BSC implementation and internal business process perspective

Balanced Scorecard

Google's internal business processes are surprisingly informal for a group of engineers. Rather, Google likes to encourage the creative side of their workers, and so there is an emphasis on projects, even where there is no clear objective at the outset. The company also embarks on projects where there is no clear profit potential -- such is life at a company with $50 billion in the bank. The reality is that Google does all of this because it recognizes the importance of intellectual property in its success. The company hires great people, but then it allows them to innovate and perform, and the internal operations are specifically design to remove constraints to innovation.

On the more conventional side of the business, where Google runs the advertising business that makes all of its money, the company does have more formalized business processes. There is still an element of innovation but the company also recognizes that it needs to be able to deal with its customers, provide service and other more mundane elements of doing business and making money. With these processes, Google tries to automate a lot of it, but it also seeks to keep the processes simple for the transactional tasks. These processes might allow Google to collect money, but they are not the drivers of revenue. The innovation and intellectual property are what meet the needs of the end users, meet the needs of the customers and ultimately result in success of the company.

A great measure for the company's processes is the number of new patents it receives. It could be argued that this reflects learning and growth, but at Google the learning and growth perspective is so intertwined with the internal processes that the two are not distinguishable -- innovation is built into the company's processes at a structural level. Thus, the company has long recognized that innovation is major driver of success and profitability, and of customer happiness. One way to measure innovation is by the intellectual property that the company generates. The number of patents is one good measure, but so too is the value of intangible assets on the company's balance sheet, which indicates the degree to which it has been able to capitalize on its intellectual property.

Thus, the company can set two objectives for intellectual property development. One is that it can measure new filings, and the other is that it can measure the value of those findings. There is little doubt that the company's processes contribute significantly to success in intellectual property development, and if it removed its policy of allowing employees time to work on their own projects, there is little doubt that Google would see a reduction in its capacity to develop intellectual property.