Google and the 80/20 Rule

Innovation. It’s a term that several companies use to define internal success and it is what many organizations work hard to accomplish. Many of these businesses have different techniques they use to achieve this success. One example is Google. It has paved the way for other companies such as Xerox, for instance, by developing a unique way to inspire innovation and creativity amongst their teams. They do so by establishing a tool that gives employees autonomy to work on whatever projects they so desire. This tool is Google’s 80/20 policy.

The 80/20 policy was announced through an open IPO letter written by Google founders Larry Page and Sergey Brin back in 2004. This letter stated that they were going to encourage their employees to dedicate 20% of their time to work on separate projects that they felt would benefit the company. They hoped that this would encourage their employees to be more creative and innovative. Sure enough, they were correct. This policy led to the creation of some of Google’s most well-known products that include Google News, Gmail, and AdSense.

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For those unfamiliar with these products, Google News provides similar information to what major news sites report on such as CNN online and Fox News. What makes Google News special, however, is that it is computer generated and “aggregates headlines from news sources worldwide, groups similar stories together and displays them according to each reader’s personalized interests.” Gmail, a feature that most people and businesses so commonly use today, is a free Web-based e-mail service that provides users with a gigabyte of storage for messages and provides the ability to search for specific email messages. It is a way for Google, like Facebook, to create a network for people to connect throughout the world. As of February 2016, Gmail has around 1 billion active monthly users.

AdSense works differently than Gmail and Google News. It is the feature that I find has the most impact on digital marketing and business today. AdSense generates revenue for publishers using EPC (earnings per click) and CPC (cost per click). Businesses can quickly formulate ads online using templates provided by the AdSense that create codes pasted onto their company websites. These ads can have several formats and sizes including text and images. Publishers will then get paid for clicks on the ads that appear on their sites. As of February 2015, AdSense publishers were noted to be receiving about 68% of the click cost and Google receiving 32%.

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Other companies have decided to implement employee innovation into their corporate culture as well. Companies such as Xerox, Chubb, and Whirlpool have taken a cue from Google and have embraced innovation by making it part of everyone’s jobs. As a company primarily known for just producing photocopiers, Xerox needed a new way to expand their product lines. They decided to add educational products to their mix to distinguish themselves as a company not just known for producing office copiers. One of these educational products they developed is called Ignite and was developed as a tool for teachers to use when grading exams and works similarly to a scanner. Completed exams are put through the device and can specifically direct the teacher to see–at a glance–what a student needs. For instance, if it is a math exam, once the exam is scanned through, the software can pinpoint if the student is doing poorly on fractions, but well on multiplication based on their scores. It can also help the educator compare how students are doing relative to their peers, and the teacher can then act to help the students improve where necessary.

Xerox has incorporated this vision by putting their researchers directly into the field. For example, in the case of Ignite, researchers visited classrooms to directly observe how teachers work and how they might work more efficiently. A second method that they use is what they call “dreaming sessions” with its clients. These are casual sessions designed to get Xerox and its clients to think more creatively about problems and solutions by talking it through together. Back in 2013, the Chief Technology Officer of Xerox at the time, Sophie Vandebroek, stated that “Being innovative to me is being both creative and entrepreneurial. And you can’t be creative and entrepreneurial unless you truly bring your heart to work, and have fun at work. It is essential. You need to have fun every day.” To me, that is the heart of what makes these companies able to innovate so well. These employees bring their expert skills and ideas to implement change.

Ultimately, companies like Google and Xerox thrive on continuously inventing new ways to promote innovation throughout their organizations. Whether it is through ideas such as Google’s 80/20 rule or working directly with clients the way that Xerox does to determine their biggest needs for improvement, continuous innovation is key. The question is, can these companies afford to dedicate so much time to innovation or is focusing on a few products more beneficial?

 

Sources and Articles:

http://www.businessinsider.com/google-20-percent-time-policy-2015-4

https://hbr.org/2017/02/ai-is-going-to-change-the-8020-rule

https://www.wired.com/insights/2013/08/innovate-or-die-why-googles-8020-rule-is-a-red-herring/

https://www.forbes.com/sites/johnkotter/2013/08/21/googles-best-new-innovation-rules-around-20-time/#2a1a5a1c2e7a

https://hbr.org/2013/08/just-how-valuable-is-googles-2-1

https://www.hrzone.com/lead/culture/why-did-google-abandon-20-time-for-innovation

https://techcrunch.com/2016/02/01/gmail-now-has-more-than-1b-monthly-active-users/

https://www.digitalmarketingpro.net/how-does-google-adsense-works-253/

https://www.fastcompany.com/3023240/dreaming-together-how-xerox-keeps-big-ideas-flowing

10 comments

  1. Really interesting article! It’s interesting that the companies that in the end succeed, especially those in the digital business have innovation intertwined in their cultures. In the case of Google it’s interesting to see that most of its innovations came from people “just doing what they like” rather than what the companies tell them to do. In the end I believe that if a company wants to control too much its employees, innovation will stifle and the company will succumb in the end.

  2. Awesome post! I definitely agree that innovation is a mix between entrepreneurship and creativity. Most people work more efficiently when they are doing work that they are interested in. Going into work every day can get boring if you are doing the similar tasks over and over again. Having the freedom to work on some independent projects can definitely motivate employees. I think more companies should implement the ideas of Google and Xerox.

  3. Great post! 20% of an employees time doesn’t necessarily sound like a lot, but it is crazy to think that Google is willing to let many very well paid employees work on side projects for what amounts to possibly almost 2 hours every day. I think this relates well to the discussion we had on the first day of class about the HIPPO (Highest Paid Person’s Opinion). I think Google and other companies are starting to recognize that the nest ideas and the best ways to innovate as a company will not always come from the top. This is a great way to take advantage of all of the talent and intuition that is present within an organization, especially one with as much talent within their employees as Google

  4. Really interesting post! Google’s 80/20 policy is similar to how Facebook is treating their AI research lab in New York. In the article that my reading group read for last week’s class, the writer discussed how this new lab has a “university like feel,” meaning that the workers have the freedom to work on anything that they are passionate on, instead of following what Facebook plans on doing in the future. Yann Lecunn, the head of this research facility, stated how “you don’t tell them what to work on, they tell you what’s interesting.” I definitely think that more businesses are going to incorporate this strategy into their everyday business environment, as I think it leaves the most room for creativity, development and growth.

  5. I had no idea that Xerox did something similar to Google’s 80/20 rule–it was so interesting to learn about their educational tools (also what an amazing way to optimize a teachers and thus classrooms time)! It is interesting to look at the way other companies are trying to encourage more creativity in the workspace. Clif Bar has a program where employees can go work in local community non-profits during work hours. I think it is a way of incentivizing employees to always be focused on one of their core competencies, which is “Sustaining our Communities.” It is cool to see the many ways you can help provide a creative space for your employees, no matter what the definition of your bottom line is.

  6. By my understanding, Google has abandoned the 80/20 rule as they originally conceived it, because it just didn’t scale well. Instead, they’ve moved it over to the Xlabs where they have employees dedicated full-time to innovation. Others companies do “FedEx” days, where they have to deliver a working product overnight.

    1. In my research, I had encountered some articles talking about whether the 80/20 rule was going to work. Many people were not confident that it would, and I wish I had found one talking about how they moved it to the Xlabs so I could have dug a bit deeper and talked about it more. It is not surprising to see that they have decided to have employees dedicated to innovation full-time.

      1. Fear not. My comments are based in private convos with Google employees. Yours is a a legit topic and perspective. The general theme is right. Nice work!

  7. It’s funny to think about what sounds like the advanced version of a Scantron. I would never have considered room for innovation in something like that, but it makes so much sense! Thanks for sharing.

  8. I think it was great for Google and Xerox to introduce “Innovation” in their work culture. My current job Liberty Mutual have begun to roll out “Innovation Sprints” at the end of our Program Increment. During this Innovation Sprint, not only provides a buffer for planning ahead but it is time dedicated for research and development and continuing any education.

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