Google’s Product Strategy

For many years now, I’ve watched as Google continues to push the boundaries of innovation and continue to launch new products on what seems like a quarterly basis. It never ceases to amaze me the breadth and the depth of industries that they touch upon, and I continue to be taken away by their awesome new products every time they launch hold a product launch event.

But as an outsider looking in I could never get a glimpse of HOW they did it. How do they keep doing this? How do they come up with new products and how do they make it successful?

My curiosity was answered when I came across the book “How Google Works” by Eric Schmidt and Jonathan Rosenberg. In the book Eric provided a high level view of how the company is structured and the 6 main topics that they focus on, but as a product manager what I found most interesting was HOW they came up with products. I’ve decided to write down what I found was the most insightful pieces in the book to formulate “Google’s Product Strategy”, and I hope that it helps aspiring product managers or curious entrepreneurs on their path to creating awesome products.

In general many large successful companies have succeeded by progression of these steps:

1. They solved a problem in a novel way
2. They used that solution to grow and spread quickly
3. That success was based largely on their products.

But this begs the question: “How do you build products that support these steps?”

Google’s product strategy boils down to 3 key points

• Bet on technical insights that help solve a big problem in a novel way
• Optimize for growth, not for revenue
• Let great products grow the market for everyone

Specifically, “The right strategy has a beauty to it, a sense of many people and ideas working in concert to succeed.”

1.Bet on technical insights that help solve a big problem in a novel way

This is one of if not the most important key aspect of a new product. And this sentence actually has 3 key points hidden inside.

• Technical insights: throughout all the trial and error products that Google has launched over the years they’ve learned that this specific key point is the most critical to success. Start by asking what’s going to be true in 5 years, where is the industry heading, and why?
• Solve a BIG problem: based on the technical insight that was derived from above, what is the BIGGEST issue that’s blocking this right now? Why hasn’t it happened already? What will accelerate or boost this phenomenon?
• Novel way: what are the solutions to the big problem mentioned above? What is a novel way to approach this problem? In essence this is the solution that comes out.

If you put these 3 key points together at this point you’ll have a very convincing product to your Target Audience already. You will already be able to convince your TA to buy into the concept and product, but we can’t stop there…

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2.Optimize for scale, not for revenue

The second step is to account for scale. What matters in the end for a product is how much value it brings to its users and how many users it serves. Google always takes into account how many users they can serve with the product, in essence they always consider how to “democratize” technology.

And the way to do that is to focus on scaling the product. Don’t get caught up in the revenue for the product in the very beginning, leave room for flexibility. At this point all of the product development efforts should be focused on: How do we make it easier and enticing for millions of users to use our awesome product?

Here the key is to have a “grow big fast strategy”.

For example Eric gave an example that in the early stages of Google.com the founders Larry Page and Sergey Brin invested in improving the search engine rather than trying to put ads on every page to generate as much revenue as possible like their competitor/partner AOL did.

3.Let great products grow the market for everyone

The last step is to build platform products, not linear products. Because platform businesses are way more valuable in the long term than linear businesses.

With platform products, the product itself creates value by facilitating exchanges between 2 or more interdependent groups (consumers and producers) as opposed to linear products, which create stuff and push them out to customers.

Platform products are far more valuable and sustainable in the long run because of the following:

• Network effects: for each new user that joins the platform, it brings incremental benefit to the other users in the network.
• Economics of information goods: goods can be replicated a near zero cost. For example on a music platform it costs nearly nothing to allow another user to listen to the same piece of music. Compared to a CD business it’ll take the cost of making the CD and replicating the music on it to serve the second user.

Examples of such a strategy are reflected in their product successes and failures, below are some examples of Google products that leverage these 3 key ingredients:

• Google Search: technical insight
• Adwords: based on the insight that ads could be ranked and placed on a page based on their value as information to users, rather than just by who was willing to pay more.
• Google News: the site that aggregates news headlines from thousands of media outlets, was based on the insight that we could algorithmically group stories by topic, not source.
• Google Chrome: founded on the insight that as websites grew more complex and powerful, browsers needed to be reengineered for speed.
• Knowledge graph in search: based on organizing the internet’s vast amount of unstructured data about a particular person, place, or thing into structured data, and presenting it in an easy-to-consume format.
• Youtube content ID: creates a unique data representation for every audio and video clip and matches that fingerprint against a global rights database, thereby giving content rights owners the ability to find and sometimes monetize their content on youtube.
• Google Translate: gets help from a vast multilingual user base to continuously improve translation quality.
• Google Hangouts: transcodes various video formats in the cloud rather than at the device level, making it one-click easy to conduct a global video conference from any device.

Versus products that failed (mostly because they didn’t have a strong foundation in the 3 key ingredients):

• iGoogle
• Google Desktop
• Google Notebook
• Sidewiki
• Lnol
• Google Health
• Google Reader

I found it fascinating that Google has found these patterns for a successful product and am eternally grateful for them sharing this information through the book. I’ve thought long and about these points in my product development process and as I write am about to launch a product that I am proud to say that actually addresses these key points.

What do you think? What did I get right? What did I miss or forget? What type of product strategy do you adopt?

I’d love to know.

Albert T.

Citation: How Google Works, Eric Schmidt & Jonathan Rosenberg

My other product strategy articles on Medium:

• Amazon’s Product Strategy

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