Comments on: Microsoft, Google, the Innovator’s Dilemma and the Future of Search & Web Ads http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/ Keeping politicians' hands off the Net & everything else related to technology Tue, 14 Feb 2012 19:26:00 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: The Progress & Freedom Foundation Blog http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-66757 The Progress & Freedom Foundation Blog Fri, 19 Feb 2010 18:26:08 +0000 http://techliberation.com/?p=15492#comment-66757 <p><strong>Antitrust Regulators Approve Microsoft/Yahoo! Search Partnership--Finally!...</strong></p> <p>Last July, Adam Thierer and I argued in a Forbes.com piece that the Microsoft/Yahoo! search partnership should be cause for "celebration among as a good thing for consumers. By providing a strong competitor with a combined 28% market share, the......</p> Antitrust Regulators Approve Microsoft/Yahoo! Search Partnership–Finally!…

Last July, Adam Thierer and I argued in a Forbes.com piece that the Microsoft/Yahoo! search partnership should be cause for “celebration among as a good thing for consumers. By providing a strong competitor with a combined 28% market share, the……

]]> By: Social Advertising Is Just Around the Corner: Why A Facebook Ad Network Would Benefit Users — Technology Liberation Front http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-62628 Social Advertising Is Just Around the Corner: Why A Facebook Ad Network Would Benefit Users — Technology Liberation Front Thu, 01 Oct 2009 21:59:27 +0000 http://techliberation.com/?p=15492#comment-62628 <p>[...] competitor to Google. The ability to offer what Google can’t is precisely the sort of “disruptive innovation” that could up-end Google’s current dominance of online advertising. Those who fear [...]</p> [...] competitor to Google. The ability to offer what Google can’t is precisely the sort of “disruptive innovation” that could up-end Google’s current dominance of online advertising. Those who fear [...]

]]> By: The Progress & Freedom Foundation Blog http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-61397 The Progress & Freedom Foundation Blog Fri, 11 Sep 2009 16:17:33 +0000 http://techliberation.com/?p=15492#comment-61397 <p><strong>A Bing Skunkworks: a Solution to Microsoft's Innovator's Dilemma?...</strong></p> <p>I've noted that Google and Microsoft both face what Clayton Christensen famously called the "Innovator's Dilemma" in trying to handle disruptive innovation in search technology. But noting Microsoft's innovations in bringing social functionality t...</p> A Bing Skunkworks: a Solution to Microsoft’s Innovator’s Dilemma?…

I’ve noted that Google and Microsoft both face what Clayton Christensen famously called the “Innovator’s Dilemma” in trying to handle disruptive innovation in search technology. But noting Microsoft’s innovations in bringing social functionality t…

]]> By: The Progress & Freedom Foundation Blog http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-61395 The Progress & Freedom Foundation Blog Fri, 11 Sep 2009 16:15:17 +0000 http://techliberation.com/?p=15492#comment-61395 <p><strong>Microsoft's Bing Leads in Bringing Social Functionality to Search...</strong></p> <p>Microsoft is making a major push to integrate social networking tools like Facebook and Twitter into its Bing search engine: users will soon be able to "Ping" search results they like to their friends directly from Bing. Back in January,......</p> Microsoft’s Bing Leads in Bringing Social Functionality to Search…

Microsoft is making a major push to integrate social networking tools like Facebook and Twitter into its Bing search engine: users will soon be able to “Ping” search results they like to their friends directly from Bing. Back in January,……

]]> By: A Bing Skunkworks: a Solution to Microsoft’s Innovator’s Dilemma? — Technology Liberation Front http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-61239 A Bing Skunkworks: a Solution to Microsoft’s Innovator’s Dilemma? — Technology Liberation Front Sat, 05 Sep 2009 15:42:11 +0000 http://techliberation.com/?p=15492#comment-61239 <p>[...] noted that Google and Microsoft both face what Clayton Christensen famously called [...]</p> [...] noted that Google and Microsoft both face what Clayton Christensen famously called [...]

]]> By: Microsoft’s Bing Leads in Bringing Social Functionality to Search — Technology Liberation Front http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-61188 Microsoft’s Bing Leads in Bringing Social Functionality to Search — Technology Liberation Front Fri, 04 Sep 2009 00:27:52 +0000 http://techliberation.com/?p=15492#comment-61188 <p>[...] search results they like to their friends directly from Bing. Back in January, in “Google, the Innovator’s Dilemma and the Future of Search & Web Ads,” I talked about the implications of this history of search from the WSJ): Microsoft missed [...]</p> [...] search results they like to their friends directly from Bing. Back in January, in “Google, the Innovator’s Dilemma and the Future of Search & Web Ads,” I talked about the implications of this history of search from the WSJ): Microsoft missed [...]

]]> By: The Search Wars: With Jingles Like This, Microsoft’s Bing Can’t Lose! http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-60389 The Search Wars: With Jingles Like This, Microsoft’s Bing Can’t Lose! Sat, 08 Aug 2009 01:06:07 +0000 http://techliberation.com/?p=15492#comment-60389 <p>[...] written a lot lately about Microsoft’s efforts to reinvent itself, first rebranding its Live search engine as the Bing, and then partnering with Yahoo! to make Bing [...]</p> [...] written a lot lately about Microsoft’s efforts to reinvent itself, first rebranding its Live search engine as the Bing, and then partnering with Yahoo! to make Bing [...]

]]> By: A Bargain Deal on Yahoo! for Microsoft & the Regime Uncertainty of Antitrust | The Technology Liberation Front http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-60179 A Bargain Deal on Yahoo! for Microsoft & the Regime Uncertainty of Antitrust | The Technology Liberation Front Thu, 30 Jul 2009 02:06:11 +0000 http://techliberation.com/?p=15492#comment-60179 <p>[...] It would seem that both Yahoo! and Microsoft under-estimated the likelihood that antitrust regulators would block a Yahoo!/Google deal a year ago: Microsoft probably wouldn’t have offered as much as it did to acquire Yahoo!’s search business ($31/share) and Yahoo! (currently $15.14/share) certainly wouldn’t have held out for a better deal from Google. While the end result ended up being a Yahoo!/Microsoft deal anyway, the delay of over a year in reaching a deal is itself a significant cost of what economists would call the “regime uncertainty” created antitrust: Without clear rules, it’s difficult for economic actors to predict the decisions by regulators. A delay of a year could well prove to make a big difference in the ability of the two companies to mount a successful response to Google in search and advertising—just as Microsoft’s 18 month delay back in 2003-2004 in developing a search ad auction system to respond to Google’s AdWords system (which now produces 2/3 of its revenue) probably did much to thwart Microsoft’s initial efforts to compete in search. [...]</p> [...] It would seem that both Yahoo! and Microsoft under-estimated the likelihood that antitrust regulators would block a Yahoo!/Google deal a year ago: Microsoft probably wouldn’t have offered as much as it did to acquire Yahoo!’s search business ($31/share) and Yahoo! (currently $15.14/share) certainly wouldn’t have held out for a better deal from Google. While the end result ended up being a Yahoo!/Microsoft deal anyway, the delay of over a year in reaching a deal is itself a significant cost of what economists would call the “regime uncertainty” created antitrust: Without clear rules, it’s difficult for economic actors to predict the decisions by regulators. A delay of a year could well prove to make a big difference in the ability of the two companies to mount a successful response to Google in search and advertising—just as Microsoft’s 18 month delay back in 2003-2004 in developing a search ad auction system to respond to Google’s AdWords system (which now produces 2/3 of its revenue) probably did much to thwart Microsoft’s initial efforts to compete in search. [...]

]]> By: quanticle http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-65434 quanticle Mon, 19 Jan 2009 10:21:30 +0000 http://techliberation.com/?p=15492#comment-65434 <blockquote>But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to "throw everything against the wall and see what sticks." </blockquote> <p><br></p> <p>Arguably, given the inherent unpredictability of disruptive innovations, that's the only viable strategy. If you can't predict the future, you have to make a commitment to as many possible future technologies as you can fund and hope that one of them goes big and funds the next phase of your corporation's development. However, that requires a lot of things - a group of shareholders tolerant of long term investment and failed products; employees willing to experiment with new technologies and new ways of doing business; and management that is willing to let employees "goof off", in the hopes that the business can capitalize on whatever comes out of that free time.</p> <p><br></p> <p>Even then, though, success isn't guaranteed. Google seems to have come the closest, but even it is having trouble making money off its non-search related business. I recently read about the trouble it had monetizing YouTube, and wondered whether any of Google's other technologies (GMail, Google Reader, Google News, etc.) were cash flow positive for the company.</p> But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to “throw everything against the wall and see what sticks.”


Arguably, given the inherent unpredictability of disruptive innovations, that's the only viable strategy. If you can't predict the future, you have to make a commitment to as many possible future technologies as you can fund and hope that one of them goes big and funds the next phase of your corporation's development. However, that requires a lot of things – a group of shareholders tolerant of long term investment and failed products; employees willing to experiment with new technologies and new ways of doing business; and management that is willing to let employees “goof off”, in the hopes that the business can capitalize on whatever comes out of that free time.


Even then, though, success isn't guaranteed. Google seems to have come the closest, but even it is having trouble making money off its non-search related business. I recently read about the trouble it had monetizing YouTube, and wondered whether any of Google's other technologies (GMail, Google Reader, Google News, etc.) were cash flow positive for the company.

]]> By: quanticle http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-61733 quanticle Mon, 19 Jan 2009 06:21:30 +0000 http://techliberation.com/?p=15492#comment-61733 <blockquote>But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to "throw everything against the wall and see what sticks." </blockquote> <p><br></p> <p>Arguably, given the inherent unpredictability of disruptive innovations, that's the only viable strategy. If you can't predict the future, you have to make a commitment to as many possible future technologies as you can fund and hope that one of them goes big and funds the next phase of your corporation's development. However, that requires a lot of things - a group of shareholders tolerant of long term investment and failed products; employees willing to experiment with new technologies and new ways of doing business; and management that is willing to let employees "goof off", in the hopes that the business can capitalize on whatever comes out of that free time.</p> <p><br></p> <p>Even then, though, success isn't guaranteed. Google seems to have come the closest, but even it is having trouble making money off its non-search related business. I recently read about the trouble it had monetizing YouTube, and wondered whether any of Google's other technologies (GMail, Google Reader, Google News, etc.) were cash flow positive for the company.</p> But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to “throw everything against the wall and see what sticks.”


Arguably, given the inherent unpredictability of disruptive innovations, that's the only viable strategy. If you can't predict the future, you have to make a commitment to as many possible future technologies as you can fund and hope that one of them goes big and funds the next phase of your corporation's development. However, that requires a lot of things – a group of shareholders tolerant of long term investment and failed products; employees willing to experiment with new technologies and new ways of doing business; and management that is willing to let employees “goof off”, in the hopes that the business can capitalize on whatever comes out of that free time.


Even then, though, success isn't guaranteed. Google seems to have come the closest, but even it is having trouble making money off its non-search related business. I recently read about the trouble it had monetizing YouTube, and wondered whether any of Google's other technologies (GMail, Google Reader, Google News, etc.) were cash flow positive for the company.

]]> By: quanticle http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-57527 quanticle Mon, 19 Jan 2009 05:21:30 +0000 http://techliberation.com/?p=15492#comment-57527 <blockquote>But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to "throw everything against the wall and see what sticks." </blockquote> <p><br></p> <p>Arguably, given the inherent unpredictability of disruptive innovations, that's the only viable strategy. If you can't predict the future, you have to make a commitment to as many possible future technologies as you can fund and hope that one of them goes big and funds the next phase of your corporation's development. However, that requires a lot of things - a group of shareholders tolerant of long term investment and failed products; employees willing to experiment with new technologies and new ways of doing business; and management that is willing to let employees "goof off", in the hopes that the business can capitalize on whatever comes out of that free time.</p> <p><br></p> <p>Even then, though, success isn't guaranteed. Google seems to have come the closest, but even it is having trouble making money off its non-search related business. I recently read about the trouble it had monetizing YouTube, and wondered whether any of Google's other technologies (GMail, Google Reader, Google News, etc.) were cash flow positive for the company.</p> But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to “throw everything against the wall and see what sticks.”


Arguably, given the inherent unpredictability of disruptive innovations, that's the only viable strategy. If you can't predict the future, you have to make a commitment to as many possible future technologies as you can fund and hope that one of them goes big and funds the next phase of your corporation's development. However, that requires a lot of things – a group of shareholders tolerant of long term investment and failed products; employees willing to experiment with new technologies and new ways of doing business; and management that is willing to let employees “goof off”, in the hopes that the business can capitalize on whatever comes out of that free time.


Even then, though, success isn't guaranteed. Google seems to have come the closest, but even it is having trouble making money off its non-search related business. I recently read about the trouble it had monetizing YouTube, and wondered whether any of Google's other technologies (GMail, Google Reader, Google News, etc.) were cash flow positive for the company.

]]> By: Prosolution http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-57526 Prosolution Mon, 19 Jan 2009 03:41:06 +0000 http://techliberation.com/?p=15492#comment-57526 <p>all the men must know about this</p> all the men must know about this

]]> By: Berin Szoka http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-57516 Berin Szoka Sun, 18 Jan 2009 16:38:52 +0000 http://techliberation.com/?p=15492#comment-57516 <p>It's been several years since I last read the book but as I recall, there are really three parts to the "Dilemma."<br><ol><br> <li>How do you identify potentially succesful disruptive innovations?</li><br> <li>How can a company know which of the many concepts it sees for disruptive innovation will actually succeed? It's easy to look back at Microsoft's failure to embrace paid search in the late 90s and laugh, but as you point out, we can do so only because of our ex post knowledge that paid search actually did take off. </li><br> <li>Even if some part of management decides to bet on a particular disruptive technology, how do you ensure that the company as a whole supports the development of that particular technology to fruition? How do you prevent those managers in the company with a vested interest in whichever existing technology would be "disrupted" by the new technology you're investing in from strangling the baby in its crib? </li><br></ol><br>Google's famous <a href="http://googleblog.blogspot.com/2006/05/googles-20-percent-time-in-action.html" rel="nofollow">program</a> of encouraging its engineers to spend 20% of their time on innovative pet projects is clearly intended to deal with these problems: Allow smart people to have fun playing with new ideas and see what comes out of their experimentation. But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to "throw everything against the wall and see what sticks." <br><br>Another response, of course, is to buy small start-ups—precisely what Microsoft now regrets <em>not</em> doing when it passed on the oppoturtunty to buy <a href="http://Overture/Goto.com" rel="nofollow">Overture/Goto.com</a> in 2003.<br><br>But as you rightly point out, the hardest problem in all of this is trying to look into a crystal ball and predict which technologies will take off. But that's what entrepreneurship is all about: investing in a world of uncertainty. If I had any easy answers, I'd be rich!</p> It's been several years since I last read the book but as I recall, there are really three parts to the “Dilemma.”
<ol>
<li>How do you identify potentially succesful disruptive innovations?</li>
<li>How can a company know which of the many concepts it sees for disruptive innovation will actually succeed? It's easy to look back at Microsoft's failure to embrace paid search in the late 90s and laugh, but as you point out, we can do so only because of our ex post knowledge that paid search actually did take off. </li>
<li>Even if some part of management decides to bet on a particular disruptive technology, how do you ensure that the company as a whole supports the development of that particular technology to fruition? How do you prevent those managers in the company with a vested interest in whichever existing technology would be “disrupted” by the new technology you're investing in from strangling the baby in its crib? </li>
</ol>
Google's famous program of encouraging its engineers to spend 20% of their time on innovative pet projects is clearly intended to deal with these problems: Allow smart people to have fun playing with new ideas and see what comes out of their experimentation. But even there, the problem you've identified still remains: How does management know which pet projects will be the next big thing far enough in advance that the company will be the market leader? Google's approach seems to be to “throw everything against the wall and see what sticks.”

Another response, of course, is to buy small start-ups—precisely what Microsoft now regrets not doing when it passed on the oppoturtunty to buy Overture/Goto.com in 2003.

But as you rightly point out, the hardest problem in all of this is trying to look into a crystal ball and predict which technologies will take off. But that's what entrepreneurship is all about: investing in a world of uncertainty. If I had any easy answers, I'd be rich!

]]> By: quanticle http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-57512 quanticle Sun, 18 Jan 2009 02:04:44 +0000 http://techliberation.com/?p=15492#comment-57512 <p>The problem I had when reading "Innovator's Dilemma" was that all the analysis in the book was ex-post-facto. The author doesn't state how any of the firms could have told that the new technology was going to revolutionize their industry and put them out of business <i>at the time the technology came out</i>.</p> The problem I had when reading “Innovator's Dilemma” was that all the analysis in the book was ex-post-facto. The author doesn't state how any of the firms could have told that the new technology was going to revolutionize their industry and put them out of business at the time the technology came out.

]]> By: Don Marti http://techliberation.com/2009/01/17/microsoft-google-the-innovators-dilemma-and-the-future-of-search-web-ads/comment-page-1/#comment-57511 Don Marti Sun, 18 Jan 2009 00:20:20 +0000 http://techliberation.com/?p=15492#comment-57511 <p>Remember the car company Saturn, GM's attempt to do Toyota-like quality plus a no-BS buying experience? The first-generation car in 1990 was almost as good as a late-1980s Toyota Corolla, but then corporate HQ failed to fund R&D for a second version, so instead of catching up, the Corolla pulled ahead. When MSFT execs talk about search, they sound like GM execs talking about Saturn.</p> Remember the car company Saturn, GM's attempt to do Toyota-like quality plus a no-BS buying experience? The first-generation car in 1990 was almost as good as a late-1980s Toyota Corolla, but then corporate HQ failed to fund R&D for a second version, so instead of catching up, the Corolla pulled ahead. When MSFT execs talk about search, they sound like GM execs talking about Saturn.

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