In The Plex Review

          Before I began Kellogg, my former colleagues jokingly shared, “enjoy learning about Walmart and Google.”  To my surprise, reading In The Plex by Steven Levy was the first time I had “studied” Google.  Throughout the book, Levy provided insight into what makes Google a multi-billion dollar business designed on the premise of “doing things better.”  Undoubtedly, Page and Brin are visionaries and Schmidt’s business prowess helped Google gain its untenable (to date) scale.  While much of Google’s success may be attributed to each and their decisions, I contend that much of Google’s success may also be attributed to luck and timing. 

          In Google’s early days, Yahoo, Excite, and Altavista dominated the search market.  Page and Brin knew that in order to compete, it would need to differentiate itself on (1) providing more accurate/relevant search results; (2) providing results at faster speeds; or (3) doing both.  Google changed search when it developed its complex algorithms that made results more accurate/relevant to users and established data centers all over the world to increase the speed with which we receive our search results.  Since their early days, timing was on Page and Brin’s side; they entered the internet search market when the barriers to entry were relatively low.  They seized their golden opportunity to set search standards for what users expect and how quickly we expect search results, which raised the barriers to entry/lessened the threat of new competitors.

          In addition to setting search standards, Google further revolutionized the internet search market by monetizing searches, and beating others to it.  Google did so with AdWords and AdSense.  In order to succeed in the market, you need people who are searching (buyers) and providing what is being searched (suppliers).  Based on search revenue, Google has nearly 65% share of the search market, followed by Yahoo at 16% and Microsoft at 15%.  Thus, suppliers and buyers have low bargaining power because Google has such a stronghold on the market.

          Its market position combined with its decision to be more than a search engine through its suite of services, including Gmail, GoogleDocs, and GoogleMaps, has lowered switching costs for users.  Again, they seized opportune timing to further differentiate itself from competitors.  These services arose from Google’s 20% time initiative, which recognizes the importance of (1) innovation which will give Google sustainable competitive advantages and (2) motivation for employees to work on projects/initiatives that drive them.  While the threat of substitution exists, it is less likely that users will switch to other search engines as search becomes finely integrated with complementary services.  As Google continues to give their engineers 20% time, we are likely to see improvements to the services we already use and new services that we won’t believe we’ve lived without.

            So, how are timing and luck ingredients to Google’s success?  Page and Brin masterfully used time to their advantage and beat others to optimizing and monetizing search results.  Additionally, they were lucky that the products and services they rolled out were successful.  While strategists may argue that Page, Brin, and Schmidt had a strong business strategy underlying their decisions, Levy provides numerous examples to suggest that luck played a considerable role in Google’s success.  For example, Google retained its business strategy/unwaivering belief that if Google had a superior product, people would use it.  It worked with search, but it flopped with mobile phones.  My takeaway: luck and timing are as critical to success as a strong and thoughtful business strategy.

          Overall, I appreciated how Levy showed Page and Brin’s naiveté and unharnessed vision for what Google can achieve (e.g., wanting to etch “Google” on the moon and self driving cars), which contrasted mature decisions such as pulling out of the Chinese market.  I also appreciated mentions of Google’s gaffes including holding off on Orkut.  One area I wish Levy would have explored is Google’s non-profit arm.  Given the number of times Page expressed his desire to change the world, I nearly raced to the end of the book to learn about what revolutionary things Google was doing with its non-profit.  Although Page and I have differing views on how to change the world, I appreciate how he’s changed the internet search world for me.

Here Comes Everybody Review

            Shirky’s Here Comes Everybody looks at how people form groups using online tools.  Throughout the book, Shirky argues that we do not need formal organizations to organize ourselves; rather, online tools have made it easy for ordinary people to organize groups and rise to collective action.  Although Shirky specifically mentions Wikipedia, Flickr, Twitter, and a number of other collaboration, file sharing, and communications/ social networking tools, Shirky places greater emphasis on how these tools have allowed us to change our perceptions and behaviors to form groups, rather than write ad nauseam about tool functionalities.  The latter, tool functionalities, will undoubtedly change as new competitors “up the game” for all current players.    

            Here Comes Everybody is rich with examples: how the low transaction cost of publishing information on the Web enabled Evan to publish a play-by-play account of Ivanka’s stolen Sidekick retrieval, how Meetup lowers the burden of coordination and allows Witches, Pagans, and Ex-Jehovah’s Witnesses to gather, and how Kate Hanni was able to use the American-Statesman’s comment page to communicate with other passengers and create a Passenger’s Bill of Rights.  In each example, Shirky states that there was “a plausible promise, an effective tool, and an acceptable bargain with the users.”

            Shirky uses the terms, “promise,” “tool,” and “bargain” to explain (1) why someone would want to join a group, (2) how one can manage/overcome the difficulties of coordination, and (3) what can you expect and what will be expected of you.  He argues that the interaction of these terms cannot be used as a recipe for successful social tool usage because of the dynamic relationship between any two of these elements.  Shirky then contends, “a successful bargain among users must be a good fit for both the promise and the tools used.  Taken together, these three characteristics are useful for understanding both successes and failures of groups relying on social tools.”  Of the three elements, Shirky states that the promise is the most critical element because it is the hook that engages users in today’s busy world.

            I agree that promise is the most important element.  Without an engaged base who finds value from the group, it is less likely that you can overcome the difficulties of coordination and achieve a bargain to take collective action.  I experienced this firsthand when my employer required new hires to join its social networking site, DStreet, a tool to foster connections between employees and to help with business pursuit efforts.  While well-intentioned, DStreet became yet another thing that employees had to maintain and failure to do so meant that you would get an update reminder email from HR.  Unfortunately, most preferred to use LinkedIn or Facebook because they already had profiles and had connections to those outside of the company.  Furthermore, as an internal firm tool, DStreet did not have any unique features that would entice users to maintain an active profile.  Thus, it yielded very little value to users.  DStreet remains to be an ineffective tool; however, its ineffectiveness is grounded in the fact that it offered a weak promise to users and most did not find its bargain worthwhile.

            Although I found the book engaging, I felt that Shirky glossed over the link between group formation and collective action.  Unlike formal organizations, I believe that groups formed online have a greater set of challenges to overcome including, (1) group legitimacy: because it is so easy to form groups, what differentiates organizations and what would incentivize smaller groups to give up part of their identities to pursue collective action? (2) weak ties: how can you entice large groups that are only connected online (and not by a national organization/local chapter model used by the NAACP) to take action? (3) engage non-users: how do you engage members of the population who are not online or non-users for the communication tool you use (i.e., organizing my 10-year HS reunion through Facebook – 371/800+ class members contacted)?  I believe that the key to group formation and collective action in today’s world requires integrating traditional strategies with online networking tools and I believe that Shirky could have done a stronger job to express how today’s tools are enhancing traditional organizing strategies and behaviors.

The Future of Print Journalism

            In Professor Williams’ class, Financial Tools for Public Managers, Williams extracts lessons on transformational leadership that author Jim Collins expressed in his book, Good to Great.  While exploring Collins’ website, I came across a piece Collins penned for Inc. called “Building Companies to Last” in which Collins shared his take on the “secret sauce” that enabled visionary companies like Hewlett Packard, 3M, and Wal-Mart to stay relevant during constantly evolving times.  His secret sauce consists of two main ingredients: (1) “ability to change within the context of their core ideologies while also adhering to a few timeless fundamentals” and (2) “stimulate progress through [Big Hairy Audacious Goals], experimentation, and continuous improvement.”  

             I couldn’t help but reflect upon Collins’ words while reading pieces on the declining print journalism news industry.  Alterman’s “Out of Print,” Winer’s “Sources go Direct,” Shirky’s “Newspapers and Thinking the Unthinkable,” Johnson’s “Old Growth Media and the Future of News,” Jarvis’ “The Last Presses,” and Carr’s “The Great Unbundling: Newspapers & The Net” pieces touch upon the following themes:

  • “Newspaper companies are losing advertisers, readers, market value, and in some cases, their sense of mission at a pace that would have been imaginable just four years ago” (Alterman)
  • “News has now become a commodity, thanks to the Internet, so we must differentiate ourselves in other ways.” (Jarvis)
  • “There is going to be more content, not less; more information, more analysis, more precision, a wider range of niches covered.” (Johnson)

            If I were to apply Collins’ secret sauce to the print media industry, I would question a news organization’s ability to (1) implement change and stay relevant in today’s fast-paced and internet-fueled news; and (2) integrate experimentation and innovation as readership and profits decline.  Fortunately, further research revealed that news organizations have already altered their business strategies and are beginning to focus on innovation.

            In the early 2000s, the Washington Post even re-evaluated its portfolio and rebranded itself as an “education and media company” once it acquired Quest Education (Kaplan) (see “The Trials of Kaplan Higher Ed and the education of the Washington Post Co.“).  More recently, The New York Times, the Washington Post, The Guardian, and Focus magazine have altered their business strategies to focus on building relationships and communities with its readers via individual blogs, video reports, and “chat” opportunities.  Such efforts have enabled online audiences to grow; in fact, Johnson estimated that 75 million people read news online. 

            Carr, Jarvis, and others have remarked that news organizations have been struggling with how to monetize online readership.  Although Winer suggested that news organizations adopt membership models similar to NPR’s membership model, most have focused their revenue generation efforts on online advertising.  In fact, Pew’s 2011 annual State of the Media report stated that online advertising outpaced newspaper advertising for the first time.

            Media mogul Rupert Murdoch believes that new inventions will come along every month and in order to stay ahead of the curve, “one has to stay awake and race to stay up with it.”  To do so, news organizations have to dedicate themselves to experimentation, innovation, and continuous improvement.  The New York Times’ Digital Initiatives is one example of how a news organization was able to integrate its print and digital sales staff which enabled them to develop more targeted and creative solutions for our advertisers. Additionally, The New York Times created an R&D group, which has helped drive innovation across the Company by looking at trends in technology and consumer behavior and resulted in new products and services and strategic alliances.

            In Robin Miller’s “A Recipe for Newspaper Survival in the Internet Age” and Dan Conover’s “2020 Vision: What’s Next for News,” Miller and Conover hypothesized the future of journalism and shared practical recommendations for ways new organizations can sustain their businesses in tomorrow’s media landscape.  Both also emphasized the ingredients – adapting to change and implementing innovation and a culture of continuous improvement – that made up Collins’ secret sauce; I guess it’s not a secret anymore, but the proof will be in pudding.