenges to this
- laws are so complicated. to operate globally, need a large team of lawyers.
- cultural information: widespread difference in interpreting of laws. tragedy if laws of one country are applied in another.
Watch the full video here: Google on the future of business