The wheel of fortune is changing for Google. Long years of experience have taught me when all the lemmings are running in one direction toward the proverbial cliff, it’s a promising time to lean in the other direction. We seem to have reached that moment with Google. There’s no question but that Google has transformed the tech industry with its search engine prowess and its Google Earth technology that allows you to peek inside the Kremlin.
But the hype reached a turning point with predictions that Google was going to take over the media and advertising industries and, indeed, threaten any company that depends on flows of information, which meant basically everybody. All of which justified its stock price of nearly $500 at one point. But ladies and gentlemen, we’ve all seen this show before.
Innovation and Insight – The Google bubble?
Here are the things that can go wrong, and some of them already are:
–Managing scale and complexity. We’ve seen lots of companies burst onto the scene with a bright idea, but then as they grow in terms of the complexity of their product offerings and range of geographies, not to mention the overall size of their sales and employee bases, their managements have to shift gears—or stumble. It’s tough work. Certainly Google has a solid pro as CEO with Eric Schmidt, but it’s not yet clear whether he can avoid this growth trap.
- Hubris and the assumption that technology can solve every problem. This is a classic mistake that we saw in the first Internet bubble—the blind assumption that the “new world” is going to completely replace the “old world.” But the reality is, no amount of technology can completely replace the web of relationships in an industry such as advertising. Doesn’t anyone remember the hype about B2B software and the “frictionless marketplace?”
- The Microsoft effect. At a certain point, the industry could start coalescing in opposition to Google if it looms too large. We saw what happened when customers came to believe that Microsoft was too powerful. No one likes to be dominated. The new AT&T and Verizon are not exactly going to run away from the fight. Microsoft and Yahoo are also just beginning to respond in earnest.
- The media wheel is already turning. Until very recently, tech journalists were hyperventilating about every utterance and pronouncement from Mountain View. But Google has now had its first earnings disappointment, failing to achieve what the Street was expecting. It also has suffered an unfortunate PR debacle by cooperating with the Chinese Communist government to repress freedom of speech. A third whiff of negativity is something called “click fraud,” the practice by which some shady operators hire rooms full of Pakistanis and others to sit all day fraudulently clicking on websites. It’s only a question of time before we see the headline, “What went wrong at Google?”
Don’t get me wrong. I think Google is an incredibly innovative company. It’s just time for a little reality check about how far, and how fast, it can go.
Find out more about us. We invite you to learn more about us by exploring the links above. Email us for more infomation.