Google's Dilemma and Why It Will Die, Part II

In Part I of this two-part series, I softened Google up with a few well-placed punches to the torso. In this post, I'll deliver the knockout blow -- and hopefully encourage a bit of reflection.

Now, where were we? Oh, yeah, we had just looked at the first three of Clayton Christensen's five Innovator's Dilemma principles -- that companies depend on customers and investors for resources, that small markets don't solve the growth needs of large companies, and that markets that don't exist can't be analyzed -- and how they relate to Google.

So let's complete that list:

4. An organization's capabilities define its disabilities. The crux of this principle is that a company adapts to its success, and that it cannot simultaneously behave in ways contradictory to that success. A disruptive technology, however, often requires a completely different approach.

   Do you ever watch House? You know how House is always accusing Foreman of seeing a neurological problem because Foreman's a neurologist? That's what this principle is about. No matter how much 20% time you give people, they're far more likely to be working on projects that build on Google's existing success -- and therefore on its existing mindset and processes and server farms.

   And, at first, that may not sound like a bad thing. "Right, Kaila. Instead of building on success, we should look to failure? Thanks for the brilliant advice." There are obvious reasons why organizations benefit from repurposing what already works -- and obvious scenarios in which that's the smartest way to go. But at the end of the day, disruptive technologies come from doing things differently to the way that has previously succeeded.

5. Technology supply may not equal market demand. In this principle, market leaders who continue to improve actually end up overshooting market demands, creating a vacuum at lower price points. This scenario actually sounds more applicable to Office vs. Google Docs -- and more in Google's favor than against it.

   But can you see how the five principles work together here? Google can't afford to alienate the non-technical masses with too much tinkering, but others have the freedom to try something completely different, with no multi-billion dollar penalties for failure. And before you start your rant about Google Labs, just ask yourself who Google Labs is targeting. It's targeting you, and me, and the other power users and tech geeks who comprise only a small fraction of society. By the time a new innovation is mainstream enough to make it out of Google Labs and into the real world, someone has already staked a real-world claim on it.

Finally, any investor in Google would have to concerned about the narrowness of its success. They've never gone through a leadership transition. They've never generated significant revenue from anything other than AdWords. As of now, they're Gloria Gaynor; they're Dexys Midnight Runners; they're Harper Lee. Don't get me wrong -- I'd welcome the kind of success and financial returns associated with I Will Survive, Come On Eileen, or To Kill a Mockingbird -- but it's generally not desirable to predicate long-term business strategy on a single major success.

So when will this demise happen? Should we be ironing our mourning attire and writing the eulogy?

Here's the thing: Google won't go down because of a replacement product. Bing, for example, isn't going to cut it. As much as new search engines would like to believe that search is broken, it's just not that bad.

Google will go down because of a replacement habit.

This is the nature of the Innovator's Dilemma, of disruptive technologies, of market leaders caught unawares. It happens when, while simultaneously turning to their ten blue links for general search, people start to enjoy a new behavior. The new behavior may not, at first, seem to have anything to do with search. It may be an exploration of the social graph, or a real-time public conversation thread. Whatever it is, the new habit has the chance to take root in an environment that's initially non-threatening to the big boys.

That is the key: the habit takes root. The vast majority of Google users do so out of habit. The real market doesn't care enough to compare results. And so, in a head-to-head competition for straight search, Google will continue to win. But suddenly the environment around it will change -- the shift to mobile, the incredible immediacy of real-time -- and the old habit will no longer be relevant.

So when will it happen? I have no idea. But I'm looking forward to seeing how the story unfolds. What do you see as the next plot twist?

• Clayton Christensen
• Google
• Innovator's Dilemma