As I look at the Facebook VS Google race that is going on today, I recall something.
I read a book sometimes back called as “Only the paranoid survive” by Andy Grove. In the book Andy talked about how Intel faced intense competition but managed to came out as winner all the times. Leaving aside the controversies, Intel is the champion of personal computing. It had its fair share of competition with Motorola, Japanese Manufactures and then finally with AMD. Andy talked about how was Intel quick to spot the changes when they occurred. More than often he referred to these path breaking changes as 10X.These were changes that were so powerful that they changed the way we live and work.
It does not need to see long the changes that have happened in last decade and are accelerating with time. Intel faced 10X change when they faced competition from Japanese factories. Intel responded by becoming cost effective and responding to the customers. What Andy says that we should always be on the lookout for 10x changes. They can literally knock down the company in a few years.
Taking a look at Google vs Facebook battle, it seems clear that Google is facing the same 10x change that had catapulted it in the front of internet ahead of microsoft. Internet was shaping the world and microsoft had remained more of a desktop giant. Despite years of efforts, Microsoft did not achieve the lead over Google.
For around ten or so years Google has been undisputed leader of the internet. It has the capability to change the business models of thousands of companies with one small change in algorithm.
The new kid on the block Facebook has one advantage over Google which is difficult to replicate. Facebook is closer to the customer or users. Facebook knows much more about its customers than Google can ever know. 500m + userbase churning out millions of thoughts everyday which can be analyzed into a pattern serves as a mouthwatering dish for advertisers. It is possible to personalize ads based on user preferences because it is directly derived out of what users post or mention online.
Hence Facebook is a 10X threat to Google. It is not the end of the battle but just start of it. It would be interesting to see if a nimble startup can upstage a giant or the giant will eat the start up. Not that anyone has lost anything but as a reigning champion Google has enough to worry about.
In the end Andy Grove sounds really true. The winner of the game is the one who spots this change and take steps to ride the wave. Companies who stuck to old ideas will lose much faster than one which is open to new ones. The battle will be won by the company that not only knows its customer closely but serves them faster and better.