This is a short case analysis I wrote for an MBA information systems class at McGill MBA Japan. Hope you enjoy it.

1. Case
Case:
Google
MBA
Japan-­‐
INSY
690
(Case
Analysis
Assignment)
Student:
Lance
Shields

2. 1. What were the key factors behind Google’s early success?
• Perfecting an innovative search engine was clearly the most important factor for
Google founders’ early success. Turning the keyword spam problem on the web into an
opportunity by solving it while grad students at Stanford led to Sergey Brin’s and Larry
Page’s now famous PageRank algorithm. Instead of counting keywords like old search
engines, the founders created reliable searches through the number of websites that link
to a page or “votes” to weight search result relevance.
• Google focusing on the user was another trait that attracted people initially as the no-
nonsense simple white search page and distinctive colorful logo with no ads or editorial
content on the page lead to easy and fast searches that Yahoo couldn’t imitate. This is
described in their first truism “Focus on the user and all else will follow” where they
talk about simplicity of interface and speed of page loads.
• Google delivered search results people really wanted lead to users trusting Google as
they promise to not sell placement in search results to advertisers and instead rely on the
“true” natural search to deliver users the content they really are looking for. At the same
time, their sponsored links were relevant to the searched keywords so that users
generally found them useful or at least not intrusive like usual banner ads. The
sponsored links being just simple text also meant that they were lightweight enough to
not slow down page loads and allowed a better search experience.
• Effectively monetizing paid search was what made Google economically successful as
a business. They did this by first adopting a “cost per impression” in 1999, that made
money regardless of whether people clicked on a an ad. Then in 2002, they then altered

3. the “cost per click” paid listing model that was popularized by Overture by doing a ratio
of actual CPC and expected CTR (click through rate) to ensure users saw ads that were
closer to what they were actually searching for. By giving users what they wanted, it
maximized their revenue by avoiding the problem of high CRC but low CTR.
2. Do you expect the search business to become more concentrated (i.e., dominated by
fewer firms)? Is search a winner-take-all business? Why?
My initial impulse is to answer “yes” the search business will continue to become more
concentrated as Google has clearly dominated this industry and Yahoo can hope to retain
market share by offering editorial content that some users may be “tricked” into viewing.
But as modern web surfers have become more sophisticated and empowered to seek out
content in less orthodox sites, Google’s democratic style of search combined with its
enormous scale of indexed web pages leads to results more fitting to users, especially
younger ones. This very scale of indexing presents a head start for Google that makes market
entry near impossible.
At the same time, innovative search engines continue to come out as seen by Cuil.com1 that
went live in July 2008 and claimed to have the largest index in the world at 120 billion sites.
Cuil’s differentiation is it’s concept of not relying on just “superficial popularity metrics” but
Cuil searches for and ranks pages based on their content and relevance. At the same time,
they provide “helpful choices and suggestions until you find the page you want” by showing
relatively long entries along with thumbnail pictures for many results. Cuil also claims to
focus on analyzing web content rather than users to give better results based on the
1
http://www.cuil.com/ and http://www.cuil.com/info/

4. coherence and quality of the content. Unfortunately for Cuil, the wide coverage of the search
engine was dampened by technical issues of reports of improper results appearing. Most
likely the innovative interface they invented was too unique and possibly to challenging for
users who were used to the much simpler Google results pages.
And then there’s Bing, Microsoft’s recently rereleased engine that is now number
three in query volume at 3.16% (Google 85%, Yahoo 6%). What’s probably most significant
about Bing recently is the search deal with Yahoo in which Microsoft has taken the
responsibility of powering Yahoo search with Bing search, eventually to feature “Powered
by Bing” in the future and will be a lift for Bing and something it was missing the chance to
do with Google dominating. For Yahoo this means it can focus on its “strengths as a
producer of Web media sites, from finance to sports, as a marketer and a leader in on-line
display advertising that accompanies published Web sites”.2
With Google now taking 85% market share, it certainly seems that it’s a winner-take-
all industry. With Google’s large lead and gargantuan resources to throw at any new
innovation it decides to take on, it would take more than a good idea to beat this giant. What
would be needed is another disruptive technology that connects future users in ways that
Google hasn’t addressed.
3. In addition to enhancing its core search businesses, should Google also branch out
into new arenas? Which of the following would you recommend: 1) building a full-
fledged portal like Yahoo!’s; 2) targeting Microsoft’s desktop software hegemony; 3)
becoming an e- commerce intermediary like eBay?
2
http://topics.nytimes.com/top/news/business/companies/yahoo_inc/yahoo-­‐microsoft-­‐deal/index.html

5. For Google, they have been experimenting with a variety of online software that drives
travel to their site and provides opportunities for in contextual Sponored Links related to the
content the user is engaged in creating such as in Gmail and Google Groups. By providing
ad funded web services, Google could solve one of the fundamental contradictions of its
business model, to generate revenue users have to click a sponsored link in a search a search
result and leave Google, in other words they want people to leave as possible by dishing up
the most relevant ads as possible to the user’s search. But what about the rest of the time
people spend on their computers when they’re not searching? By moving people online to
use Google’s communication and productivity tools, they are creating numerous new
opportunities for ad revenue opportunities. By scanning the content of the users’ mails,
messages, documents and to-do’s, Google gains insights about what sort of services or
products that their advertisers offer which the user might be interested in.
At the same time, this solution to increasing the scope of Google’s business, opens
another can of worms in that it does not appear appear to be consistent to the company’s
founding mission, “to organize the world’s information and make it universally accessible
and useful”. In some ways, by channeling people into their own services rather than making
other sites more visible, Google could be reducing the democratic nature of the web,
something akin to what Yahoo has done by creating an editorial content destination in order
to retain users rather than send them out to possibly even more relevant and useful websites
or blogs. As I am an avid user of many of Google services such as Gmail, Calendar, Custom
Homepage, Google Docs, Sites, Wave and Picassa, I can honestly say I have been generally
pleased by these additions and the overall integration to make me more productive and bring
me information wherever I am. At the same time, I pay very little attention to the Sponsored

6. Links in these services, which tells me that the contextual links in Google apps have a much
lower CTR compared to search results. Google will have to think further about how to both
maximize ad revenue and provide useful experiences that change the way people use
computers and mobiles. I also think that as Google gets mature, it needs to be careful about
sacrificing its unique idealism for continuing to grow by dominating the web and destroying
healthy competition which leads to innovation. By replacing MS Office, an outmoded local
software model, they help to usher in a new ubiquitous computing era. At the same time,
they are a business and are competitive and have the potential to squash other new
innovations before they ever come to light.
4. Do you view Google’s distinctive governance structure, corporate culture, and
organizational processes as strengths or potential limitations? Why?
I would say that in general, for the kind of innovations and technology that Google produces,
their governance, culture and processes are perfectly suited for generating one great idea
after another. The three top executives have a keen instinct for where to take the company
and I agree with them when they say hostile takeovers would only put their long-term vision
in jeopardy. The media model may very well be a good one to compare them to, as they are
both are reliant on creative vision and talent. The creative corporate culture is superb for
attracting bright minds and Googleplex is a perfect laboratory/playground for creating the
Google magic. The organizational process of allowing all employees to use 20% of the work
time combined with the small team work style appears to be a good formula for generating
rough and dirty prototypes that if found of value can then be developed more fully from
alpha to beta. The only limitations I can see is the possibility of ego getting in the way of

7. doing great work and the size of the company eventually turning employees and customers
off of the company. This could very well be a branding challenge for Google in the near
future of how to deal with growing into a big corporation.
5. My Question: What will Google be like in the coming 5 years? What challenges will
it face?
The answer to the first question is that in many ways Google cannot indeed avoid becoming
like Microsoft. New Yorker media columnist Ken Auletta, author of “Googled: The End of
the World as We Know”, argues that the biggest challenges for Google will be internal ones.
He says that with size and success comes hubris, as Google unlike Apple has not yet met any
major failures. 3 Losing touch with reality and being unfocused on various projects, from
Android to bringing wifi to San Francisco. At the same time, unlike Microsoft, Google was
founded on very non-corporate principles such as democracy on the web and “making
money without doing evil”. This could help sustain an innovative culture into the future.
However, already many of Google’s smartest people have left the company such as
VP of online sales and operations Sheryl Sandberg having moved on to become the COO of
Facebook. There are also reports that Brin and Page themselves are getting older and
spending more time on their hobbies and new families than they used to. The true
businessman of the three, Eric Schmidt could end up taking more of the lead in the future,
shaping the company more like a typical company and possibly more like a Microsoft.
3
http://www.telegraph.co.uk/technology/google/6459437/Googles-Eric-Schmidt-sets-out-the-search-engines-future.html

8. Externally, Google by becoming a Microsoft has “woken up the bears”, attracting negative
attention and competition from everyone from Microsoft and AOL to U.S. and EU
governments, causing organizations to band together to go up against the giant.
I believe a big part of the next 5 years will be the mobile web and bringing new levels
of information and search. The iPhone and the App Store will certainly be a continuing
threat to Android and its open standard. Open innovation will become more a marketing spin
as Google positions itself as the “open giant” and Apple continues staying proprietary,
however contradictory things are with Apple’s open App Store and Google’s closed search
strategy.
Chinese search, the overflow of Chinese language websites and Chinese government policy
will continue be a challenge as the company attempts global control of the search market.
Like the locally flavored Yahoo Japan’s dominance as it suits local needs, Google may very
well not be able to suit the Chinese surfer’s unique cultural needs and Baidu could very well
beat Google in its home market.
In the end, the question is whether Google can continue staying focused on the end
user and produce new and disruptive innovation to shape the future of search and the web as
a whole. While conspiracy theories grow day by day, I would say that Google shows no true
sign of stopping its endless stream of new ideas for the market. I myself will continue being
a loyal user of their search and online software. However, Apple has my mobile dollar and
as I increasingly surf on the mobile, my attention could very be distracted. Google’s future
looks bright but is in no way a sure thing.