To make a profit, don’t chase profit

This is a sad story of why a talented Googler decided to leave the company, having lost faith in its ethos.

We shouldn’t judge a company based on the views of one disillusioned employee. This post isn’t really about Google, I’m just using something he says to make a wider point. The part that got my attention was this:

The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus [trying to beat Facebook and avoid losing the Internet advertising crown].

So what kind of company is Google? An ad company or a tech company? Of course it’s both – they use tech to ‘organise the world’s information’ and generate revenue through advertising. But one trickles down from the other. Tech is what Google is really about. All great companies focus on something higher and if you get that right then profits follow.

When you have an incredibly strong competitor (or you’re just going through a period of bad financial results), it’s so tempting to say ‘SHIT we are losing profit. How can we make more profit?’ But this kind of thinking stifles what really matters – focussing on the mission, innovating and then delivering.

The blog post says that Google has failed to create an exodus from Facebook. I can’t see how they ever will if they try to chase Facebook’s ad dollars and catch up. The focus is in the wrong place.

It seems Google is on the defensive now as the incumbent against the up-start, just as it once was the up-start against Yahoo and Microsoft. Google got ahead of these competitors by doing something new and different, not playing them at their own game. And it did this by having a clear and simple mission which it followed.

The lesson here for all companies is that when you find yourself chasing profit (or a particular competitor,) you’re operating at the wrong level. You need to look higher at the mission and focus on creating a strategy for meeting it. This can lead to innovation that leapfrogs the competition and creates completely new markets, exactly as Google once did and Facebook is doing right now.

Let’s not get into a discussion about Google’s strategy around social networking – there’s plenty of that on the tech blogs. But what do you think about where you should put your attention if you want to build a profitable company?

6 thoughts on “To make a profit, don’t chase profit

    • Trouble for them is that so much of the web today is locked inside Facebook where they can’t help it to be searched. Big problem for them but I don’t think that just directly chasing Facebook with an alternative answer. Who know what the answer is though.

  1. I think the problem is here: “So what kind of company is Google?”. As soon as you define Google as a company. When you define it as a company it becomes something that hungers for financial performance. Before that it was a bounce of boys and girls playing together with code, like in when kids play together in school. There was no agenda. Except, create and learn. Use new colours/code, create new pictures/applications and form new clay-sculptures/software-architecture. When it became about how much you can get someone to pay for it, the game changed.

    • Good point. It shouldn’t be about defining a company by sector (tech, advertising, underpants, whatever) but by their ambition for how they want to see the world in the future as a better place. Google is clear about this, by organising the worlds information and making it universally accessible. When they’re under threat, like Google is from a closed Facebook that it can’t help people to search (or sell advertising on) then going back to the ambition and looking for new ways to achieve it seems like the right thing to do,

  2. And the game always changes and always will change.

    It’s fun at the front but when it expands – of necessity – others get involved and it’s not possible to recruit new people who have the same motivation as those involved at the initiation of the enterprise.

    The new people – who soon vastly outnumber those involved at the initiation of the enterprise – are differently motivated. They want to succeed versus the standards which they perceive as signifying what amounts to success – usually financial reward but, sometimes, power or influence upon events.

    Sure you can attempt to recruit only those who share the same motivation as those involved at the initiation of the enterprise but there is rarely the time available to go through the recruitment process as thouroughly as would be required to achieve this recruitment objective. So you get what you get and this will normally be a mix of the ‘well motivated’ and the ‘normally motivated’.

    You are also left with another problem; the motivation of those involved at the initiation of the enterprise is subject to change when they perceive the opportunities which exist which they had not perceived when they were initially involved in developing the enterprise, e.g. a level of wealth which would allow them to exercise freedoms, allow experiences which they had not previously thought possible and acquistions which they had previously thought to be outside their scope of consideration.

    It’s an ugly and ‘real’ world out there; we’re not all of us the Dalai Lama or Mohandas Gandi – we are subject to the normal weaknesses of humanity, i.e. greed, avarice, envy, self-glorification, etc. which strongly compete with our better instincts.

    It’s admireable and right that we should strive to being driven by our better instincts but realistic to acknowledge that history and experience teach us that we are more frequently driven by the normal weaknesses of humanity.

    • Agree with your first point about the culture changing with size although I think there are ways you can minimise this (decentralisation for example.) Seems like we always get to a point of disagreement though about our fundamental assumptions of human nature. I think this is a really important point and worthy of a blog post of itself next week. Thanks for playing devils advocate – it gives the issues a good proper rinsing!

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