How Google Lost Its Groove, but Snatched Away Microsoft’s “Evil Empire” Mantle

Success, particularly big and early, covers alot of sins: it seldom, though, compensates for the biggest sin of all, arrogance.

Google, famously successful early, has managed to become the big bully on the technology block, and in doing so has become the target of the type of enmity formerly directed Microsft’s way. When a post by Hunch co-founder Chris Dixon – Every Time an engineer Joins Google, a Startup Dies – becomes the hot retweet of the digerati, you know a nerve has been nailed. More anti-Google sentiment in this tweet from today, Google 2084 or this tweet from Ethan Kaplan, “Heard from a few people now, good friends, that they are switching from Gmail because they don’t trust Google anymore.”

Suprisingly enough, both firms share somewhat similar histories and as philosopher George Santayana quipped, “Those who cannot learn from history are doomed to repeat it.”

It’s helpful to remember in the old, pre-Microsoft days that IBM was perceived as the big bully on the block. The famous customer service quote attributed to them – “We’ll give you the product in any color as long as it’s IBM beige” speaks well to how IBM was seen by their customers. Like Microsoft years later, IBM had their own monopoly suit filed against them in the 1960′s.

Microsoft was the start-up – IBM the big guy.

Microsoft got its serious business legs when it bought for $50,000  a disk operating system called QDOS and was able to repackage it as MS-DOS (Microsoft Disk Operating System) and sell it to IBM as Big Blue entered the personal computer business. When IBM’s entry legitimized PCs, a cash cow for Microsoft was born. One big successfulbet against an IBM’s attempt to free itself from Microsoft’s grasp – the MicroChannel dispute – and the folks from Redmond were mostly home free. Savvy bundling and aggressive pricing of products (combining Word, a spreadsheet knock-off of Lotus 1-2-3 called Excel, and a slide / deck program called PowerPoint that Microsoft purchased for $14M) into packaged suite helped Microsoft penetrate and dominate the corporate desktop market against unbundled products such as 1-2-3 and WordPerfect.

Microsoft later took on a scorched earth approach to eviscerate Netscape when Bill Gates realized in 1996 that something called the Internet was a serious threat to Microsoft’s desktop business. A long trial and conviction for using a monopoly position has seemed to scarcely slow them down: near-monopoly positions in the operating system and office computer suite products have given Microsoft an enviable stream of available cash to fund development and buy a series of other companies over the year.

And along the way, Microsoft ceased – if it ever really was – to become a fountain of creativity and innovation. As former Microsoft VP Dick Brass recently wrote in the NY Times, “But the much more important question is why Microsoft, America’s most famous and prosperous technology company, no longer brings us the future. . “

The leaders at Google should take a good, hard look at Microsoft’s history: as Yogi Berra might quip, “it’s deja vu all over again.”

Google’s founder started a search business behind others (Yahoo, AOL, Microsoft, something called Excite@home) and gained traction by three things: a better product, a better user design, and – the aha moment – tying search effectively to advertising in a way that others hadn’t figured out. That aha and the ability to deliver it have given Google today approximately 75% of the US search business. And that share – given the dynamics of the search business where more leads to more more, continues to grow. It also continues to feed their advertising business, which like Microsoft with its Windows and Office suite products, seems to print money. [Updated 2/24/09: See this Silicon Valley Insider chart here which details the "cash cow" position of Google's search business.]

Google also famously took a high road to business, claiming that there’s would be a different company, with “Do No Evil” as a mantra and operating principle.

Like Microsoft much of Googles new products (YouTube, Blogger, Picassa, DoubleClick) have come from the 60 acquisitions Google has made. The big, innovative products developed internally seem few and far between. And because of the very personal nature of their business – personal search indexing – Google seems to be unusually clumsy dealing with a user public that challenges some of their moves. About the recent flap regarding privacy and the new Google product “Buzz,” Matt Ingram described the affair regarding social networking and Google “Like Nerds at the Dance.

Part of the challenge with Google, like some successful companies, is they appear to have an arrogance patina of: “we know, and you don’t” that rubs so many people the wrong way.  The side antics, such as the suit over the founders’ jet decoration, or the seeming overbidding for companies, simply add fuel to a fire that doesn’t need much help. And like many a small company gone large quickly, sustained innovation – apart from things they’ve bought – as noted above seems limited.

Just as Microsoft appeared to adopt a play hard, nasty and take no prisoners approach with competitors, Google looks like it’s taking off any gloves to stifle real and imagined competitors. Eric Schmidt’s  extended stay on the Apple board – as Google clearly was deep in the development their own competitor to the iPhone – is beyond conflicting: it was conconscionable. Google’s new “Buzz” product is a move to bundle (sound familiar?) one of its products (gmail) with another in a direct shot at Facebook and Twitter. I imagine more is likely to come.

Rossabeth Moss Kanter recently wrote in the Harvard Business Review that  “Winners become sinners when confidence turns into complacency and arrogance.” She post was in reference to Toyota but the thought came from her book Confidence: How Winning Streaks & Losing Streaks Begin and End.

Rossabeth also suggests some antidotes:

  • “Keep up the essential disciplines every single day, not skipping a single one.
  • Keep checking everything carefully.
  • Repair, renew, relearn, and reinvest regularly.
  • Don’t rejoice in others’ misery, because you could be next.
  • Thank anyone who points out flaws. Listen to disgruntled customers or disaffected constituencies.
  • Treat even small setbacks as occasions for redoubled efforts.”

So we’ll see how this plays out. Will Google reinvent itself in a kinder, more collaborative, more innovative way? Will its arrogance regarding who gets in the employee door – only people from the right schools with the right IQs – let in folks with different background and much better EQ and social abiliites?

Or will Google play out the Microsoft song – bigger, but not better – in the years to come.

Stay tuned.

Life Back West is an occasional set of writings focused on ways people, teams and organizations can be both more effective (doing the right thing) and more efficient (doing the right thing well). More about executive and team coaching services can be found at the “About J. Mike Smith and Back West, Inc.” sidebar or the “Hire Me” tab above.