Last week we explained that we’re prioritizing our product efforts. As part of that process, we’ve decided to wind down Google Labs. While we’ve learned a huge amount by launching very early prototypes in Labs, we believe that greater focus is crucial if we’re to make the most of the extraordinary opportunities ahead. In many cases, this will mean ending Labs experiments—in others we’ll incorporate Labs products and technologies into different product areas. And many of the Labs products that are Android apps today will continue to be available on Android Market. We’ll update you on our progress via the Google Labs website. We’ll continue to push speed and innovation—the driving forces behind Google Labs—across all our products, as the early launch of the Google+ field trial last month showed.

Then a scant 180 minutes later, Bill Coughran, senior vice president for research and systems infrastructure, added this Googley “update.”  Google, as Susan Wojcicki, senior vice president of advertising says, is officially into “continual innovation, not instant perfection” in either products or corporate policy statements:

To clarify: we don't have any plans to change in-product experimentation channels like Gmail Labs or Maps Labs. We'll continue to experiment with new features in each of our products.

What’s gone? Obviously the Google Labs site where I could “play around with prototypes of some of Google’s wild and crazy ideas and offer feedback directly to the engineers who developed them.” And maybe the rich resource, “Publications by Googlers.” I do not think there will be much of a change in Google’s innovation pace. In fact, it may accelerate in social media.

Earlier this year (spring 2011), Google’s management shakeup put founder Larry Page’s hands on the tiller of USS Google. A loud fog horn blasted and caught the attention of Google watchers. The blast was interpreted by me that something was amiss within Google. Eric Schmidt, the “adult” working with Messrs. Brin and Page, was promoted. A management change at the top flips on the carbon arc lights of scrutiny. Under Page’s command, the financials of Google are ship shape. The fleet of products and services trawled upwards of $9.0 billion in revenue.

Social Media

Now we shall follow one thread of innovation at Google related to social media. The invention of Google+ was not a Eureka! moment. I am confident that no one formed a mental picture of Messrs. Brin and Page, sitting in a hot tub with a clutch of Google Fellows. Without warning, Brin and Page leaping from the steamy water, shouting, “We know how to deal with Facebook!”

Google+ was the result of a long, arduous, and expensive path that began with Google’s hiring of Orkut Büyükkökten in 2000, who had created Club Nexus (possibly the first college social network) and then inCircle for Stanford graduates. In my Google research I uncovered tantalizing bits of information, such as the 2004 Wired article, “Lawsuit: Google Stole Orkut Code.” Orkut was a hit in Brazil, but the service never caught on in the U.S. Orkut seems to be in permanent beta as of 8:46 am Eastern, July 24, 2011. Tomorrow? Who knows.

Scarcely 12 months later, Google sucked in the content from the Deja News archive in 2001. Newsgroups were and remain social systems generating content. When Google loaded the content on its servers amplifying the new Google Groups service, wasn’t Google ideally positioned in social media?

In my first Google study The Google Legacy, published in 2005, by Infonortics Ltd. in Tetbury, England, I pointed out that Google was an early entrant in the Social Media Wars. Here’s a good question: “Shouldn’t Google have become the leader in social media when Mark Zuckerberg was still in high school?”

Between 2001 and 2009, Google focused on many interesting projects. None of those posed much, if any, threat to Facebook. In the 8 years of innovation from Google, Facebook exploded from a handful of users to hundreds of millions of users. Wojcicki enjoins us to “Look for ideas everywhere.” Great idea but what happens when one does not recognize a great idea or have the innovation tools to do something about that idea? The question is even more interesting when media attention rages like an Arizona wildfire for years and staff leave Google to join Facebook in droves.

Google Wave, originally announced at the Google faithful conference in May 2009, was Google’s innovative social communications service. When I heard about Wave, I was researching Google’s significant investment in a technology I collectively grouped under the term “dataspaces.” The idea was that a user in a dataspace would be able to integrate Google services with personal information in one coherent searchable service. The Wave did not have enough momentum to carry its surfers to the shore. Wave sank in August 2010. Google turned over the service to the Apache Foundation. You can now use the Apache Wave to build or deploy your own real time collaborative computing platform. Surf’s up at http://incubator.apache.org/.

Then in early 2010, Goofgle caught many users’ attention with its release of Buzz, a social networking and messaging tool. The idea was to integrate sharing functions within Google’s widely-used Gmail service. The idea of social communications was at the time of the Buzz début a truism. Facebook has trampled MySpace and was riding its booster jet to social media’s stratosphere nosing toward 500 million members. Gravity did not seem to apply to Facebook in mid-2010. Whether the service was ill conceived or a victim of bad karma, Buzz was nailed with a roofing gun filled with 1 ¼ inch smooth shank coil roofing nails. There were more inconvenient legal hassles related to privacy. But the bottom-line was that Google Buzz went nowhere. You can still use the service, which is available at http://www.google.com/buzz.

Now we arrive at Google+ with its 20 million users and remarkable internet buzz, no pun intended. The innovations in Google+ pivot on Circles. (I explore Circles in my August Enterprise Technology Management column “Does Google+ Add Up for the Enterprise?” for the U.K. publisher, IMI Publishing.) Google+ seems to have been influenced by then-Googler Paul Adams in a Google briefing called “The Real Life Social Network.” Adams’ Google presentation is at http://goo.gl/IJ9WF. Nota bene: Adams now works at Facebook.

So, What Does This Tell Us About Innovation?

First, innovation for Google is not predictable. With costs creeping upwards, killing a bureaucratized, blue sky research operation is a prudent act. If Google Labs “worked,” I would have expected that group to pick up on the social media trend and dominate it. In a decade, Google Labs did not.

Second, with Google’s hooking an employee’s bonus to his or her contributions to “social media” or “social networking,” who wants to grind away in a blue sky lab and end up with a bonus of exactly zero. Not me and probably not too many of the wizards who were assigned or promoted to the Google Labs’ unit. Executive compensation is often the root cause of many business actions. How long would it take a super smart Google Labs’ employee to request a transfer to a “social” project? Maybe a second or two?

Third, Google’s innovations occur and may be part of the “stuff happens” reality of innovation. What about Google’s widely publicized “20% time” innovation method? The Google cheerleading books describe Googlers as having one day a week to work on personal projects. What the books ignore is the fact that the Googlers who I have met and, on occasion, worked with, put in 60, 80, or longer hour weeks. The 20% angle takes on a different color when considered against the background of pressure, tough problems, and Type A behavior. Reality may be a little different from the myth about that reality but according to the quite interesting I’m Feeling Lucky: The Confessions of Google Employee 59 by Douglas Edwards, Google News emerged from the 20%, side project program.

Now consider that less than 3 weeks after the Google+ tsunami rolled over the lucky invited beta testers, Google purchased Fridge, a start up with technology that allows a Google+ user to create private groups. A few days later, Google bought PittPatt, a start up with facial recognition software. Keep in mind that Google has its own facial recognition technology and Schmidt cautioned governments about the use of such technology. The phrase I jotted down was “facial recognition is too creepy even for Google.” The quote appears in a May 18, 2011 article in The Telegraph, a U.K. newspaper. Creepy or not, Google is buying technology, presumably to add functionality to its lineup of products. I will have to check out Google+ to see if PittPatt features turn up in Picasa, the photo sharing program now integrated into Google+. (Google Labs generated some interesting patent applications such as US2010 0008547, “Method and System for Automated Annotation of Persons in Video Content.”)

Challenges for Google

Before offering my cautious view of innovation at Google, let me comment on other pressures that Google now faces. The Facebook-Google+ case example is interesting, but I am not sure it is the highest hurdle in front of Page and his new management team. In my opinion, Google’s inventiveness may be affected by one or more of these challenges as the drama surrounding each unfolds. Google’s future may not be under the control of Google management.

The legal challenges in which Google is involved are wide ranging, complex, and potentially damaging and expensive. Google’s Page will be questioned by Oracle’s attorneys about Google’s use of Java technology. In my experience, Page is not a “word guy.” I appeared on a panel with him in 1999, and I attempted a bit of banter, which was met with the statement, “Google will never use truncation.” Google did introduce truncation, which is a routine method for performing certain types of grouping operations. But that sharp, “Google will never use truncatation” struck me as quite definitive and, as it turned out, not accurate. What will surface in the deposition? We will know at some point in the future.

Google also faces questioning about business practices. The company has rounded up a wagon train of Washington lobbyists to advise the firm in its interactions with the U.S. Federal Trade Commission, the U.S. Senate, the U.S. House of Representatives, and the White House. The European Commission is interested in Google as well. There are assorted legal issues in play with various parties to the Google Books project, Google’s alleged sniffing of private information via an inadvertent bit of code embedded accidentally into Street View vehicles, and a dispute about alleged results ranking actions for the U.K. company Foundem and the French company 1PlusV. Lawyers, like the prospect of being hanged in the morning, do focus one’s mind.

The financial challenges are mounting as well. The quarterly revenues, reported on July 14, 2011, rose. Google’s share price jumped 13% after the revenue report. However, Google’s overhead, sales and marketing, and research and development costs continue to creep upwards. The shift of innovation from Google Labs to product units makes sense, and I think that Google will take other measures to curtail rising costs. Examples may be found in the termination of support for Firefox’s Google Toolbar to emulating Apple’s walled garden approach to certain products and services. A softening of online advertising would squeeze Google due to its huge investments in plumbing and new products and services associated with the Android operating system. With nearly 30,000 employees, costs are now an issue for Google management and a hot button for analysts.

Today’s competitive landscape is very different from what Google rolled through in 1998. In my various articles, reports, and monographs about Google, I have been vocal about the competitive landscape. My research indicates that when Google surged to prominence in the 1998 to 2003 period, there was modest competition in web search. The major players were unable to find a way to index content without generating a sinkhole of costs. Google figured out how to index using methods that made web search possible at a price Google could afford. Google did face competition in advertising. Google emerged from a tough fight with Overture as the whale of online advertising. The money rolled in. Prior to Google’s initial public offering, Google settled a dispute related to online advertising related to Google’s use of Yahoo’s intellectual property.

Today, the competitive landscape is different. There is Facebook, which as we have seen rose in spite of Google’s early and somewhat casual social services. Google was asleep at the switch or too preoccupied with buying corporate jets and figuring out where the waterbed would go to pay attention to Facebook.

Then there is Apple. Schmidt, then Google’s chief executive, served on the Apple board of directors. At the same time, Google was revving its mobile device activities, filing patent applications related to rich media, and dabbling in hardware. Remember the Google phone available from the now defunct Google phone web page? Schmidt resigned his seat on the board, and the two companies have been jousting more enthusiastically. My research suggests that Apple is a problem for Google. Apple’s hardware is more innovative than Google’s, and Apple’s rich media services are more innovative than almost any other outfit in the universe. Google continues to labor in the rich media space, but Apple is surging. Netflix is in the market, and there are indications that continued changes are likely due to the public selling of Hulu and the long anticipated roll out of DECE UltraViolet. In short, Google has its rich media work cut out for itself. The competition is formidable.

And, there is Amazon, once a seller of ink-on-paper books. Now Amazon is doing rich media. Amazon is in the hardware business with a tablet positioned to challenge the Apple iPad and Google Android devices. And Amazon is in the cloud-based, web services business just like Google. In comparison with Amazon’s digital Wal-Mart like footprint, Google’s Froogle, now Google Shopping, is a trout swimming next to Amazon’s orca.

Why is Today’s Competitive Arena Important?

Google has to deal with a number of significant competitors in the consumer space: Facebook, Apple, and Amazon. In addition, Google has to find a way to encroach on customers enamored with the products and services of Microsoft and other entrenched vendors in the enterprise market. In short, Google has to be like Bruce Lee in Enter the Dragon. One dude must deal with multiple opponents. Bruce Lee won. Will Google pull off the same feat? Is Larry Page a Bruce Lee? Google is fighting in a real life arena. Bruce Lee fought in a make believe world. Life imitates art, or does it?

What’s the bottom line? Google is in the midst of reshaping itself from brute force search with embedded ads to a search, advertising, enterprise, consumer, mobile, and social products and services company. The 1998 wunderkind now must demonstrate that it can innovate and thrive against numerous and capable, innovative foes.

In my view, innovation at Google will continue, but it will be increasingly difficult for Google to pull off the stunning successes it had when it enjoyed “the force that through the green fuse drives the flower.” Google must prove that its “youth” will not “be bent by the same wintry fever.”

The end of Google Labs marks the end of an era, not Google innovation. Google will now buy ideas and assemble them in combinations that look original as they experience a “wintry fever.” Apologies to Dylan Thomas, whom I thought was innovative, and inventive.