Google mojo comes from open source management

Google mojo comes from open source management

Summary: Google is so large that its many small failures can't harm it, and its people remain empowered by its open source management style. Microsoft could still behave in a similar fashion, but will its corporate culture allow that?


Jim Cramer of MadMoneyGoogle is hot right now. Microsoft circa 1992 hot.

Jim Cramer (right) recently  began pounding the table for Google stock at $600, and expects it to hit $1,000. It's already up to $625.

Even at that price its market cap of $195 billion is still dwarfed by Microsoft's $284 billion. It's not too late for Big Green.

So what's the secret? I think it's open source management.

Google empowers its people to try things out, to put them "in beta." And it leaves them there even when they're not pulling their financial weight, because someone else may come along with a Clue, and the cost of leaving a server running is a rounding error.

Google has plenty of what should be considered market failures, in that they don't make money or haven't made back their investment. Google News makes no money. Orkut was a dog. Blogger is a financial drain. Google Health, so far, is nothing.

YouTube has not made back its $1.65 billion price yet, either. But notice the corporate recycling. You can think of Google Video as a direct descendent. It has a business model, and it's integrated with the rest of Google. Could it have gotten so far so fast without YouTube as stimulation? I doubt it.

By contrast, Microsoft invests heavily in products before releasing them. I remember, years ago, advising the company about a major investment, and how they took from my report the lesson it wouldn't pay off. They thanked me for saving them money, and maybe back then that way of doing business made sense.

But you've got this immense store of talent at Microsoft, which spends all of its time fighting internal battles in hopes that something might get out the door later. As opposed to the Google Way, which is to throw it on a server and see what people can make of it.

I've been witnessing some of this at ZDNet HealthCare, in my coverage of Microsoft HealthVault.  While the product was technically good, and it had a lot of institutional support from hospitals, I thought it ignored the need for stronger privacy laws, and an outside analysis proved that concern well-founded.

By contrast Google had a small team working nearly a year on Google Health, which is still not much, and since architect Adam Bosworth left, with no hard feelings, all the public sees now is a directory.

By letting people pound on its ideas in public, in other words, Google saved a ton of money, whereas Microsoft invested heavily up-front but left a key external question unanswered.

And so it goes. Google is so large that its many small failures can't harm it, and its people remain empowered by its open source management style. Microsoft could still behave in a similar fashion, but will its corporate culture allow that?

All I know is while Microsoft dithers, its market share lead continues to dwindle.

Topics: Enterprise Software, CXO, Google, Health, Microsoft, Open Source, Software, IT Employment, Social Enterprise

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  • Yes, corporate culture is everything! And, Microsoft needs to change the

    culture to compete in era of Web 2.0. In the era of Web 2.0, it is extremely cheap (and easy) to throw up an application and see what works and what does not. No need for massive reviews, just get it out there.
    • Technology changes often force culture changes

      This is an important point you make. It's the lower cost of providing an online service which is forcing this change on Microsoft.

      Products just don't cost that much to deliver any more.
      • And, because of the staggering income from the twin cash cows, they are

        basically forced to protect them at all costs. This means that they are really NOT able to embrace open source either, which limits the cultural changes that are needed. Quite an interesting problem.
        • Don't confuse user with creater

          But at the same time, embracing open source as a platform to run your programs [b]on[/b] is different then embracing open source as a platform you are writing [b]for[/b].

          Google feircly protects it's search algorthyms based on open source, while you think Microsoft should embrace open source.

          If MS opens up it's OS, secrets and all for all to use, don't you think Google should do the same? It would seem that Google does have some of the same cultural issues that MS has as they have their search "Cash Cow" to protect themselves.
          John Zern
        • Side Note:

          From an article here on ZDNet:

          [i]I?m still amazed that companies actually pay me to hack software,? Rios said, confirming his move and describing Microsoft as a ?cool place? with ?really smart people.?[/i]

          You'll know what that means ;)
          John Zern
  • Google Video predates the Google purchase of YouTube

    It's more like they bought YouTube because it was eating Google Video's
    • And, another strength of Google. They are NOT afraid to admit when things

      do not work. But, I find it very interesting that Google continues to fund Google Video, keep it separate, and let them try to innovate. For Google, they are willing to spend millions in different areas in the search of things that will resonate with users. And that is the thing about Google, they realize that you have to try everything, and above all, do not cry about things that don't work out or are not big money makers.
      • Not necessarily

        Google seldom admits mistakes. They just stop investing in stuff. They keep it around. They don't bury stuff because it costs less to just let it sit.
        • NIce observation

          Google, (like other companies) have made mistakes, but like any smart company, they don't admitt it simply because they do not want the word "mistake" associated with their name. If it cost little to nothing to let it sit there, then they will. One day it will disapear when some future product gets the notice, where as people will then attribute it to: "make sense, they are concentrating on this new, better product".
          John Zern
  • Can you have it both ways?

    Your point is well taken. The notion that a public "thrashing" of a "product" prior to its release is certainly invigorating. It leads to lots of feedback, good and bad. It's the foundation of RAD.

    Google has the advantage (becuase of hard work and brilliant marketing...) of cherry-picking applications and throwing them against the wall to see which ones stick. MS has 20 more years of tightly-integrated technology to protect. If they release a beta, it risks giving away the store on new techniquest or technology. Perhaps they take the risk too seriously, and perhaps a more public beta would be instructive.

    As I said, point well taken.
    Jim from Indy