By Azra Brankovic, IESE Research Associate
In What Would Google Do? Jeff Jarvis says his book is not about Google. It is about you, that is, it is about applying the principles in the book to yourself or to your business (which might be one and the same, as in the case of bloggers, say). One continues reading with the assumption that the book will still be about Google, but it’s not.
Jarvis’s book is about going digital. Nicholas Negroponte’s 1996 book Being Digital offered a glimpse of a future digital age and drew a contrast between “atoms” and “bits,” or physical versus digital goods. Jarvis sees Google as emblematic of the digital age and explores “how everyone and everything must evolve in the Google era,” which here means that all manner of businesses, from book sellers to wine shops to insurance companies, should abandon the “atom” and embrace the “bit.” Jarvis is a media critic and he expresses particular urgency about that industry’s needing to shrug off the chains of the material old and embrace the promise of the digital new.
Jarvis argues that if anyone has figured out how to survive and prosper in the Internet age, Google has. Accordingly, he sets out to “reverse-engineer Google,” in other words to discover the principles by which the company operates. (He does not talk to the company directly during his research for the book, but rather looks at what it says and does.) Google operates according to “new rules of a new age,” Jarvis says, and two of these rules capture the gist of the book. One is “The most successful enterprises today are networks—which extract as little value as possible so they can grow as big as possible—and the platforms on which those networks are built” and the other is “Owning pipelines, people, products, or even intellectual property is no longer the key to success. Openness is.” These rules reflect the changes brought by the Internet’s opening up of information, lowering costs, and increasing communication, and a resulting shift from thinking in terms of mass economics to network economics and from an economics of scarcity to an economics of abundance.
Jarvis starts the book by talking about how the Internet has unleashed the power of the “little guy.” An angry customer can now raise a stink on a blog that can blow up in a company’s face; at the same time, if the company listens to and even encourages his voice, the little guy can become its ally and promoter. While this conversation between customers and companies is already taking place, it is still nascent and deserves attention. As Jarvis puts it:
Now the challenge—and opportunity—is to open the door to many Jims. The complementary challenge is to reorganize and reorient every division of the company—design, production, marketing, sales, customer support—around this new relationship with the people you used to call consumers but now should transform into partners.
The democratization brought by the Internet manifests itself also in the increasing elimination of middlemen (such as car dealers and real estate agents) and monopolies (such as cable companies and broadcasters) who stop being “in the way” and taking their cut, as people can do more on their own now that information is more easily available. As more people use information together, a network effect creates its own value. Jarvis gives the example of health benefiting as those affected by a common condition form online communities to discuss their experiences and trade tips. He would be impressed, he says, if the doctor treating him had written about the condition online, and doubly impressed if he saw other doctors linking to her. “The changes,” Jarvis says, “all relate to information: opening it up, sharing it, organizing it, analyzing it, bringing the network effect to the industry.”
Democratization also unleashes the creative power of people and “takes creation out of the proprietary hands of the supposed creative class,” who are now “not just creators but inspiration for others—the flint of creativity.” Only the playing field is flat, though, says Jarvis. “One must rise on worth—as defined by the public rather than the priests—and the reward is attention. That is our culture of links and search.”
Jarvis is talking about a de-institutionalization taking place, where aspects of our lives are not determined by the government or corporations handing down services or products but where decentralization and self-organization are on the rise. “Not just DIY,” he says, meaning do-it-yourself, “but DIO (Do It Ourselves). That is the big theme for everything now.” Somewhere between the corporation and do-it-yourself lies the network, which is what matters now. To tack Google onto it, in the spirit of WWGD, Google is a platform that enables such a network.
Media and Advertising
The Internet has also changed things so that companies which cling to old business models based on owning physical goods and selling to a mass market rather than giving away information and monetizing attention in a mass-of-niches market risk ruin at worst and missed opportunities at best, according to Jarvis. Media and advertising are two industries that have been particularly hit by what Google does, and their resistance to seeing how “Google and the internet have created more models for making money through side doors” has not helped. To illustrate the difference between the old and the new way of thinking, Jarvis contrasts Yahoo with Google: “Yahoo is the last old-media company. Google is the first post-media company.” Yahoo is a portal that seeks to bring people to itself and keep them there as long as possible, while Google is a network and a platform that “thinks in distributed ways”:
Google sees its home page as the way to get you to where you want to go. This is where Google wants you to be: wherever you are. Google distributes itself. It puts its ads on millions of web pages it does not own, earning billions of dollars for those sites and for itself. Others distribute bits of Google and build upon it…An extension of this is to be a network in a way that benefits both you and whoever is building on your network; like those who perform their searches on Google and Google who analyzes their searches, the activity benefits both parties.
The mistake media companies make is in continuing to think in terms of scarcity and control rather than in terms of abundance and openness, which are the currency of the digital age. “The internet kills scarcity and creates opportunities in abundance,” Jarvis says. “If your business is built on scarcity—and most are—you need to ask how you, too, can manage and exploit abundance.” Instead of objecting to being aggregated he believes papers should beg to be aggregated so more readers will discover their content. “You want to be distributed, then aggregated, and then distributed again. You want to be found.”
Jarvis sees advertisers as similarly dragging in their response to the changes brought about by the Internet and digital media and as overly oriented to the idea of the mass market: “Advertisers, addicted to one-stop shopping, still spend huge budgets on TV that are way out of proportion to the time the audience spends there versus the time we now spend on the internet.” He outlines how Google figured out how to navigate the universe of niches and profit from it with a new way for advertisers to reach highly targeted audiences, and also introduced other disruptions such as not charging for eyeballs but for clicks (enabling advertisers to measure the return on investments) and not setting advertising rates as old media did, but letting the marketplace do so. Jarvis maintains that rather than carrying on with their legacy ways and trying to sell to a mass market, advertisers would do well to listen to their customers, who will tell them what they want instead.
Becoming a platform
What is it that Jarvis proposes companies should do to succeed in the digital age? They should strive for “elegant organization,” which means they should “organize a community’s knowledge so it can better organize itself,” a concept Jarvis hears from the founder of Facebook. Jarvis says that newspapers can create “platforms where neighborhoods, towns, schools, clubs, or people with like interests can share what they know and editors can bubble up news out of that.” Similarly, “maybe a store, like a newspaper, needs to become less a one-for-all clearinghouse of commodity goods and more a pathway to what I really want…perhaps a store, like a restaurant, can become a community,” Jarvis muses. Having reverse-engineered Google, Jarvis proceeds to turn numerous industries “upside-down,” essentially asking, why not turn yourself into a platform and “grow by building platforms to help others prosper.” He mentions a publisher that crossed over to digital; “unburdened by print,” it could focus “on new online and mobile products and event businesses.” Even airlines, “the ultimate atomic enterprises,” could be relationship and knowledge companies, Jarvis says. “If a magazine publisher no longer thinks of itself as a magazine company and if a bookstore can build a knowledge company, then ask what you can be. Where is your true value? I’ll bet it’s not in the atoms you move around.”
Jarvis says “Google’s lesson is clear: Make innovation your business.” The pointers for innovation are the general pointers given in the book—strive to become a platform like Google, don’t dictate what the platform can be used for, don’t set up rules or fees, realize value is “not in limiting what people can do but in helping them do what only they can imagine.” In other words, you will foster innovation as people build things atop your platform that you could not have conceived. Similarly, people using your products will indicate what works and what doesn’t, so you can innovate iteratively rather than coming up with a perfect product the first time around. Jarvis’s suggestions to practice openness, explore the potential of niches, and rethink businesses are good starting points for thinking innovatively, and his warnings to legacy companies that protection is not a strategy are apropos.
Jarvis is skeptical about the ability of large companies to foster innovation internally. “Can large companies spark entrepreneurism in their ranks?” he asks. He notes that Google invests in internal innovation through its 20 percent rule (technical employees spend 20 percent of their time working on new ideas) and also buying innovation when it acquires companies. But “apparently that hasn’t been sufficient,” he says, “for Google surprised the investment community when it started its own venture fund in 2008.” Jarvis comments that when he worked in large companies he saw how hard it was for them to invest in start-ups, and that investing requires different skills. “Finding start-ups comes from networking…Rather than implementing 20 percent rules, perhaps companies can find innovators within their ranks by offering grants to entrepreneurial employees in return for equity,” he says. Jarvis’s negative experience in an industry that resisted change seems to render him rather closed off to the possibility of internal innovation and therefore offering little contribution to that discussion. His equating of innovation with entrepreneurship does not help either.
Moving beyond atoms vs. bits
WWGD is shrill in advocating a shift from the “old” to the “new,” from atoms to bits. This makes sense in the context of the newspaper industry’s resistance to going digital, but it continues an either/or attitude and makes the book less useful for established businesses that are willing to bridge the digital divide but would benefit from more measured advice. When Jarvis talks in terms of a synthesis between large companies and smaller players—such as the possibility of Coke retooling a bottler to make special-order batches to be delivered and thereby joining in the small-is-the-new-big economy—his suggestions are more practicable. Jarvis also gives the example of Dell today selling Linux computers: “Michael Dell acknowledged that selling Linux machines might not be a huge business, but it was an important symbolic act, the mark of a new partnership between company and customer.” Treating these partnerships as well as the move to digital as complementary strategies rather than either/or choices is a more useful approach for large companies.
WWGD’s message is liberating and exhortatory, and as such it has general appeal. MBAs, do-it-yourselfers, and people tasked with formulating digital strategies in their companies might find actionable ideas in the book. Those interested in a more comprehensive analysis of Google should look elsewhere.
February 2010. All rights reserved.