Read an interesting article on GigaOm yesterday titled “Google’s Infrastructure is its Strategic Advantage” (go read it if you haven’t).
This post, and Google’s strategy, is a great example of using Resource Diversity and Immobility to build an advantage in your market. If you’ll recall from my previous posts (here, here and especially here), using the concept of diversity and immobility allows an organization to create a competitive advantage…and that’s exactly what Google has done with its infrastructure (and to some degree, with its people).
According to Om:
To better understand Google and its business model, one needs to break it down into three data inputs.
- Relevancy of results.
- Speed of search.
- Cost of executing a search query.
And later in his article, Om says:
In other words, the company has to make sure that the speed of its search is really, really fast. Any random search on Google these days takes between 0.12 to 0.06 seconds. Now that is really, really fast. Google does this by indexing the Internet quite well. The magic is in delivering the search results from this index at lightening speed, and that requires an infrastructure…
So…how did Google create their competitive advantage in the search space?
They created Resource diversity and Immobility by building their own infrastucture and are rumored to be buying unused fiber. According to Om:
With the exception of optical systems, Google has built or is building the gear. It has been rumored to be a big buyer of dark fiber to connect its data centers, which helps explain why the company spent nearly $3.8 billion over the past seven quarters on capital expenditures.
By building and owning their own infrastructure, they’ve created both resource diversity and resource immobility by creating a huge barrier to entry that will be almost impossible for other competitors to match.
In addition to using infrastructure to build immobility & diversity, Google has also used these concepts with their people. Google has had the ability to go out and hire the best and brightest to develop their infrastructure and software products.
Google has created an environment that makes it extremely difficult to compete…they’ve built an infrastructure that is almost impossible to replicate and they’ve hired the best and brightest.
This is Resource Immobility and Resource Diversity at its best.
[tags] Strategy, Business, IT, competitive advantage, technology, resource immobility, resource diversity [/tags]