Wednesday, October 26, 2005

It takes a lot more than 20% to innovate

I guess I'm a little tired (and admittedly envious) of all the hype and adulation that surround Google. Clearly the company is doing a lot of things right. How else can you explain its unstoppable revenue and earnings growth?

However, I'd still bet against some of Google's choices. One strategy I disagree with is Google's often-cited policy that its engineers can devote up to 20% of their work time to personal research projects. Google justifies this as an investment in innovation presumably because its talented employees will cook up some new ideas that will, over time, flourish into billion-dollar businesses. This August 2005 Always On article does a decent job overviewing Google's innovation efforts.

But every entrepreneur knows it takes a *lot* more than a 20% effort to innovate. It takes more like 120%. I'd much rather bet on a charged-up entrepreneur who is fully dedicated to an innovation than on a Google engineer spending just a fraction of his time.

Of course I do find myself thinking (and asking entrepreneurs) about how a new startup plans to address the "Google risk," but it's not out of fear related to Google's 20% innovation time policy. In fact, I wonder if the 20% innovation time is really just a distraction from productive work for most of Google's staffers.

Meanwhile, I'm delighted to be working with and investing in entrepreneurs who give more than 100%, because it's impossible to get anything done with any less effort.


Boris Veldhuijzen van Zanten said...

My guess is that the 20% work time dedicated to innovative personal stuff DOES work and for a simple reason. You are right; to get something off the ground you need to be motived and dedicated 120%. But you also have to pay your bills. So you take a job a Google. And ALL your free time (100%) is spend on your innovative billion dollar business. Then the extra 20% that your employer let's you spend on your idea makes all the difference. Suddenly you can make a few phonecalls during the day, use the copier, fax and pc to do some stuff to get you idea off the ground. And then Google owns it. So, in short, the 20% is indeed a good idea. Not because you can do much in 20% but because it is the 20% that might make all the difference...

Anonymous said...

Good post! I have a different perspective, for different reasons to Boris.

With ventures, the 20% of work is going to count for 80% of results.

It's a lot better to kick start heaps of ideas, some of which will stick, than doing a few startups and trying your hardest to make sure they DO stick.

It's not a secret- the outcome of any given venture is influenced more by randomness that the 120% of postive actions that one may endure. You can have a seamingly bulletproof idea with A players, and nothing works out- no matter what you do, or, you can have some wacky idea (think Ebay), run by amateurs (think Google) and bang, everything just sort of clicks.

Entrepreneurship is a game of luck more than that of skill and Google is rolling more dice than anybody else in town with their HR policy- that's why they're gonna win.

That's why DFJ wins. It's not the quality of the deal, quantity is more important.

Anonymous said...

Jeremy - Great Post. However, I think it's important to note that several other successful companies allow their engineeers to also devote 20-25% of their time to working on personal projects as well - companies like 3M and Medtronic are two examples. In that respect google isn't that impressive. In the case of 3M, the post-it and cold seal adhesives were both invented by accident by an engineer working on something for fun. Allowing the engineer to work on projects of personal interest allows the engineer to act like an entrepreneuer, but without the risk (also without the huge upside since presumably the company the engineer works for owns the IP). From a company's pt of view it makes sense because they can leverage these "inside entrepreneurs" to come up with out "of the box" ideas and products, while at the same time having them work on corporate projects.

In response to Daniel I would say that luck definitely plays a part in a startup, but that it is not entirely a game of luck. I think the team and a clear business strategy is the most important thing in any given startup. Too many entrepreneurs only look at the end picture but don't think enough about how to get from pt A to Z. I also disagree that just throwing money at tons of ideas is a way to make a successful VC firm - If I recall I don't think idealab (or countless other firms) did too well with that strategy....

Anonymous said...

I have a more Machiavellian view of 20% time: 20% time is a scam to help their engineers really focus on their remaining 80% time.

Really good engineers like to have fun. They get distracted from the job they are supposed to be doing. They like to innovate -- they don't like to do the boring work that is required to make the product commercial grade.

Engineers would waste 20% of their time anyway. Google makes that 20% time productive for the company. And by condoning the goof-off time of engineers, they make their "real work" time more productive.

Anonymous said...

Nivi has a good point, but I'd suspect that the f-around time that will get spent by engineers will get spent, probably on top of the 20% personal time allocated.

I also agree with you, Jeremy, and that is the reason why Orkut is now a Friendster for Brazilian kids, while MySpace was worth $580m.

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