Innovation is increasingly important as technology spins the world ever faster. Both quantum innovation and incremental innovation are important to organizational growth and success. Speeding up the innovation process results in the development of new products and speeds their move to market. In many areas, being slow to innovate or to move new products to market can be disastrous for a firm. Managers need to understand how to build an environment that will foster innovation.

In this exercise, you will read a description of the explosive growth of Google and how it occurred through an emphasis on innovation.

Read the case below and answer the questions that follow.

The history of Google, the Internet search engine company, began in 1995 when two Stanford graduate computer science students, Sergey Brin and Larry Page, decided to collaborate to develop a new kind of search engine technology. They understood the limitations of existing search engines, and by 1998 they had developed a superior engine that they felt was ready to go online. They raised $1 million from family, friends, and risk-taking “angel” investors to buy the hardware necessary to connect Google to the Internet.

At first Google answered 10,000 inquiries a day, but in a few months it was answering 500,000. By fall 1999, it was handling 3 million; by fall 2000, 60 million; and by spring 2001, 100 million per day. In the 2000s Google became the dominant search engine, handling around 75 percent of inquiries by 2010. It is one of the top five most-used Internet companies, and rivals like Microsoft are working hard to catch up and beat Google at its own game.

Google’s explosive growth is largely due to the culture of innovation its founders cultivated from the start. Although by 2012 Google had grown to 35,000 employees worldwide, its founders claim that Google still maintains a small-company feel because its culture empowers its employees, who are called staffers or “Googlers,” to create the best software possible. Brin and Page created Google’s innovative culture in several ways.

From the beginning, lacking space and seeking to keep operating costs low, Google staffers worked in “high-density clusters.” Three or four employees, each equipped with a high-powered Linux workstation, shared a desk, couch, and chairs that were large rubber balls, working together to improve the company’s technology. Even when Google moved into more spacious surroundings at its “Googleplex” headquarters building, staffers continued to work in shared spaces. Google designed the building so staffers constantly meet one another in its funky lobby; in its Google Café, where everyone eats together; in its state-of-the-art recreational facilities; and in its “snack rooms,” equipped with bins packed with cereals, gummi bears, yogurt, carrots, and make-your-own cappuccino. Google also created many employee social gatherings, such as a TGIF open meetings and a twice-weekly outdoor roller hockey game where staffers are encouraged to bring down the founders.

All this attention to creating what might be the “grooviest” company headquarters in the world did not come about by chance. Brin and Page knew that Google’s most important strength would be its ability to attract the best software engineers in the world and then motivate them to perform well. Common offices, lobbies, cafés, and so on bring staffers into close contact with one another, develop collegiality, and encourage them to share new ideas with their colleagues and to constantly improve Google’s search engine technology and find new ways to expand the company. The freedom Google gives its staffers to pursue new ideas is a clear indication of its founders’ desire to empower them to be innovative and to look off the beaten path for new ideas. Finally, recognizing that staffers who innovate important new software applications should be rewarded for their achievements, Google’s founders give them stock in the company, effectively making staffers owners as well.

Their focus on innovation did not blind Brin and Page to the need to build a viable competitive strategy so Google could compete effectively in the cutthroat search engine market. They recognized, however, that they lacked business experience; they had never had to craft strategies to compete with giants like Microsoft and Yahoo. Moreover, they also had never been responsible for building a strong set of value chain functions. So they recruited a team of talented and experienced functional managers to help them manage their company. Brin and Page’s understanding that successful product development requires building a strong organizational architecture has paid off. It has become one of the most successful and profitable global companies, and hardly a day goes by without some news story about some new innovation in one of its product groups.

1. The original development by Google of its search engine represented a(n)  

stage–gate innovation.

quantum product innovation.

industrial product development.

incremental product innovation.

new organizational structure.

2. Google encourages managers and employees from different departments in the company to work together. These groups can be classified as ________ product development teams.

cross-cultural

cross-industry

self-replicating

cross-functional

uni-functional

3. Google encourages lots of new product ideas that are then reviewed by managers, with the most promising moving forward from proposal to product development. This represents a movement from ________ in the stage–gate model.

stage 2 to 3

entry to funnel

middle stage to end stage

stage 1 to 2

stage 1 to 4

4. One reason Google is successful is that it constantly takes ________ into account when considering new products.

its customers’ needs

developing a contract journal

stage–gate

its profitability

Microsoft’s ideas

5. The funky decor, rubber ball chairs, shared work spaces, cafes, and roller hockey games are all elements of the culture at Google that  

are adding too much to company costs.

encourage innovation.

are already out-of-date in high-tech companies.

encourage bureaucracy.

make it difficult to recruit top finance managers.

6. Changes to the Google search engine that occur now that the technology is well perfected represent ________ product innovation.

Qualcomm

instrumental

quantum

incremental

qualified

7. The initial team members who stay with the project from inception to completion are

contract members.

a self-directing team.

core members.

rotating team leaders.

a top management team.