Wednesday, April 8, 2015

Cohesion through Experimentation?

Google is renowned as an internet giant that frequently experiments with acquisitions.  The specific case I want to address is Google's acquisition of Motorola back in 2012 for $12.5 billion dollars. This seemed like a reasonable purchase because it seemed like Motorola had all the assets that aligned with the direction of growth Google was pursuing.  However, in 2014 Google sold Motorola to Lenovo for $2.91 billion dollars, I'm interested in seeing why Google ended up cutting Motorola loose and want to analyze this through the cohesion principles.

How does Google create value?  
We serve our users by developing products that quickly and easily find, create, organize and share information. We place a premium on products that matter to many people and have the potential to improve their lives.

Googles capabilities that describe what they do uniquely better than anyone else.
Google has a list of 10 things they know to be true.   These 10 things roughly determine their culture and defines the products that they make.  You can check them out here:

http://www.google.com/about/company/philosophy/

How do Google's operations and organizational structure embody these capabilities?
One of Google's most interesting philosophies is "It's best to do one thing really, really well".  In this case we are focusing on their organizational structure in relation to the mobile industry.  Google purchased Android in 2005 to battle against Apple and Nokia in the growing mobile operating system market.  Fast forward to 2012 and we now see Android with a 70% worldwide market share.  The reason they were able to grow it so quickly was by aligning the Android development through their philosophies like: focus on the user, fast is better than slow, democracy on the web and others. Overall their moves in the mobile market have seemed to embody the capabilities they describe, but I don't think they followed that trend when they adopted Motorola.

Does Google evaluate new products and acquisitions on the basis of their fit with the way to play and capabilities system?
This is the part that is most questionable.  Google has done an amazing job when it has come to software and internet related technologies, but should mobile hardware fall under their umbrella?  At this point in time Android has been doing very well, but their attempt at selling mobile devices was still a far cry from Apple. Purchasing Motorola gave Google access to patents and Motorola's large supply network of smartphone users. The idea was to supercharge the Android market through Motorola resources; however, mobile phone hardware development is a completely different game than the fast moving and iterative software development. I think the acquisition of Motorola fit some of the philosophies that Google embodies like: providing access to information anywhere and focusing on the user.  But it didn't align well with the others, which were more information and web services based.  This led to Google selling Motorola's mobile phone production to Lenovo in 2014.

In the end, it seems that even if some matches make sense and actually gives you more power to expand your market and influence.  It may be taking away, or not adding enough to other parts of your business to be worthwhile.

Other Readings and Links:
http://www.tmu.ac.in/pdf/viewpointjultodec2012/final_inner_12.pdf
http://www.forbes.com/sites/gordonkelly/2014/02/10/how-google-used-motorola-to-smack-down-samsung-twice/
http://www.pcmag.com/article2/0,2817,2430130,00.asp
http://www.cartesian.com/wp_content/upload/Google-Buys-Motorola_Cartesian_Oct2011.pdf
http://www.phonearena.com/news/Motorola-is-Googles-defense-against-Samsungs-Android-dominance_id40243
http://www.wikinvest.com/stock/Google_%28GOOG%29/Provide_Value_Users
http://www.google.com/about/company/products/

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