Google Wave Decision Shows Strong Innovation Management

11:26 AM Thursday August 5, 2010
by Karim R. Lakhani  | Comments ( 11)

Some tech pundits were surprised that Google decided to shut down Wave yesterday just a year after its launch and chastised the company for its decision. But I’m not surprised and I applaud the company’s decision to pull the plug after it was clear the market wasn’t interested in Wave. From my vantage point as someone who studies innovation, Google’s decision was exactly the right move and provides some very important lessons for managing innovation in both small and large organizations.

The first lesson, of course, is that uncertainty haunts all innovation attempts. Charles Kettering, inventor and VP of R&D and Board Member of GM (1920-1947) famously noted that when it comes to innovation: “You don’t know when you are going to get the thing, whether its going to work or not and whether its going to have any value whatsoever.” In essence Kettering implied that any innovation attempt faces a combination of temporal, technical and market uncertainty. Even a company like Google, recognized for its wealth of intellectual talent in its employees, was not able to figure out before hand if there would be a market for Wave. Some types of uncertainties are simply not resolvable before the fact, and the only true way to find out is to make the investment and launch an innovative product in the market place. Google should be applauded and rewarded for pioneering a risky project and publicly launching it so that it can learn from the market.

Google’s decision to launch Wave also provided an important signal to both its existing and potential employees that it values innovation and the efforts of its staff to imagine new revolutionary possibilities about the future. In a global war for talent, the best scientists, engineers, marketers and managers are going to affiliate with organizations that will allow them to fully express and exercise their creativity. Supporting the inception and development of such creative projects to attract and retain top flight talent is thus another important part of managing innovation.

Failure of course is always a possibility with any attempt at innovation. Indeed the bedrock of innovation is failure. Unpacking the history of most innovative products and services will reveal a long track record of failure where innovators attempted many different (failed) ideas and approaches on their way to create high-value solutions. These failures are a necessary on the path of innovation and executives and managers need to build an organizational culture that has a high tolerance for failure so that that their staff don’t second guess big risky ideas and instead propose incremental bets.

Certainly the business world is rife with examples of other firms that keep investing more resources and staff in failing projects in the hopes of a miraculous recovery or simply to avoid the public embarrassment of failure. However, admitting failure and moving on is another key lesson in managing innovation. With Wave, Google simply did not get the user traction it needed to justify its existence. Innovation managers need to develop clear metrics about performance criteria and be ruthless about shutting down projects that do not meet the bar. The ability to (quickly) shut down failing projects and reallocate intellectual and financial resources to other more promising endeavors is critical to innovation success as it releases individuals and budgets to take on the next big challenge. It also indicates to the internal organization that performance metrics are important and projects that do not meet the criteria will not be allowed to languish. Of course the lessons from the failure should be embraced and rapidly applied to other projects. In the case of Wave, Google has already started to bring some of the communication and collaboration features into their more successful products like GMail and Docs.

Google should be commended for both launching and shuttering Wave as it shows that their managers both embrace creativity and innovation and are also cognizant of allowing failure and dealing with it rapidly and efficiently if the creative efforts do not bear fruit. More of us should be following in their footsteps.

Karim R. Lakhani is an Assistant Professor of Business Administration at Harvard Business School.