Innovate for Success, Like Google and Yahoo!

Yahgoo!

Should Google buy Yahoo! That was the question asked by Stephen Wellman in Information Week in July 2007. It is certainly not a far-fetched idea. With their roots in academic startups the two companies have much in common. A recent analysis of how the two companies innovate also points to the fact that they share more than a few cosmetic similarities and that at the heart of their successes is a similar approach to innovation that differs significantly from that used by the rest of the pack.

Traditionally, technological innovation and business innovation have been seen as two sides of the same coin, you might say, or perhaps they are more akin to a dual core processor, both equally powered and working in parallel towards a single end more efficiently than a single processor could achieve. Indeed, this notion has become a key theme in studying how innovation occurs and where it leads. If they are not a dual-core then, they innovation is taken to operate on a four-stroke lifecycle, a kind innovation combustion engine.

Now, Ping Lan of the School of Management at the University of Alaska Fairbanks, and colleagues Gregory Hutcheson, Yavor Markov, and Nathaniel Runyan have examined how different types of innovation are integrated by two of the world’s leading tech companies: Yahoo! and Google. They have found that neither company takes a dual-core nor a four-stroke approach to innovation. Instead, both Google and Yahoo! it seems operate a triple-core system, with all the advantages of both the dual and the four-stroke that sidestep many of the disadvantages.

The research team has trawled through more than 2000 publicly available documents, including patents, company reports, news releases, and search engine monitoring reports. They analyzed this information for both companies to uncover their relative innovation efforts over their entire development history. The analysis was carried out against the background of the search engine and online directory industry. To put each in context, Google is considered to be the premier search engine with a vast index, by many observers. Google’s generally less familiar directory is usually only thought of as a minor part of its operations. On contrast, Yahoo! emerged as the net’s first big directory of sites and has only recently taken a sideways shift in the public perception to be considered a search engine instead.

From this analysis, the team has demonstrated that, despite, their many differences, there is a singly common factor that contributes to the unique successes of these two giant net companies. They both “actively pursue the synergy of product innovation, process innovation, and business innovation,” an approach that Lan and his team label the “innovation tripartite”.

Moreover, Lan suggests that recognizing how such companies weave together these threads of innovation, could give other companies and entrepreneurs useful insights into how to improve their own methods for coming up with new products and service ideas. The analysis also overturns the staid concepts used to describe innovation in a more traditional setting, such as the dual-core approach and the so-called four-stage innovation life cycle.

As to differences between the innovation strategies of Google and Yahoo! the researchers found that although both companies actively pursue this tripartite approach at various levels in each company, Google shows a more balanced tripartite structure, with each thread contributing more evenly to the overall end result.

According to the Yahoo Innovation blog (ironically hosted on Google’s Blogspot), Yahoo! is one of the top 20 Innovators comprising the The Innovation Index, and is leading the top 20 Innovators in stock performance gain in 2007. Of course, Google is also in the same innovation index. Other studies have looked at whether or not Yahoo! can ever catch Google and based their conclusions on a comparison of innovation, showing how different are the two camps. This new study from Lan and colleagues perhaps suggests that there are greater similarities than there are differences, which could hint at future outcomes regarding ongoing successes, failures, and buyouts.

Of course, there are some serious differences between the results of all this supposed innovation at Y! and G and as a footnote to this post, I ought to mention Amit Agarwal’s recent post on the five things that Yahoo search but not Google can do. Among them, composing emails from the search box, specifying keyword order in a search, retrieving song lyrics directly, search within sites using a keyword like !wiki, !flickr, or !ebay (like shortcuts in Firefox, admittedly, but requiring no set up), and use the undocumented linkdomain feature, e.g. find how many outbounds to one site there are from another like this: linkdomain:cnn.com site:wikipedia.org

The research team published details of their results in the International Journal of Technology Marketing, 2007, 2, 295-315

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