I’ve spent many hours trying to puzzle out Google’s product plans. What’s the logic behind Google Drive, how does Motorola fit in a software company, and on and on (link). But with the acquisition of Nest, I think I’m going to stop looking for a single product strategy. I believe Google’s mission statement to “organize the world’s information” is no longer a meaningful guide to its actions. To me, the company looks less and less like a unified product company and more and more like a post-modern conglomerate.
The idea behind the “Internet of Things” is that network connectivity is moving into almost everything. If that’s Google’s investment thesis, it could rationalize an investment in almost any industry. Appliances? Absolutely. Shipping and logistics? You bet. Phosphate mining? OK, maybe not that. But any category of products that have electronics in them is fair game, as are any services that rely on data management. That’s going to be most of the economy.
You’re left with no grand product plan, other than the strategy of any conglomerate: Move into hot categories where we can apply our skills and expertise.
If that’s the case, we’ll need to evaluate Google’s strengths and weaknesses differently. We should worry less about the overall grand plan, and more about the management structure of its businesses, the skills of its general managers, and the efficiency of the support staff behind them. In other words, will Google be more like GE or like HP?
Here’s the key question: Does Google know how to manage itself this way? Does it have the right culture, processes, and team strength to run a conglomerate? Does it understand its weaknesses, and have a plan to fix them? For example, maybe the acquisition of Nest is less about its products and more about getting a team that knows how to apply high technology to a low-tech device category (link).
No industry is safe. The answers are crucial to many people. Investors obviously need it to understand whether Google stock is a good buy. VCs need to understand what categories of companies Google might buy. Competitors need to anticipate what Google might do next. And more broadly, the leaders in most industries should ask whether Google is now a competitor to them.