Google, Agile and Business Value
Google announced on 4/20/2007 that it earned $1.002 billion in the first quarter. The Net was up 69% from 2006. The sales increase was not too shabby either.
Maybe it’s a company we can learn from. (Or maybe they are just lucky.)
Google uses Agile. As I hear, Agile isn’t forced on anyone, and many different types of Agile are used. My hypothesis is that the relationship between Agile and the increased profits is not coincidental.
But that is not my topic for today.
As I hear it, Google takes a very different view of how to use Business Value in its projects. It allows project teams to work on lots of things, as long as someone thinks there is a potential of value. The value is not clearly defined upfront. Google gets a beta product in front of the customer world quickly, and gets feedback. After feedback and improvements, if the product has traction (internally and externally) then they release. Only then do they start to worry about monetizing the product (for example, say, Google maps).
Again, they build, and give it away and build market share. Once they have a product that people want, then they figure out how to monetize it.
What’s the idea here?
I am guessing the idea goes like this:
- The first thing is serving the customers.
- Some products (for Google at least) don’t need to bring in money by themselves. They are looked at as filling out a whole customer relationship. It is those customer relationships that become profitable (in multiple ways, if you know how Google makes its money).
- The first decisions are made by the bright employees deciding how much they want to invest (their own time) in creating or improving the product. My understanding is that each employee is almost an entrepreneur in the way he decides to invest his own time in projects. (I will guess this is something of an exaggeration, but you get the drift.)
- Then each product team “sells” the product internally and externally, building users and buzz, and perhaps gathering input and more people (workers) for the project (product). So, the key tollgate is, “Does this product add value for the customer?” Early on, and to some degree later, internal people act as proxies for external customers. The product is also out quickly to get external customer feedback.
- Then, once they have a released “successful” product (i.e., successful to the customers), then they worry about monetizing it (how Google will make money off it). Sometimes those earnings are indirect (e.g., via ads rather than via license fees to users).
To me, the main lesson here is that Google folks expect to learn along the way what the customers really want and what business value really is. They get feedback as soon as possible. It’s a question of who can learn more useful stuff faster.