Google is at it again.
Earlier this month, CEO Larry Page announced that Google is reorganizing in order to foster innovation. Not content to be the kings of search, Page and his business partner Sergey Brin are leading disruption in their company to separate its money-making businesses from the ones incubating new ideas.
We’re all familiar with Google search, YouTube, and online advertising, which will all remain part of Google. Less familiar are the companies developing contact lenses that read blood sugar levels, self-driving cars, and delivery drones, among other projects, that will be under the Alphabet umbrella but not part of Google.
To explain the move, Page wrote in a letter posted on the new Alphabet site, “From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have. We did a lot of things that seemed crazy at the time. Many of those crazy things now have over a billion users, like Google Maps, YouTube, Chrome, and Android. And we haven’t stopped there. We are still trying to do things other people think are crazy but we are super excited about.”
Google may be the face of the new research and development. The company’s challenge will be to stay true to its passion and purpose, while resisting the urge to become only a holding company focused only on financial results. If it can, it will create an opportunity that many other innovative companies failed to capture as they grew and matured.
In past paradigms, R&D has focused on meeting the articulated needs of its customers. Today if you wait for a need to be articulated before you begin, you may be too late. The process by which R&D is approved, funded, and transitioned is changing. In this emerging environment, R&D staff members must begin to anticipate what the future customer will want and understand the environment in which the future customer will reside.
Apple is a perfect example of the process. We don’t believe anyone at Apple started with a vision to create an iPod Shuffle. Instead, they recognized how important music was to most people and how important portable music could become. They used an emerging technology – digital music files – and created a small device that allowed users to download their favorite music and play it back randomly. To top it off, the tiny iPods produced incredible sound and consequently disrupted the music industry. As you know, they were followed by the iPhone, iPad, and iWatch.
The point is that Apple and Google didn’t wait for their customers to articulate a need. Instead, they anticipated and met an unspoken need in the marketplace. Going forward, successful R&D efforts must read and anticipate the customer and also the future in which they will live.
We would like to suggest three areas where action will be needed: human capital, R&D’s position within an organization, and leadership. We’ll discuss a few major points in each area now, but plan to discuss each of them in greater detail in future blogs.
The new business models we are building require a different focus on employees and their contributions to the workplace than the old. This is especially true for R&D organizations. The new landscape requires new attributes – people who are culturally intuitive rather than just technically proficient, who question authority rather than accepting judgments, and who are calculated risk takers rather than being averse to risk, to name just a few. We must develop hiring practices that identify the attributes needed for particular projects and departments, and that will require a shift in focus for the entire hiring process.
Engineers and scientists have long been the backbone of R&D departments and will remain central to the process, but companies will need greater diversity of thought and background to be successful. We will need to hire for differing points of view and experience, not just differing physical traits. We need people in R&D with backgrounds in anthropology, sociology, and psychology. We need storytellers and global thinkers. We need employees who are customer focused and outcomes oriented. This multi-attribute, multi-disciplinary group of individuals must also coexist and be capable of working together as a unified team.
One of Google’s best moves is to remove innovative divisions from the pressures of only making a profit. The recent reorganization can sustain the ability, behavior and leadership that has already propelled Google to its place as one of the world’s most innovative companies. Apple has also organized so that R&D is leading the company. Time will tell if the strategies will work.
We believe, they will, but with a caveat. The strategies will work if the “why” of the companies – purpose and passion – lead decision making, but will not if financial performance alone leads. Both are important, but the key is which is more important for sustained performance over decades.
R&D is not dealing with today’s customer. That’s the job of the current lines of business. It’s not dealing with tomorrow’s customer. That’s marketing and business development’s job. R&D is about dealing with the customers who come after tomorrow’s customer – in other words, the future of the company. Protecting the innovation that comes from disciplined dreams and risk takers is critical for the viability of a company. Isolating it from today’s pressures is required.
We have left perhaps the most important element for last. A thriving company must have visionary, engaged leadership that can build core values, trust, vulnerability, and freedom. We suggest that innovation is a corporate responsibility, not just the purview of a single leader. It is ongoing and essential to the organization.
At Toffler Associates, we define our approach with three words – understand, plan, and adapt. When you seek to understand a customer, an environment, or a world, you stand in the future. That’s where leaders should be as they challenge their R&D departments to anticipate their customers’ unspoken needs. This is how you Future Proof® your organization.
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We can agree with the conclusion to Larry Page’s letter about Google because it echoes some of the things we’re excited about. He wrote:
“We are excited about…
As Chairman of the Board for Toffler Associates, Deborah brings skills and insights honed over 30 years working with some of the top minds and leaders of governments and Fortune 100 companies. Deborah has an MBA from Webster University and a BS in Electrical Engineering from the University of New Mexico, and has completed extensive continuing education with Harvard Business School and Wharton Business School. She is also a member of the National Academies of Science, Engineering and Medicine.
Toffler Associates is a future-focused strategic advisory firm. Our Future Proof® business consulting approach helps global leaders understand how future shifts impact current decisions so they can take advantage of opportunity, manage risk, and create future value.
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