Posted on Nov 10, 2010

Innovation Lessons from Google Maps

Here’s a Fast Company interview with Stephen Chau (former Goldman Sachs banker and Product Manager for Google Maps) about how Google Street View went from just an idea to become one of Google’s best products.

The interview is part of Fast Company’s Innovation Agents series about how innovators got to where they are today. See the interview here or see all the interviews from the Innovation Agent series here.

Innovation lessons from Google Maps

Here are some insights about innovation that I took from the interview:

Innovation is about creating new value; optimization is about enhancing existing value

Chau’s interests in business and technology led him to a career in investment banking at Goldman Sachs. After awhile began to feel like investment banking was missing something.

As an investment banker his job was to optimize financial transactions for clients. As a result of his work, clients’ value creation efforts were enhanced. But as a consultant, Chau did not get to participate in the value creation.Chau realized he wanted to be connected to the process of creating value and had the opportunity to do so with Google through developing new products.

Although Chau could have viewed his work with Google Maps as an opportunity to enhance the value of maps – by putting them online, adding hi-resolution photos, etc. Instead Chau and his team saw it as an opportunity to innovate, viewing the project as creating the next-generation of mapping products.

Opportunities for innovation are everywhere

Online maps have tremendous potential for technological innovation – using technology to create the highest resolution, most accurate, and most immersive maps. But according to Chau, Google’s approach to innovation goes beyond technology to look at the user experience in order to find new ways to create value.

“I spend a lot of time thinking beyond just the technology but also just what the core user experience should be. Because you can take a simple idea like showing photos to users, but it’s all around how users actually interact with those photos.”

One way Google is doing this is by making the product useful to people for more than just driving directions. In addition to their cars which captures images at street level, Google operates multiple portable systems for mapping things like hiking trails and amusement parks. They are even beginning to look at ways to map interior spaces.

To help himself foster his innovative focus, Chau says that he tries in his decision making to be wary of being too comfortable. If you’re pretty comfortable you’re probably ignoring the development of weaknesses.

“Think about putting yourself in more challenging situations because that inspires more innovation over time. That’s when you really start to deliver something really of value.”

Framing everything in terms of user-impact helps nurture an innovation culture

Google’s culture doesn’t value innovation for sake of innovation itself. Instead, as Chau points out, innovation is fueled by people’s innate desire to create innovation for users. Teams are focused on creating things that will improve the lives of users. That external, user-centric focus becomes a standard by which Google teams determine how they spend time and which products they create – evaluating initiatives based on the impact they can have.

The foundation for Google’s innovative culture is an inspired vision about what the company does. Chau’s language for describing what the Google Maps team does reveals a deeper a belief that they are doing something great in the lives of users. Though Google Maps is a technology product, the vision that motivates Chau has very little to do with technology.

“We’re changing how people see the world. When you think about that on such a wide scale, it really excites me.”

Those are just some of the things I gleaned from watching the video.

What do you think? What else can we learn about innovation from Stephen Chau’s story and the success of Google Maps?

Posted on Sep 5, 2010

Does an Innovative Company Culture Impact Market Performance?

Does an innovative culture impact a company’s market performance?

According to a recent study by the USC Marshall Center for Global Innovation it does.

Seeing through the innovation hype

Historically, establishing a direct, causal relationship between innovation and market performance is difficult because of the subjective nature of identifying innovation and innovative cultures.

Most of the discussion of innovative company cultures highlights benefits that are loosely tied to market performance: product development in response to known market opportunity, increase productivity as a result of better employee engagement, ability to outpace competitors. But measuring these benefits in a uniform way across companies is difficult.

More often a firm’s innovative reputation is a matter of opinion, largely influenced by the attention company receives in the press. While the attention is not misplaced. In order to evaluate the impact of innovative company culture on market performance, innovation must be measured based on metrics that are separated from hype.

To address these limitations, the USC Marshall Center for Global Innovation’s study developed an index of top innovative firms based on objective market data (rather than opinion polling) to measure innovation. Companies in the index were selected from Fortune’s list of the 300 largest US firms and Business Week’s list of the 100 most innovative firms, between 2004 and 2008 and then evaluated based on publicly available data. The financial performance of a portfolio of the top innovative firms was then compared to the S&P 500.

The portfolios of top innovative firms significantly outperformed the S&P 500 in up markets. According to the study:

In the five years between 2004 and 2008, an annual paper investment of $10,000 in a portfolio of top 20 firms in the Index yields a cumulative return that is 46% higher than the S&P 500 for concurrent years.

In addition, the portfolio performed nearly as well as the S&P 500 in down markets. According to the study the exceptional performance comes without excessive risk.

Making the case for innovation work

While increased market returns are unlikely to motivate managers and employees to become more innovative. The findings of this study will help company executives to begin to see the value of innovation as investors begin to invest more in innovative companies. This will help in getting top level buy-in for innovation initiatives.

These findings will also encourage companies to try copy what they see the top innovative firms doing. Some firms are likely to try and short circuit the process for fostering an innovative culture. Both of these will likely have detrimental effects.

True innovation relies on both individual characteristics of employees andorganizational structure and leadership that supports the generation, development and execution of new ideas. Companies that focus solely on the financial benefits of an innovative culture are not likely to have the patience and tolerance for the time and that cultural transformation requires.

What do you think? Will this help companies to see the value of innovation or will it cause bad innovation strategies?

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