At my workshop in New York last week the conversation drifted to Google's and Verizon's plans to introduce a new kind of Internet which looks more like a toll road than a free highway. I was not surprised that everyone in the group was upset by the idea. But I was surprised that Google's plans came as a shock.
Sure, the plan runs afoul of Google's now famous self-directive to "not be evil." But the evolution of Google from underdog to an industry leader follows the inevitable pattern of every successful firm.
The reason for this transformation has nothing to do with values but all to do with sources of power. You see, small companies must build competitive advantages on things we as consumers admire—like producing great products—because the only tools they have at their disposal provide temporary advantages. Keeping consumers always happy is hard work, but necessary when you have competitors waiting in the wings to steal your clients away.
But as companies grow stronger, things change. They become intrigued by a new set of tools in their tool box. In my last book I called this stage of evolution "earth." The innovator, who now owns the innovation, wants to protect his gains. The sources of advantage that got him here will no longer sustain him. So he shifts his strategy to pursue three goals:
- To lock up critical inputs (as Google seems to be wishing to do with Internet access).
- To leverage economies of scale.
- To build customer captivity.
This is not to say that we should not be afraid of Google's more obvious approach. But I don't think we should be surprised. To believe that Google would continue to be gratuitous is naive. We all aim to build an empire and we all know we would alter our mission to protect our significant gains. So ask yourself the questions below to see how you can start developing a business strategy to tackle the three objectives above.
- What can we give away for free in order to capture more customers?
- How can we lock up access through partnerships with vendors or another industry?
- How can we use our processes to decrease our costs?