Competitive strategies in cola and technology industries

Competitive Strategies of Google and Microsoft

The Battle for the Future of Search:

Comparing the Brilliant, Competitive Cultures of Google and Microsoft

Both Microsoft and Google have emerged as catalysts of remarkable growth in the high technology industry. Each of these companies have a very unique, finely-tuned series of strategies for managing the innovation processes, including the steps each rely on for creating new services. Each also has shown remarkable success at delivering exceptional disruptive innovations in their core markets and globally across the consumer markets as well. This inevitable track record of success isn't an accident; there is a fierce level of intensity and competitiveness both within the company cultures themselves and across their vast, global ecosystems of suppliers, customers and shareholders. And both of these companies are looking to dominate the lucrative online advertising business models now showing the potential to be multibillion dollar businesses over time (Finkle, 2012). Both companies have invested millions of dollars in contextual search as well, in addition to in-car navigation systems and in the case of Google, their completely automated driverless car (Finkle, 2012). Both are also solidly positioned to lead the next generation of cloud computing as well, with Microsoft investing in their Azure platform and Google with their AppEngine series of online platforms (Cusumano, Gawer, 2002).

The cultural strengths of Google emanate from the highly competitive academic environment of Stanford University, where the two founders graduated less than 20 years ago. The culture at Stanford and now at Google place a high value on solving complex, very challenging theoretical problems with elegant yet powerful algorithms (Dollinger, 2006). Google also has a very selective culture, which concentrates on choosing only the most qualified candidates. This creates a culture of continual intellectual challenge and a strong focus on shared intelligence and knowledge (Badawy, 2008). It also forces a galvanizing effect into groups that have many of the world's smartest people in a given field. Contrary to this approach of unified effort through a shared intelligence base, Microsoft is a fragmented organization that thrives on internal competition and the continual effort to upstage other groups with more innovative and elegant algorithms and programming (Love, 2006).

With this background, the goal of this analysis is to show how the cultures of Google and Microsoft continually benefit from competition with each other. A projection is also made with how each company will continue to change and grow rapidly if its current corporate culture changed. In any projection of the future state of a company assumptions must also be made, and they are included in this analysis.

How Google and Microsoft's Competition Drive Each Other

The unique cultural aspects that both of these companies share is their ability to get their best programming and engineering talent on extremely difficult problems and resolve them quickly, while also ensuring the solutions are integrated back into their existing programming platforms (Finkle, 2012). This is especially evident in how quickly Google has moved past Microsoft in the area of mobile operating systems and the rapid development of Google Glass, which has a contextual operating system for wearable computing as well (Finkle, 2012). Google was able to move quickly past Microsoft on this attribute of their broader search strategy. Microsoft however has partners with Nokia and is working on a variation of their operating system which can support advanced phone functions. Both of these groups regularly compare their performance with each other through competitive analysis and continued competitive evaluations (Finkle, 2012).

Google has the speed advantage overall however, specifically in how the company is much more focused on innovation from the engineering teams first. Microsoft's approach to development reflects a more fixed mindset while Google allows their engineers to invest 20% of their time in new product ideas of their own interest. Google calls this the Rule of 20% and today is responsible for 57% of total revenues (Machlis, 2009). This strategy for innovation has been highly successful for generating new product ideas and many of the company's greatest new product innovations have come out of the Rule of 20% programs including Google Docs and applications that get used by millions of people a day (Finkle, 2012). Google's culture attracts a specific type of engineer that seeks out complex, challenging problems that must be coded around to be successful (Badawy, 2008). Because of this Google continues to accelerate the pace of innovation in search and broader technology markets.

Where Google is more open with its rule of 20%, Microsoft is a much more hierarchically-based model that centers on very regimented approaches to agile-based product development (Love, 2006). Google thrives on a chaotic approach to allowing engineers 20% of their time to develop products while Microsoft is regimented. Microsoft also is intentionally designed to promote internal competition as founders Bill Gates and Paul Allen felt that was a critical aspect of how to build better software and drive innovation. This drive for competition however against Google forces Microsoft to become more myopic and very silo-like it its structure (Love, 2006). The rapid adoption of the Internet and its needs for security also forces Microsoft into an entirely different competitive posture relative to Google as well (Cusumano, Gawer, 2002).

The three main ways each culture benefits from the others' competitive strategies and direction are defined here. First, Google is running to keep up with the enterprise market that Microsoft dominates today on the desktop, and is further challenged by how far Microsoft is with its cloud computing platforms including Azure and hosted office automation applications (Finkle, 2012). Second, Microsoft perfected the agile development methodology and has instituted it within its organizational structure; Google still struggles with transforming the sheer volume of ideas generated with the rule of 20% into viable products (Shaw, 2004). Third, Google is continually learning how to create more effective personal and office automation applications from competing with Microsoft's dominance of the desktop.

Google has also helped Microsoft gain greater focus on the user experience of applications and the streamlining of their operating systems as well. If it hadn't been for Google, Microsoft would not have streamlined the interfaces of its operating system or designed a more effective platform for users to search across applications (Finkle, 2012). Second, Microsoft has had no choice but to increase the speed of its agile development methodology as the sheer volume and speed of innovations Google produces using the rule of 20% is forcing them to (Dollinger, 2006). This is evident in how Microsoft is attempting to now emulate the rule of 20% in its own couture, which is admittedly difficult given its unique and highly structure environment. Third, Microsoft is learning more about scalability of their own applications by watching Google build out the worlds most scalable and context-driven search engine (Cusumano, Gawer, 2002).