Google As A Champion Of Fluid Core Strategy
The American enterprise is in flux and Google GOOG -1.03% is a great example of it. The vast majority of Google’s revenues comes from advertising but the majority of news around the company originates in its non-advertising activities – Chromecast, the Nexus tablet, the new Smartwatch, Project Loon and Google Glass, to name a few. A couple of days ago I offered a suggestion for how this type of management strategy might be labelled – and called it The Fluid Core (you can see my paper on Fluid Core Strategy here – transparency statement: It is sponsored by Cognizant).
Google is a great example of The Fluid Core at work. Though people still regard it as ad-dominant, it core competency is evolving and fluid. Executives are telling a transformational story. It has its moonshot projects and at the same time it is developing new products at the more mundane level of hardware devices and fiber. Google is, in fact, transforming into a device and telecoms infrastructure company, and along the way it is picking up new competencies and pushing others to the margin.
In some senses it is beginning to resemble an old conglomerate, which is not so flattering. But the newer picture is of a core competency that is changing – the company has its software competency intact but it is developing a strong hardware outsourcing competency, online marketing, and, gradually, hardware design and execution.
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Before you argue that Google is unique or that these developments are specific to the smartphone sector, look at companies like Arjo Wiggins (formerly Wiggins Teape) one of the world’s leading paper producers. Arjo Wiggins is now a leading producer of substrates for printed electronics and is pushing its R&D capability in that area. The era of printed electronics is drawing Argo Wiggins into a new field, disposable, low cost devices.
It happens to be at the convergence between old print and new devices. But the world of devices is a serious adjacency for Arjo Wiggins, just as devices are a serious adjacency for Google. Fluid Core strategy seems well suited to these convergence points – look at Samsung in medical imaging and chip design and manufacture, Nike in intelligent apparel, and of course Google in Smartwatches.
Nike is a great example of a fluid core in action. With Fuelband it has built on its early success with Nike + and is now on it sway to being a device and data company. By the way Apple is a leader here – having created a fluid core that takes in miniaturization, design, platform management, mobility, and retailing.
In all these cases you can see that the core competency is fluid. Fast Company recently said core competency is dead (in an article with the title Death To Core Competency). It is not alone in thinking we can just jettison the idea that companies need a core. But it has not died. It has loosened up.
Companies need core competency in entirely new areas – like ecosystem management. In the research I quoted above Aaron Levie of Box.net told me:
“We do think about the crowd and our platform because the old Bill Joy saying that there are more talented engineers outside your organization has to be true. We have only 700 employees and there are millions out there in companies that we want to sell to, so there is a huge focus for us in working with the ecosystem, mostly via our APIs, and so they can build distribution out.”
In other words a core competency now lies in how you relate to your extended family of users and developers. Management still think of the talent they can capture in employment contracts, and yet the ecosystem is where you will scale a business cheaply. These developments also mean you need much broader core competency – in product, ecosystem, perhaps social marketing, design etc but in ways where you can shift emphasis. Right now media companies like Forbes are having to shift core competency to content design for mobile – they will be dead without it. Core competency is fluid in great companies.
Another important change is the sheer breadth of what is knowable and do-able – by employees and competitors. Employees know their company’s strategy was well as executives do. The idea that management can huddle in a corner to do strategy, oblivious to the talents and knowledge of employees is too old fashioned to countenance. Sure many leadership teams still do it but they are mugs not to act in a more peer-like way with the many talented people around them.
Talking with the folks at Apigee, with whom I am discussing some new research on how we can understand changes to corporate decision processes, one of their observations is that digital transformation often relies on someone in the firm who has no responsibility for digital but who is inspired enough to take a career risk on promoting a new digital project. Strategy actually lies in the hands of people who do that. Decisions get made because of unearthed talent.
Abundant talent also means there has been a neutralization of the talent advantage. Does Apple have a design advantage? Hardly. Is it still a core competency? Very questionable. There are plenty of designers out there who can create exciting new products. Microsoft created the trend for flat OS design. Apple is the follower. A coupe of years back design Professor Roberto Verganti (of Milan Polytechnic) told a story about a conversation with world-famous lamp designers Artemide. This is what Artemide say about design:
“…you know, every company nowadays knows that design is important. We have been using design for 40 years, and everyone now can design a beautiful lamp. It doesn’t make any difference anymore. You can go to Ikea and buy copycats of this company for 30 Euros. You don’t need to go to China.”
When Samsung wanted to update its designs it hired world class design talent like Chris Bangle, ex BMW chief designer. When Kia wanted to compete with the value perceptions of western cars they hired Peter Schreyer, the man behind the Audi TT.
The point is these core competencies are variable. Their value fluctuates. They are necessary but they are part of a fluid core where priorities change. Smart management does not abandon the idea of core, it changes the core in response to circumstances. And it expands the core in the knowledge that competing today requires broader competence than ever before. That in fact is the definition of the Fluid Core.
Source: Facebook.com (Young Turks)
The American enterprise is in flux and Google GOOG -1.03% is a great example of it. The vast majority of Google’s revenues comes from advertising but the majority of news around the company originates in its non-advertising activities – Chromecast, the Nexus tablet, the new Smartwatch, Project Loon and Google Glass, to name a few. A couple of days ago I offered a suggestion for how this type of management strategy might be labelled – and called it The Fluid Core (you can see my paper on Fluid Core Strategy here – transparency statement: It is sponsored by Cognizant).
Google is a great example of The Fluid Core at work. Though people still regard it as ad-dominant, it core competency is evolving and fluid. Executives are telling a transformational story. It has its moonshot projects and at the same time it is developing new products at the more mundane level of hardware devices and fiber. Google is, in fact, transforming into a device and telecoms infrastructure company, and along the way it is picking up new competencies and pushing others to the margin.
In some senses it is beginning to resemble an old conglomerate, which is not so flattering. But the newer picture is of a core competency that is changing – the company has its software competency intact but it is developing a strong hardware outsourcing competency, online marketing, and, gradually, hardware design and execution.
Six Ideas Driving The Future Of Innovation
Haydn ShaughnessyHaydn Shaughnessy
Contributor
Google, Pitting Itself Against Samsung, Prepares For Device War
Haydn ShaughnessyHaydn Shaughnessy
Contributor
Before you argue that Google is unique or that these developments are specific to the smartphone sector, look at companies like Arjo Wiggins (formerly Wiggins Teape) one of the world’s leading paper producers. Arjo Wiggins is now a leading producer of substrates for printed electronics and is pushing its R&D capability in that area. The era of printed electronics is drawing Argo Wiggins into a new field, disposable, low cost devices.
It happens to be at the convergence between old print and new devices. But the world of devices is a serious adjacency for Arjo Wiggins, just as devices are a serious adjacency for Google. Fluid Core strategy seems well suited to these convergence points – look at Samsung in medical imaging and chip design and manufacture, Nike in intelligent apparel, and of course Google in Smartwatches.
Nike is a great example of a fluid core in action. With Fuelband it has built on its early success with Nike + and is now on it sway to being a device and data company. By the way Apple is a leader here – having created a fluid core that takes in miniaturization, design, platform management, mobility, and retailing.
In all these cases you can see that the core competency is fluid. Fast Company recently said core competency is dead (in an article with the title Death To Core Competency). It is not alone in thinking we can just jettison the idea that companies need a core. But it has not died. It has loosened up.
Companies need core competency in entirely new areas – like ecosystem management. In the research I quoted above Aaron Levie of Box.net told me:
“We do think about the crowd and our platform because the old Bill Joy saying that there are more talented engineers outside your organization has to be true. We have only 700 employees and there are millions out there in companies that we want to sell to, so there is a huge focus for us in working with the ecosystem, mostly via our APIs, and so they can build distribution out.”
In other words a core competency now lies in how you relate to your extended family of users and developers. Management still think of the talent they can capture in employment contracts, and yet the ecosystem is where you will scale a business cheaply. These developments also mean you need much broader core competency – in product, ecosystem, perhaps social marketing, design etc but in ways where you can shift emphasis. Right now media companies like Forbes are having to shift core competency to content design for mobile – they will be dead without it. Core competency is fluid in great companies.
Another important change is the sheer breadth of what is knowable and do-able – by employees and competitors. Employees know their company’s strategy was well as executives do. The idea that management can huddle in a corner to do strategy, oblivious to the talents and knowledge of employees is too old fashioned to countenance. Sure many leadership teams still do it but they are mugs not to act in a more peer-like way with the many talented people around them.
Talking with the folks at Apigee, with whom I am discussing some new research on how we can understand changes to corporate decision processes, one of their observations is that digital transformation often relies on someone in the firm who has no responsibility for digital but who is inspired enough to take a career risk on promoting a new digital project. Strategy actually lies in the hands of people who do that. Decisions get made because of unearthed talent.
Abundant talent also means there has been a neutralization of the talent advantage. Does Apple have a design advantage? Hardly. Is it still a core competency? Very questionable. There are plenty of designers out there who can create exciting new products. Microsoft created the trend for flat OS design. Apple is the follower. A coupe of years back design Professor Roberto Verganti (of Milan Polytechnic) told a story about a conversation with world-famous lamp designers Artemide. This is what Artemide say about design:
“…you know, every company nowadays knows that design is important. We have been using design for 40 years, and everyone now can design a beautiful lamp. It doesn’t make any difference anymore. You can go to Ikea and buy copycats of this company for 30 Euros. You don’t need to go to China.”
When Samsung wanted to update its designs it hired world class design talent like Chris Bangle, ex BMW chief designer. When Kia wanted to compete with the value perceptions of western cars they hired Peter Schreyer, the man behind the Audi TT.
The point is these core competencies are variable. Their value fluctuates. They are necessary but they are part of a fluid core where priorities change. Smart management does not abandon the idea of core, it changes the core in response to circumstances. And it expands the core in the knowledge that competing today requires broader competence than ever before. That in fact is the definition of the Fluid Core.
Source: Facebook.com (Young Turks)
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