October 13, 2010

Will Robots Drive Google to Distraction?

Quite an interesting debate raging over the past few days on whether it's appropriate for Google to be investing its time, resources, and money in robot-driven automobiles when such an initiative is seemingly so far removed from the search engines, web applications, and operating systems that comprise its primary business.

It's a distraction from the core strategy, one argument goes. It doesn't serve shareholders. Google should spin it off into a start-up.

The question isn't whether companies should innovate but rather whether there are limits on how far mature companiesshould attempt to stretch beyond their cores.

Fair points indeed. We all know what can happen when companies lose their focus and spread themselves too thin. The results can be catastrophic for shareholders, employees, and customers.

The arguments against attempting breakthrough innovation within core businesses are well-worn. The spinoff allows for a more pure and unfettered form of innovation, unconstrained by the mores of the mature business, free from the battles for resources and inflexible infrastructures. And within the conventional wisdom there's certainly plenty of ammunition to support the argument that Google should stick closer to its knitting — especially given the potentially explosive growth with its Android and Chrome operating systems.

But I think there are more fundamental questions here:

  • What do you stand to lose by spinning off stretch innovation?
  • What's the right way define what a company is or what it does?
  • How flexible should such a definition be? And just how strongly should companies factor near-term shareholder value into the equation?

To use the most convenient example, if Apple had permanently defined itself as a computer company or even, more broadly, as a consumer technology company, would it ever have invested so deeply and broadly in the infrastructure that transformed Apple into the media and publishing giant it has become? Was such a bold move made with short-term shareholder returns in mind or with a eye toward something much more important — transformation and long-term growth?

Which brings us back to Google. Does management believe that robot-controlled cars — and their underlying technologies — represent an opportunity to fundamentally transform the company (let alone the world)? If the signs point to no — that it's a discrete opportunity — the company should probably spin it off and see what happens. But if the potential for profound impact on Google's core is real, leadership might be wise to keep it close, manage it carefully, and let its full organizational value flourish, even at the cost of internal challenges and near-term shareholder value.

So, Google, who are you and where are you going? It's as good a time as any to ask.

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