Is Google Facing the Beginning of the End?

I recently read an interesting post evidently written by a Microsoft employee who had left that company to join Google and then returned after finding the grass wasn't so green on the other side of the fence. Google is well-recognized for providing one of the best working environments in the world, but like many companies that have been similarly revered, they appear to be systematically killing it, according to this post. This all sounded very familiar, and in Google I see the repeat of catastrophic mistakes made by IBM, Apple, Microsoft, Netscape, Sun and Yahoo.

Of this group, Microsoft survived, IBM has nearly recovered, and Apple actually eventually became greater than it had ever been, suggesting the pattern need not be terminal. But Sun, Netscape and likely Yahoo illustrate that it certainly can be the end of a once successful firm. Let's look back on how Google's inability to learn from the mistakes of others is setting the stage for its failure.

The Microsoft-Google-Microsoft Blog

I could have written a blog entry similar to the post describing how Google lost its way several times in my own career. It tells the very sad story of a company that started out founded on fairy dust and dreams that has suddenly had to face the twin realities of losing its focus and being rendered obsolete by Facebook. What is interesting is the writer, James Whittaker, left and then returned to Microsoft. I imagine this was because Microsoft is in a steady state, while Google is in transition and transitions, particularly when they come at the expense of cherished entitlements, are incredibly painful and demotivating.

Whittaker also tells the story of a company that has lost its way in a desperate need to be seen as successful, one that misinterpreted Steve Jobs' advice about focus and simplicity. Google is simplifying and focusing on people, which is consistent with the Jobs' counsel, but the company appears to have skipped the part about deciding what they are good at and focusing on that. Google still seems to be chasing Microsoft, Apple, or in this post, Facebook. This last elusive target has been a recurring theme and one that has contributed to the crippling of a lot of great companies.

IBM Now Is Focused

When I first ran into this problem it was as an internal analyst at IBM. The company owned the tech market and was actually operating under what we now know as a SaaS model. In fact, it was arguably even more advanced, in that everything was pretty much a service. Corporate leaders saw the personal computer emerge and viewed Apple as a threat. They responded by creating the IBM PC and partnering with Microsoft as a block to Apple, and then they saw Sun come up and decided to sacrifice the mainframe on the altar of client-server computing. Next, they identified Microsoft as a threat and decided to do outsourced software with OS/2.

Each attempt to become another company further weakened IBM to a point where the firm almost failed. Now that IBM has shifted gears and is focusing on being the best IBM it can be, the company doesn't appear to be trying to be Google or Facebook and shares are trading higher than they have ever traded.

Microsoft Still Faces Challenges

Next on the list is Microsoft, whose success was tied to outsourcing software. Hardware engineers have never really understood software, and Microsoft's big idea was to provide an outsourced service. They first did this with Apple and then IBM, and Office and Windows eventually resulted. However, IBM became concerned that it was being eclipsed by Microsoft, and the two companies went to war. Microsoft began to sell to corporations directly.

Next, Microsoft saw AOL as a threat and created MSN but missed the Web and Netscape ambushed them. In the process, Microsoft lost focus on OEMs and users. They began to worry that Sony was planning to turn the PlayStation into a PC and built the Xbox, which further alienated OEMs and pretty much killed the PC gaming business.

Finally, Google arrived and Microsoft spent billions trying to be a better Google. But Microsoft didn't seem to get Google's core model and the once-unstoppable outsourced software model is no longer unstoppable. Microsoft continues but the OEMs that initially made the company unbeatable are now also using Google, and Microsoft has been eclipsed in cellphones and tablets.

Apple, Once Near Death, Stronger Than Ever

Apple, which started as the consumer PC company, was initially eclipsed by Commodore, which better focused on the consumer early on, but then died trying to be a better business computer provider. After losing Jobs, Apple seemed to get lost in first trying to be Compaq, Sony/HP, and then Microsoft. The company massively expanded its hardware lines, jumped into cameras, printers and hand-held computers, and then ventured into outsourced software by licensing the MacOS.

Apple was months away from going under when Jobs came back. He refocused the company on the consumer PC business and then, anticipating that PC growth was slowing and recognizing that catching Microsoft from behind wasn't going to work, moved into entertainment. The renewed narrow focus on consumers and excellence allowed this company to recreate itself in its own image. Apple is the only firm that actually emerged stronger than its prior peak after losing its way.

Netscape Mistakenly Blamed Microsoft

Netscape was the first poster child for forgetting what it was about. Netscape was the Internet, and when people initially went to the Web virtually all of them used a Netscape product. But Netscape couldn't figure out how to do what Google would eventually do and properly monetize the Web, and instead the company decided to focus on displacing Microsoft.

This effort to upend Microsoft has been at the core of billions of dollars in wasted spending by more companies in the last three decades than any other failed strategy and it cuts across virtually all of these vendors. What is fascinating is that when you talk to an ex-Netscape executive he will often argue they were put out of business by Microsoft, which, in a similar fight with Google, has been fairly unsuccessful. I reviewed the evidence out of the Justice Department trial, and while Microsoft clearly misacted, the company was hapless in its fight with Netscape. Each major failure tracked back to a decision made by a Netscape executive largely connected to something that had nothing to do with its Internet dominance.