Companies and Information

IN EARLY February Hewlett-Packard showed off its new tablet computer, which it hopes will be a rival to Apple’s iPad. The event was less exciting than it might have been, thanks to the leaking of the design in mid-January. Other technology companies have suffered similar embarrassments lately. Dell’s timetable for bringing tablets to market appeared on a tech-news website. A schedule for new products from NVIDIA, which makes graphics chips, also seeped out.

Geeks aren’t the only ones who can’t keep a secret. In January it emerged that Renault had suspended three senior executives, allegedly for passing on blueprints for electric cars (which the executives deny). An American radio show has claimed to have found the recipe for Coca-Cola’s secret ingredient in an old newspaper photograph. Facebook’s corporate privacy settings went awry when some of the social network’s finances were published. A strategy document from AOL came to light, revealing that the internet and media firm’s journalists were expected to write five to ten articles a day.

Meanwhile, Julian Assange has been doing his best to make bankers sweat. In November the founder of WikiLeaks promised a “megaleak” early in 2011. He was said to be in possession of a hard drive from the laptop of a former executive of an unnamed American bank, containing documents even more toxic than the copiously leaked diplomatic cables from the State Department. They would reveal an “ecosystem of corruption” and “take down a bank or two”.

“I think it’s great,” Mr Assange said in a television interview in January. “We have all these banks squirming, thinking maybe it’s them.” At Bank of America (BofA), widely thought to be the bank in question, an internal investigation began. Had any laptop gone missing? What could be on its hard drive? And how should BofA react if, say, compromising e-mails were leaked?

The bank’s bosses and investigators can relax a bit. Recent reports say that Mr Assange has acknowledged in private that the material may be less revealing than he had suggested. Financial experts would be needed to determine whether any of it was at all newsworthy.

Even so, the WikiLeaks threat and the persistent leaking of other supposedly confidential corporate information have brought an important issue to the fore. Companies are creating an ever-growing pile of digital information, from product designs to employees’ e-mails. Keeping tabs on it all is increasingly hard, not only because there is so much of it but also because of the ease of storing and sending it. Much of this information would do little damage if it seeped into the outside world; some of it, indeed, might well do some good. But some could also be valuable to competitors—or simply embarrassing—and needs to be protected. Companies therefore have to decide what they should try to keep to themselves and how best to secure it.

Trying to prevent leaks by employees or to fight off hackers only helps so much. Powerful forces are pushing companies to become more transparent. Technology is turning the firm, long a safe box for information, into something more like a sieve, unable to contain all its data. Furthermore, transparency can bring huge benefits. “The end result will be more openness,” predicts Bruce Schneier, a data-security guru.

From safe to sieve

When corporate information lived only on paper, which was complemented by microfilm about 50 years ago, it was much easier to manage and protect than it is today. Accountants and archivists classified it; the most secret documents were put in a safe. Copying was difficult: it would have taken Bradley Manning, the soldier who is alleged to have sent the diplomatic cables to WikiLeaks, years to photograph or smuggle out all the 250,000 documents he is said to have downloaded—assuming that he was not detected.

Things did not change much when computers first made an appearance in firms. They were used mostly for accounting or other transactions, known as “structured information”. And they were self-contained systems to which few people had access. Even the introduction in the 1980s of more decentralised information-technology (IT) systems and personal computers (PCs) did not make much of a difference. PCs served at first as glorified typewriters.

It was only with the advent of the internet and its corporate counterpart, the intranet, that information began to flow more quickly. Employees had access to lots more data and could exchange electronic messages with the outer world. PCs became a receptacle for huge amounts of “unstructured information”, such as text files and presentations. The banker’s hard drive in Mr Assange’s possession is rumoured to contain several years’ worth of e-mails and attachments.

Now an even more important change is taking place. So far firms have spent their IT budgets mostly on what Geoffrey Moore of TCG Advisors, a firm of consultants, calls “systems of record”, which track the flow of money, products and people within a company and, more recently, its network of suppliers. Now, he says, firms are increasingly investing in “systems of engagement”. By this he means all kinds of technologies that digitise, speed up and automate a firm’s interaction with the outer world.

Mobile devices, video conferencing and online chat are the most obvious examples of these technologies: they allow instant communication. But they are only part of the picture, says Mr Moore. Equally important are a growing number of tools that enable new forms of collaboration: employees collectively edit online documents, called wikis; web-conferencing services help firms and their customers to design products together; and smartphone applications let companies collect information about people’s likes and dislikes and hence about market trends.

It is easy to see how such services will produce ever more data. They are one reason why IDC, a market-research firm, predicts that the “digital universe”, the amount of digital information created and replicated in a year, will increase to 35 zettabytes by 2020, from less than 1 zettabyte in 2009 (see chart); 1 zettabyte is 1 trillion gigabytes, or the equivalent of 250 billion DVDs. But these tools will also make a firm’s borders ever more porous. “WikiLeaks is just a reflection of the problem that more and more data are produced and can leak out,” says John Mancini, president of AIIM, an organisation dedicated to improving information management.

Two other developments are also poking holes in companies’ digital firewalls. One is outsourcing: contractors often need to be connected to their clients’ computer systems. The other is employees’ own gadgets. Younger staff, especially, who are attuned to easy-to-use consumer technology, want to bring their own gear to work. “They don’t like to use a boring corporate BlackBerry,” explains Mr Mancini.

The data drain

As a result, more and more data are seeping out of companies, even of the sort that should be well protected. When Eric Johnson of the Tuck School of Business at Dartmouth College and his fellow researchers went through popular file-sharing services last year, they found files that contained health-related information as well as names, addresses and dates of birth. In many cases, explains Mr Johnson, the reason for such leaks is not malice or even recklessness, but that corporate applications are often difficult to use, in particular in health care. To be able to work better with data, employees often transfer them into spreadsheets and other types of files that are easier to manipulate—but also easier to lose control of.

Although most leaks are not deliberate, many are. Renault, for example, claims to be a victim of industrial espionage. In a prominent insider-trading case in the United States, some hedge-fund managers are accused of having benefited from data leaked from Taiwanese semiconductor foundries, including spreadsheets showing the orders and thus the sales expectations of their customers.

Not surprisingly, therefore, companies feel a growing urge to prevent leaks. The pressure is regulatory as well as commercial. Stricter data-protection and other rules are also pushing firms to keep a closer watch on information. In America, for instance, the Health Insurance Portability and Accountability Act (HIPAA) introduced security standards for personal health data. In lawsuits companies must be able to produce all relevant digital information in court. No wonder that some executives have taken to using e-mail sparingly or not at all. Whole companies, however, cannot dodge the digital flow.

To help them plug the holes, companies are being offered special types of software. One is called “content management”. Programs sold by Alfresco, EMC Documentum and others let firms keep tabs on their digital content, classify it and define who has access to it. A junior salesman, for instance, will not be able to see the latest financial results before publication—and thus cannot send them to a friend.

Another type, in which Symantec and Websense are the market leaders, is “data loss prevention” (DLP). This is software that sits at the edge of a firm’s network and inspects the outgoing data traffic. If it detects sensitive information, it sounds the alarm and can block the incriminating bits. The software is often used to prevent social-security and credit-card numbers from leaving a company—and thus make it comply with HIPAA and similar regulations.

A third field, newer than the first two, is “network forensics”. The idea is to keep an eye on everything that is happening in a corporate network, and thus to detect a leaker. NetWitness, a start-up company, says that its software records all the digital goings-on and then looks for suspicious patterns, creating “real-time situation awareness”, in the words of Edward Schwartz, its chief security officer.

There are also any number of more exotic approaches. Autonomy, a British software firm, offers “bells in the dark”. False records—made-up pieces of e-mail, say—are spread around the network. Because they are false, no one should gain access to them. If somebody does, an alarm is triggered, as a burglar might set off an alarm breaking into a house at night.

These programs deter some leakers and keep employees from doing stupid things. But reality rarely matches the marketing. Content-management programs are hard to use and rarely fully implemented. Role-based access control sounds fine in theory but is difficult in practice. Firms often do not know exactly what access should be assigned to whom. Even if they do, jobs tend to change quickly. A field study of an investment bank by Mr Johnson and his colleagues found that one department of 3,000 employees saw 1,000 organisational changes within only a few months.

This leads to what Mr Johnson calls “over-entitlement”. So that workers can get their jobs done, they are given access to more information than they really need. At the investment bank, more than 50% were over-entitled. Because access is rarely revoked, over time employees gain the right to see more and more. In some companies, Mr Johnson was able to predict a worker’s length of employment from how much access he had. But he adds that if role-based access control is enforced too strictly, employees have too little data to do their jobs.

Similarly, DLP is no guarantee against leaks: because it cannot tell what is in encrypted files, data can be wrapped up and smuggled out. Network forensics can certainly show what is happening in a small group of people working on a top-secret product. But it is hard to see how it can keep track of the ever-growing traffic that passes through or leaves big corporate IT systems, for instance through a simple memory stick (which plugs into a PC and can hold the equivalent of dozens of feature-length films). “Technology can’t solve the problem, just lower the probability of accidents,” explains John Stewart, the chief security officer of Cisco, a maker of networking equipment.

Other experts point out that companies face a fundamental difficulty. There is a tension in handling large amounts of data that can be seen by many people, argues Ross Anderson, of Cambridge University. If a system lets a few people do only very simple things—such as checking whether a product is available—the risks can be managed; but if it lets a lot of people do general inquiries it becomes insecure. SIPRNet, where the American diplomatic cables given to WikiLeaks had been stored, is a case in point: it provided generous access to several hundred thousand people.

In the corporate world, to limit the channels through which data can escape, some companies do not allow employees to bring their own gear to work or to use memory sticks or certain online services. Although firms have probably become more permissive since, a survey by Robert Half Technology, a recruitment agency, found in 2009 that more than half of chief information officers in America blocked the use of sites such as Facebook at work.

Yet this approach comes at a price, and not only because it makes a firm less attractive to Facebook-using, iPhone-toting youngsters. “More openness also creates trust,” argues Jeff Jarvis, a new-media sage who is writing a book about the virtues of transparency, entitled “Public Parts”. Dell, he says, gained a lot of goodwill when it started talking openly about its products’ technical problems, such as exploding laptop batteries. “If you open the kimono, a lot of good things happen,” says Don Tapscott, a management consultant and author: it keeps the company honest, creates more loyalty among employees and lowers transaction costs with suppliers.

More important still, if the McKinsey Global Institute, the research arm of a consulting firm, has its numbers right, limiting the adoption of systems of engagement can hurt profits. In a recent survey it found that firms that made extensive use of social networks, wikis and so forth reaped important benefits, including faster decision-making and increased innovation.

How then to strike the right balance between secrecy and transparency? It may be useful to think of a computer network as being like a system of roads. Just like accidents, leaks are bound to happen and attempts to stop the traffic will fail, says Mr Schneier, the security expert. The best way to start reducing accidents may not be employing more technology but making sure that staff understand the rules of the road—and its dangers. Transferring files onto a home PC, for instance, can be a recipe for disaster. It may explain how health data have found their way onto file-sharing networks. If a member of the employee’s family has joined such a network, the data can be replicated on many other computers.

Don’t do that again

Companies also have to set the right incentives. To avoid the problems of role-based access control, Mr Johnson proposes a system akin to a speed trap: it allows users to gain access to more data easily, but records what they do and hands out penalties if they abuse the privilege. He reports that Intel, the world’s largest chipmaker, issues “speeding tickets” to employees who break its rules.

Mr Johnson is the first to admit that this approach is too risky for data that are very valuable or the release of which could cause a lot of damage. But most companies do not even realise what kind of information they have and how valuable or sensitive it is. “They are often trying to protect everything instead of concentrating on the important stuff,” reports John Newton, the chief technology officer of Alfresco.

The “WikiLeaks incident is an opportunity to improve information governance,” wrote Debra Logan, an analyst at Gartner, a research firm, and her colleagues in a recent note. A first step is to decide which data should be kept and for how long; many firms store too much, making leaks more likely. In a second round, says Ms Logan, companies must classify information according to how sensitive it is. “Only then can you have an intelligent discussion about what to protect and what to do when something gets leaked.”

Such an exercise could also be an occasion to develop what Mr Tapscott calls a “transparency strategy”: how closed or open an organisation wants to be. The answer depends on the business it is in. For companies such as Accenture, an IT consultancy and outsourcing firm, security is a priority from the top down because it is dealing with a lot of customer data, says Alastair MacWillson, who runs its security business. Employees must undergo security training regularly. As far as possible, software should control what leaves the company’s network. “If you try to do something with your BlackBerry or your laptop that you should not do,” explains Mr MacWillson, “the system will ask you: ‘Should you really be doing this?’”

At the other end of the scale is the Mozilla Foundation, which leads the development of Firefox, an open-source browser. Transparency is not just a natural inclination but a necessity, says Mitchell Baker, who chairs the foundation. If Mozilla kept its cards close to the chest, its global community of developers would not and could not help write the program. So it keeps secrets to a minimum: employees’ personal information, data that business partners do not want made public and security issues in its software. Everything else can be found somewhere on Mozilla’s many websites. And anyone can take part in its weekly conference calls.

Few companies will go that far. But many will move in this direction. The transparency strategy of Best Buy, an electronics retailer, is that its customers should know as much as its employees. Twitter tells its employees that they can tweet about anything, but that they should not do “stupid things”. In the digital era of exploding quantities of data that are increasingly hard to contain within companies’ systems, more companies are likely to become more transparent. Mr Tapscott and Richard Hunter, another technology savant, may not have been exaggerating much a decade ago, when they wrote books foreseeing “The Naked Corporation” and a “World Without Secrets”.

Logoland

ONE of last year’s most interesting business books was Clay Shirky’s “Cognitive Surplus: Creativity and Generosity in a Connected Age”. The rise of the affluent society has left people with lots of time and talent to spare, Mr Shirky argues. For decades they squandered this cognitive surplus watching television. Today, thanks to the internet, they can also channel it into more productive pursuits.

For a surprising number of people these productive pursuits involve worrying about companies’ logos. Howard Schultz, the boss of Starbucks, recently announced that his company would mark its 40th anniversary this March by changing its logo a bit. The words “Starbucks” and “coffee” will disappear. And the mermaid, or siren, will be freed from her circle.

Starbucks wants to join the small club of companies that are so recognisable they can rely on nothing but a symbol: Nike and its swoosh; McDonald’s and its golden arches; Playboy and its bunny; Apple and its apple. The danger is that it will join the much larger class of companies that have tried to change their logos only to be forced to backtrack by an electronic lynch mob.

As soon as the change was mooted, bloggers started blogging and tweeters began to tweet. Starbucks.com has been inundated with complaints, such as “focus on your core business and forget this foolishness”. Fox News, not normally an authority on corporate marketing strategy, has likened the proposal to Prince’s decision, in 1993, to swap his name for an unpronounceable symbol, an action he reversed seven years later. The protesters have plenty of success stories to inspire their efforts. Gap, a clothing retailer, abandoned a new logo in October after a week of concentrated online hazing. Tropicana (which tried to replace its straw-in-an-orange logo with a picture of a glass of orange juice) and Britain’s Royal Mail (which renamed itself Consignia) held out a bit longer but eventually had to retreat.

Why do people get so upset about such changes? An obvious reason is that so many logos and names are either pig ugly or linguistically challenged. Think of BT’s “piper” logo, which looked like someone drinking a yard of ale and disfigured all things BT-related for 12 years (admittedly, Britain’s incumbent telecoms firm was not too popular to begin with); or the SciFi channel’s decision to call itself SyFy—a name that raises the spectre of syphilis.

Moreover, the people who spend their lives creating new logos and brand names have a peculiar weakness for management drivel. Marka Hansen, Gap’s president for North America, defended the firm’s new logo (three letters and a little blue square) with a lot of guff about “our journey to make Gap more relevant to our customers”. The Arnell Group explained its $1m redesign of Pepsi’s logo with references to the “golden ratio” and “gravitational pull”, arguing that “going back-to-the-roots moves the brand forward as it changes the trajectory of the future”.

Ghastly stuff, to be sure. But why do aesthetically sensitive consumers harry companies to go back to old logos rather than simply shifting their loyalties elsewhere? One answer is that people have a passionate attachment to some brands. They do not merely buy clothes at Gap or coffee at Starbucks, but consider themselves to belong to “communities” defined by what they consume. A second reason is that the more choices people have, the more they seem to value the familiar. These days there are so many choices available to Western consumers—the average supermarket stocks 30,000 items and America’s patent and trademark office issues some 200,000 patents a year—that they are in danger of being overwhelmed. Homo economicus may be capable of carefully considering all available products. But poor, fumbling Homo sapiens seizes on logos as a way of creating order in a confusing world.

The debate about logos reveals something interesting about power as well as passion. Much of the rage in the blogosphere is driven by a sense that “they” (the corporate stiffs) have changed something without consulting “us” (the people who really matter). This partly reflects a hunch that consumers have more power in an increasingly crowded market for goods. But it also reflects the sense that brands belong to everyone, not just to the corporations that nominally control them.

They want your opinion, as long as it’s positive

Companies have gone out of their way to encourage these attitudes. They not only work hard to create emotional bonds with consumers (Victoria’s Secret is one of many firms, including The Economist, that encourage customers to “like” them on Facebook). They involve them in what used to be regarded as internal corporate operations. Snapple asks Snapple-drinkers to come up with ideas for new drinks. Threadless encourages people to compete to design T-shirts.

Starbucks has been in the forefront of this consumer revolution. It consults consumers on everything from the ambience of its stores to its environmental policies. It emphasises that it is not just in the business of selling coffee. It sells entry to a community of like-minded people (who are so very different from the types who get their coffee from Dunkin’ Donuts or McDonald’s) gathered in a “third place” that is neither home nor work.

The company’s new logo hints at a big ambition. Mr Schultz wants to burst asunder the bonds created by Starbucks’s humble origins as a coffee shop. Some of his cafés are to sell alcohol as well as coffee. Many more Starbucks-branded goods are to appear in supermarkets. Starbucks is to become a force in the emerging world as well as the emerged. Such changes would be difficult even for an old-fashioned corporate dictatorship. Mr Schultz is about to discover whether they are possible for a company that has made such a fuss about giving power to its customers.

The Innovation Machine

IN HIS new book, “Still Surprised: A Memoir of a Life in Leadership”, Warren Bennis, a management theorist, tells a story about Sigmund Freud’s flight from Vienna to London in 1938. On arriving in his new home Freud asked Stefan Zweig, a fellow Viennese intellectual, what it was like. “London? How can you even mention London and Vienna in the same breath?” Zweig thundered. “In Vienna there was sperm in the air!”

Today there is no hotter topic in management theory than “sperm in the air”. How do companies generate new ideas? And how do they turn those ideas into products? Hardly a week passes without someone publishing a book on the subject. Most are rubbish. But “The Other Side of Innovation: Solving the Execution Challenge” is rather good. Its authors are Vijay Govindarajan and Chris Trimble, two professors at the Tuck School of Business at Dartmouth College. Last year Mr Govindarajan and Mr Trimble (hereafter: G&T) published a seminal article, with Jeff Immelt, the head of General Electric, on frugal innovation. In their new book they address two subjects that are usually given short shrift: established companies rather than start-ups and the implementation of new ideas rather than their generation.

The fashion these days is to focus on the supply side of innovation: for example, by encouraging everyone to think big thoughts. 3M, the maker of Post-it notes, expects its workers to spend 15% of their time on their own projects. Google expects them to spend 20%. This approach is attractively democratic: by giving everyone a chance to innovate, it makes everyone feel special. Or so the theory goes. G&T are ready with the cold water. The let-them-loose approach spreads resources thinly and indiscriminately. Companies dissolve into a thousand small initiatives rather than focusing on a few big problems. It also produces far too many ideas: managers have to spend weeks sorting through the chaff to find a few grains of wheat.

A second approach focuses on closing the loop between ideas and results. Nucor Corporation, a steelmaker, gives its workers bonuses if they can produce steel more efficiently. Deere & Company, a maker of farm machinery, has produced a detailed playbook on how to design new tractors. G&T concede that this approach is an excellent way of making incremental improvements to existing products and processes, but suggest that it has little chance of producing a big breakthrough.

G&T say that you need to start by recognising that innovation is unnatural. Established businesses are built for efficiency, which depends on predictability and repeatability—on breaking tasks down into their component parts and holding employees accountable for hitting their targets. But innovation is by definition unpredictable and uncertain. Bosses may sing a pretty song about innovation being the future. But in practice the heads of operational units will favour the known over the unknown.

Many would-be innovators deal with the trade-off between efficiency and innovation by rejecting traditional management entirely. They repeat mantras about “breaking all the rules” and “asking for forgiveness rather than permission”. They set up skunk works (small, autonomous units with a remit to innovate) and mock the boring corporate types who write their pay-cheques. But again this is counter-productive. Mocking the corporate establishment only encourages it to starve you of resources. And producing ideas in isolated skunk works ignores the basic reason for working for a big company in the first place—to use its superior resources to supercharge what you are doing.

G&T argue that companies need to build dedicated innovation machines. These machines need to be free to recruit people from outside (since big companies tend to attract company men rather than rule-breakers). They also need to be free from some of the measures that prevail in the rest of the company. But they must avoid becoming skunk works. They need to be integrated with the rest of the company—they must share some staff, for example, and they must tap into the wider company’s resources as they turn ideas into products. And they must be tightly managed according to customised rather than generic rules. For example, they should be held accountable for their ability to learn from mistakes rather than for their ability to hit their budgets.

Brake-out groups

G&T offer several examples of successful innovation machines. Harley-Davidson, a firm whose customers tend to be fiercely loyal, was struggling to woo new ones. So it created a group to come up with ideas for attracting beginner motorcyclists, such as safety courses and rental programmes. BMW, a carmaker, realised that its established system for producing brakes might be a hindrance when it came to designing brakes for hybrid vehicles (which benefit from capturing wasted energy and putting it back to work). So it set up an innovation team in which battery specialists regularly talked to brake specialists. Allstate, an American insurance company, noted that insurers had come to accept widespread customer dissatisfaction as a fact of life. So it asked marketers to help risk-adjustment specialists to design car insurance. They came up with industry-changing ideas such as accident forgiveness and cash rewards for good driving.

G&T undoubtedly get carried away with their model. Innovation machines come in many shapes and sizes. Sometimes it is wiser to buy something than to make it yourself. Unilever, for example, would not have invented “Chubby Hubby” ice-cream if it had not bought Ben & Jerry’s. But G&T are nonetheless right to argue that students of innovation must pay more attention to big companies. They have the muscle to chase big prizes, from alternative fuels to clean drinking water. But they need to learn how to conquer new territories while continuing to cultivate old ones.

from The Economist

Google Today

Secrets of a nimble giant

Technology companies usually get slower as they get bigger - so why is Google as fast as ever? Co-founder Sergey Brin tells Jemima Kiss how size can make for innovation.

It was Rupert Murdoch who summed up success in the digital age when he said: "Big will not beat small any more - it will be the fast beating the slow." That might be inspiring for startups, but in the process-laden, corporate environment, how can big companies keep their edge by moving quickly and lightly? This has become something of an obsession for Google watchers, who have seen the college research project develop into a multi-billion-dollar phenomenon, stretching from mobile software and blogging to social networking and the ubiquitous search. How does a company with 20,000 staff manage to keep innovating?

Sergey Brin, Google's co-founder, thinks size should help. "It's important for people to realise that you should benefit from the scale - if you're not benefiting then you're doing something wrong, and might as well break up into lots of little things. Instead of having our employees in large buildings, we could have several thousand houses each with a garage - there's nothing stopping us from doing that. But the fact is that as we scale, we should be able to take advantage of that. Look at how many colleagues can you talk about a specific issue with, and how can you take advantage of a piece of infrastructure that the company already has."

Google's infrastructure - and those enviable facilities - are much reported, from the lavish, free canteen and commuter shuttles to the infinity pool at the Mountain View headquarters. The Sydney office has equally fine trimmings, with lava lamps and great views, which may or may not have contributed to the birth of its most recent tech toy, the communications tool Wave. Tapping several sweet spots in web development, Wave aggregates real-time Twitter-esque instant messaging with email, wiki-based collaboration features and social networking.

Wave of confidence

Brin doesn't get his hands dirty with quite as many of Google's tech projects as he'd like, so he says he's "trying to take time to do more of that". But when Lars and Jens Rasmussen came to him with the idea for Wave, it was their track record that gave him confidence in the project. The pair joined Google with the acquisition of their mapping startup Where 2 Technologies in October 2004; that grew into the first incarnation of Google Maps.

"We have been gradually embracing the idea that once you're successful, we give you much more latitude," says Brin. "Somebody who has a success under their belt has really demonstrated accomplishment and in that case we will give them generally more liberty. When they came and proposed this idea they said, 'We want to do something new and revolutionary, but we're not even going to tell you what it is. And we want to go back to Australia, hire a bunch of people and just work on it.' That was a crazy proposal," Brin says, and not one many businesses would have supported. "But, having seen their success with Maps, I felt that it actually was pretty reasonable." It was two years ago that Brin agreed to support the project, and the full version of Wave will be released later this year.

Google was one firm rumoured to be looking at acquiring Twitter, and the two are known to be talking about a possible real-time search collaboration. But despite the real-time elements of Wave, the project was conceived before Twitter had achieved momentum. Brin says the team wasn't aware of Twitter at the beginning, but wanted to create something timeless. "The very first demo that they showed me had, for example, character-by-character typing, which actually made me nostalgic because the old Linux systems all did that with Talk."

Mainstream manifesto

As well as organisational structure and the track record of engineers, Brin talks about intuition around projects that might translate to something more mainstream. "That essentially takes taste, I would call it, and a certain kind of intuition. People may or may not have that kind of intuition - that's why for something like Wave the prior success on a mass consumer scale is what gave me confidence that these guys can do that again in another field."

With that $131bn market value, Google is in an unusually powerful financial and strategic position to give its engineers this kind of latitude. The downturn has barely dented Google's research and development budget, which was reduced to $641m (£392m) for the first quarter of this year from $673m in 2008. Around 36% of its staff work in R&D in total, and the entire 2008 R&D budget was a staggering $2.79bn.

Despite appearing to suffer mildly from the economic climate, Brin has previously said that tough times bring out the best of the Valley because when there's too much money around, "you get a lot of noise mixed in with the real innovation and entrepreneurship".

Companies can traditionally buy in innovative products, as happened with Where 2, or develop in-house. The most well-known Google initiative for encouraging innovation in-house is its "20% time" strategy, which has almost become an innovation cliché. The idea that 80% of an engineer's time is spent on the day job and 20% pursuing a personal project is a mathematician's solution to innovation, Brin says. Some staff secretly admit their 20% time is spent catching up with the day job, but the firm insists the strategy has led to Google News, Gmail and the mighty AdSense system, among other things.

New priorities

What could established media companies learn from Google's approach to innovation? Given the perfect storm of economic meltdown and once-in-a-generation collapse of their business model, innovation may well have slipped off the priority list for old media. Perhaps it is time to rephrase the challenge, says Brin. "Any conversation I have about innovation starts with the ultimate goal - in this case what the reader is trying to accomplish, and what would make that better. Somebody reading up on the news wants to be kept up to date, and quickly." News sites offer some useful content, but there's a lot of duplication. "I don't have a solution for you - I'm just saying that I think posing the problem correctly is perhaps more important than defining the solution. People want to have good, engaging, high-quality information about things going on right now in the world."

In-house, Google uses a project database and an ideas mailing list to manage new projects. While noting ideas on the mailing list is important, it is less significant than the project database, says Brin, which lists weekly updates on who is working on what, their goals, progress and links to documentation. That distinction has to be instilled in the company culture.

"It's important not to overstate the benefits of ideas," he says. "Quite frankly, I know it's kind of a romantic notion that you're just going to have this one brilliant idea and then everything is going to be great. But the fact is that coming up with an idea is the least important part of creating something great. It has to be the right idea and have good taste, but the execution and delivery are what's key."

The Vikings Are Coming!

It seems that the richest person in Europe is the owner of Ikea.