CASE STUDY 9
Corporate Entrepreneurship and Innovation in
Silicon Valley: The Case of Google, Inc.
SUMMARY AND AUTHOR’S NOTE
Since its founding in 1998, Google has been one of the most innovative companies in the world.
The company ranked at the top with other leading companies like Apple in the development of
innovative products and technologies. Corporate entrepreneurship and innovation is the heart and
Google initially set up its business in a garage at 232 Santa Margarita, Menlo Park, California in
1998. In 1999, Google received its first significant influx of capital, $25 million in venture
capital financing. Hamel and Breen (2007) described the growth of Google into five stages:
Google 1.0:–Brin and Page invented a search engine that searched the Web, won millions
of eyeballs, but generated no real revenue.
Google 4.0:–Google’s initially controversial Gmail service, which served up ads based on a
computer analysis of each incoming message, provoked a serendipitous bit of learning that
led to the creation of AdSense. This breakthrough gave Google the ability to link its ads to
virtually any sort of Web content, not just its own search results. AdSense gave webmasters
a new way of monetizing content and vastly expand the scope of Google’s business model.
115 Case 9: The Case of Google, Inc.
Google’s primary corporate strategy was related diversification. Google achieved its
diversification strategy through corporate entrepreneurship and innovation and acquisitions. This
enabled Google to increase its offerings and decrease its competition. As the industry leader,
WHERE TO USE THIS CASE
• Chapter 12: Use to discuss corporate personality, values, and culture as well as the
challenge of aligning culture with strategy.
• Chapter 16: Use to discuss the funding and valuing of a company.
• Chapter 17: Use to discuss growth strategies, particularly innovation and diversification.
• Chapter 18: Use to discuss risk management in the face of changing economic times.
CASE ANALYSIS
This case focuses on corporate entrepreneurship, culture and innovation. You might begin with
an overview of the history of Google. Ask students what Google products they use or have used.
What is their perception of the company prior to reading the case?
Corporate Culture
Discuss with students how the experience of founders Page and Brin at Stanford helped to shape
Corporate Entrepreneurship
Corporate entrepreneurship is closely related to the discussion of corporate culture. Corporate
entrepreneurship and innovation, fueled by culture, were the heart and soul of the company’s
success. Corporate entrepreneurship is entrepreneurial behavior inside established mid-sized and
Case 9: The Case of Google, Inc. 116
for.
Competitive Strategies
Google operated in markets that changed rapidly, facing the possibility of new and disruptive
technologies and formidable competition in every aspect of their business, particularly from
companies that sought to connect people with information on the web. The company considered
Microsoft Corporation and Yahoo! Inc. to be their primary competitors. Discuss Google’s
DISCUSSION QUESTIONS
1. What are the major problems facing Google in 2009?
Google had to figure out how to maintain its culture of corporate entrepreneurship and
2. Given the economic environment in 2009 as described in the case, what implications,
opportunities and threats does this context pose for Google currently? What about in 2012?
117 Case 9: The Case of Google, Inc.
Answers will vary, but students should address the challenge growth poses to the corporate
3. Based on the content of the case, what was the primary Strategic Inflection Point for
Google? Why did you select this point?
A strategic inflection point refers to changes in the environment that require adaptation.
4. A. Calculate the key profitability, liquidity, and asset management ratios for Google over
the past five year period and compare them with Yahoo! Based on the financial ratios what
advantages does Google have over Yahoo!? What vulnerabilities does Google have versus
Yahoo!?
Review key profitability, liquidity and asset management ratios with students. Ask them to
5. What were Google’s keys to success?
Highly effective diversification strategies combined with innovation have been central to
6. What recommendations would you make to Google? Why?