How Google Fuels Its Idea Factory

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My guess is, with the alleged recession happening, there will be a lot of good targets.

So we're likely to see even more acquisitions by Google?

I would think so. But small. The likelihood of us doing big things is pretty low because we'd have to assimilate the culture. Nobody works the way we do. The Google culture makes sense if you're in it, and no sense if you're not in it.

Does this mean it's tough for people to adjust, and will that limit the number of companies you can comfortably buy?

First, it is a fact that they adjust. Second, there is selection bias. Usually, people want to [be acquired by Google]. It's always very friendly. Because they have choices, and they choose us.

How does Google make sure it's producing innovations that change the game enough to create big new markets but also continue to appeal to its main customers, who might not want so much disruption?

We make an explicit decision to favor the end-user. [We] do not say, "Newspapers should be happy. Advertisers should be happy. Telcos should be happy. Competitors should be happy." Those are fine if we can do it. But it's all about end-users.

How do you make sure all these Google engineering projects actually turn into useful services?

The No. 1 thing we do require is: You can do whatever you want as long as you track it. We have very sophisticated measurement systems at every stage of launch. We have what is called trusted testers. Then beta test, which is forever. We do these 1% launches where we float something out and measure that. We can dice and slice in any way you can possibly fathom.

What's more important than the absolute number is the relative growth rate. High growth solves virtually all problems. If the growth rate is low, or negative, you've got a serious problem.

How much of a concern is it that Google has seen both executives and engineers depart for other companies or startups?

Let's do some math. We have 18,000 people. What is 1% turnover [per month]? 180. Do you think 1% turnover is reasonable? In this area, it's quite low. Ours is some small percent, 1, 2, 3%.

What bothers me is that some people write: "So-and-so left the company." Well, they don't also write that we hired 120 people that week, five of whom have Nobel prizes, three of whom have PhDs, and so on, who are beginning their career here now.

Can innovation really be managed, or is it a case where you have to keep the company and its managers out of the way?

I disagree with the word "managed." You have to have a set of necessary conditions for innovation to occur. To start with, you have to listen to people.

Pretty basic, no?

But not often practiced. Innovation comes from places that you don't expect.