INSIGHT: What does Google’s new parent mean for technology providers?

Transparency to shareholders is likely a key reason for this move, but, it also highlights a few of these beliefs...

Google announced that they are creating a new parent ‘Alphabet’. Alphabet will be a collection of companies, with Google being the largest revenue generating one among them.

Others in the fold are investments in varied fields such as life sciences, smart home, auto, broadband and many others.

Google continues to innovate, not only in using technology for new products, but also in corporate strategy and management for an age when digital technology radically transforms consumer lives and businesses.

Transparency to shareholders is likely a key reason for this move, but, it also highlights a few of these beliefs:

• Technology as an innovative force impacts multiple industries. If you plan to grow based on that, you should build your company structure on that premise, rather than traditional structures.

Google’s belief in the potential of technology can be seen in how their interest straddles many industries.

• While technology can enable new products that threaten long standing ones, the new ones are likely to be even more vulnerable to attack from other new technology ideas.

This makes it necessary to have a strong portfolio approach and invest in multiple areas for the future.

• Not all technology-based ideas are equal, even the ones that worked.

Some will be supremely successful, such as the Google’s ad business tied to search, and will end up subsidising others that you have invested in, but cannot fully predict if they will succeed.

There will be many failures, but you want to have enough super-sized winners.

For technology providers, this not only reaffirms the idea that technology driven innovation is a source of massive growth, but also points to how even large successful companies can plan to capitalise on it, even when you cannot predict the future.

Technology providers have mostly been enablers to these high-tech companies, by either partnering with them or by supporting IT-related needs.

But, is that the best you can do? What is stopping you from identifying and nurturing ideas that can radically transform markets even when it is outside your core industry?

Since technology providers possess large groups of talented technologists, can you not aspire to do that?

We have been working on research that will show why it makes sense for providers to aim to be high-tech creators and a systematic way to approach this.

We hope to publish it in the next few months. In the meanwhile, what do you think of the potential for technology providers to create such high-tech ideas?

By Rajesh Kandaswamy - Research Analyst, Gartner

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