Innovation Google said yesterday that it will begin winding down Google Labs, the in-house incubator and beta-testing web site that birthed Google Maps, Google Reader and other popular services. In a blog post announcing the move, SVP of research Bill Coughran linked the decision to a broader strategy unveiled by CEO Larry Page in Google’s Q2 earnings call last week to streamline the company’s operations and bring more focus to fewer product categories.
“Greater focus has also been another big feature for me this quarter–more wood behind fewer arrows,” Page said. “Last month, for example, we announced that we will be closing Google Health and Google PowerMeter. We’ve also done substantial internal work simplifying and streamlining our product lines.”
The announcements triggered a predictable flurry of stories speculating on the “death of innovation” at Google and a coming era of stodgy, bureaucratic middle-age at the company that once personified the freewheeling, anything-goes ethic of Silicon Valley start-ups.
Nostalgia is a dangerous thing in a business. Page deserves credit for recognizing that Google isn’t a dorm-room science project anymore. Running a bunch of whimsical lab experiments isn’t the only viable model for innovation and probably isn’t the best one for a company with 28,000 employees on six continents and a market cap of $195 billion.
Big companies, in fact, can innovate in ways that start-ups can’t, such as by taking on projects with long pay-back horizons that start-ups cannot afford or lack the scale to undertake.
The interesting question about Google is not whether it will fail to come up with the next cool browser extension but whether, with its new streamlined approach, it flinches from the sort of long-term innovation that only a large company can pursue.
Google TV will be a good test case to watch. The first iteration of the technology flopped, and a second iteration has been slow in coming. Google faces formidable resistance from incumbent service providers and content owners who see Google TV — correctly — has a highly disruptive challenge to their current business arrangements. Breaking down or overcoming that resistance will take time and a good deal of money.
If it succeeds, however, Google TV could be transformative for consumers and provide a huge long-term payoff for investors by bringing Google’s intention-based ad targeting capability to the $75 billion a year TV advertising business.
That’s not something a start-up could do, or that a few employees could do in their 20 percent free time. It will be interesting to see whether Google TV is the kind of arrow that gets the wood.