July 7, 2009

Google's Red Queen Effect

In my 2004 paper “Strategies for Surviving the Internet Meltdown: The Case of Two Internet Incumbents” I found parallels between the strategy of two successful Web companies of the 90’s and the evolutionary concept known as the Red Queen Effect; the conclusion of my article was that surviving the dot.com meltdown, becoming a Web business leader and maintain this position in the long run requireed a strategy of continuous transformation and expansion. Both companies I examined over a course of six years (1995 – 2001), amazon.com and ertade.con, followed pretty similar strategy patterns based on continuous transformation and expansion along the three of the four dimensions of the Ansoff matrix: Market Development, Product Development and Diversification; Market Penetration (the fourth strategy of Ansoff) made no sense for Web market leaders in the 90's; their competitors / followers were quick to copy every successful online innovation making the existing markets not attractive for growth (you remember that amazon.com became famous as online bookstore in 1994 but in 1995 there were so many online bookstores that they had to expand in new categories of products in order to keep growing). Expansion to new markets, to new products / services or both was the only option.
Looking to successful Web companies of this decade I think that some of them follow a similar Red Queen survival path. The latest example is the entrance of Google into the real estate market with their Real Estate Listings and the recent upgrading in search functionality of this service. Google announced just today the launching of their own operating system the Google Chrome OS. How will Google look after five years? Maybe the prophesy of Robin Sloan is about to come true.